Cambrian Chen Tianshi: at present, the vehicle smart chip is still in the stage of research and development.

On the afternoon of August 23rd, the Cambrian (688256.SH) held a first-half performance meeting. Chen Tianshi, chairman and general manager of Cambrian, said that the company is at the right time for the layout of on-board smart chips, and will continue to invest in research and development in the future to enhance the competitiveness of products and strive for better performance feedback to shareholders.

High R & D investment failed to drive profit growth

At the exchange meeting, some investors said bluntly, what does the company rely on to replenish blood in the future? Investors said that they saw that the company's R & D investment in the first half of the year was 416 million yuan, an increase of 49.8% over the same period last year, and all of them were expended R & D investment, accounting for 301.38% of business income. Such a high R & D investment, but confiscation brought too much profit growth, how to protect the rights and interests of shareholders?

According to the Cambrian semi-annual report, there was a net cash outflow of 539 million yuan from Cambrian business activities in the first half of 2021, compared with 202 million yuan and 132 million yuan in 2019 and 2020, respectively. From January to June this year, the revenue of the Cambrian was about 138 million yuan, an increase of 58.1 percent over the same period last year, while the net profit lost 392 million yuan and a loss of 202 million yuan compared with the same period last year.

In this regard, Chen Tianshi, chairman and general manager of Cambrian, explained that the company's R & D expenses are mainly composed of staff and workers' salaries, depreciation and amortization of fixed and intangible assets, testing and processing fees, etc. specific investment in the iterative research and development of chip products and the continuous optimization of basic system software (which can be used in Yunbian product lines). The company is determined to become a leading artificial intelligence chip design company in the industry. Artificial intelligence chip belongs to the category of computing chip, the research and development of complex computing chip requires continuous and abundant R & D investment, which is used for the upgrading and iteration of the underlying basic technology of the chip and the research and development of new products in various product lines. The company will enhance the competitiveness of its products through continuous R & D investment and strive to repay the majority of investors with better performance.

Referring to the Cambrian financial statements, we can find that from 2018 to 2020, the cash received by the company by absorbing investment is 2.405 billion yuan, 1.7 billion yuan and 2.533 billion yuan respectively, of which the net amount raised by the company in the initial public offering of Science and Technology Innovation Board in 2020 is about 2.498 billion yuan. It can be seen that most of the companies rely on equity financing to get financial support. By contrast, the proportion of debt financing is very small. As of this semi-annual report, the Cambrian liabilities totaled 656 million yuan, the asset-liability ratio was only 9.69%, and the current ratio was still as high as 37.32 times.

Other analysts pointed out that the company's cloud smart chip and accelerator card-Siyuan 290's main competitive products in the market include NVDA.O 's A100 and V100 GPU, and Huawei Hayes' Ascend 910 smart chip. In terms of customer introduction, sales network and software ecology, the company still has a certain gap compared with Nvidia and Huawei Hayes. In the first quarter of 2021, Nvidia realized operating income of 36.6 billion yuan, net profit of 12.4 billion yuan, and R & D expenses accounted for about 20% of operating income. In the contest with the giants, the Cambrian continued to lose money. From 2017 to 2020, the operating income of the Cambrian was 7.84 million yuan, 120 million yuan, 440 million yuan and 459 million yuan respectively, and the net loss was 381 million yuan, 41.05 million yuan, 1.18 billion yuan and 436 million yuan respectively. The cumulative net loss over the past four years reached 2 billion yuan. Whether this will put pressure on future equity financing in the Cambrian remains to be seen.

The vehicle smart chip is still in the stage of research and development.

Chen Tianshi said that the Cambrian is one of the few manufacturers that can provide a full range of Yunbian smart chip and processor products as well as a unified basic system software platform, and occupies a certain dominant position in the accumulation of core technology and brand awareness. Intelligent driving as a new field of technology is far from mature, and the basic hardware needed for high-level intelligent driving is in the early stage of development. After multi-angle evaluation, the company believes that it is the right time for the layout of on-board smart chips.

He revealed that the car smart chip is still in the research and development stage. It takes a certain period from the design to the final production of the chip. At the same time, due to the uniqueness of the automotive industry, it pays more attention to functionality and safety, so it is necessary to overlay and design chips that meet the requirements of the specification level on the basis of the company's existing chip technology components.

It is reported that Tesla AI released the neural network chip D1, and the supercomputer DOJO, will form the most powerful supercomputer cluster in the future. The Cambrian also had neural network processors and laid out intelligent computing clusters. So, is the Cambrian layout of the track similar to that of Tesla, and will it face the competition of Tesla in the future?

In this regard, Chen Tianshi said that the Cambrian is positioned as a neutral chip company, and downstream customers can use the company's products to build computing clusters according to their own needs. According to public reports, Tesla's DOJO cluster and its underlying chips are self-developed by Tesla and are mainly oriented to its internal business.