Cambricon, once Huawei’s core AI chip supplier, eyes $400M IPO – ProWellTech
One of Cambricon’s most valuable Chinese artificial intelligence chipmakers is one step closer to his initial public offering, and his prospect reveals a rare photograph of where Chinese companies find themselves in relation to their international counterparts in this critical field.
At the beginning of June Cambricon nodded to the listing on the Star Market, the new Chinese stock market similar to Nasdaq designed to attract startups with high technological potential. This week, the chipmaker received the final go-ahead from the China Securities Regulatory Commission, the stock market watchdog, for its first sale.
The company aims to raise 2.8 billion yuan ($ 400 million) from its IPO and spend the proceeds on training and inference on cloud-based algorithms, edge computing and cash flow growth. It was last estimated at 2.5 billion yuan in 2018 and expects its market capitalization to exceed 1.5 billion yuan when it floats.
Cambricon began his life in a laboratory within the Chinese Academy of Sciences (CAS), the national institute for science and technology supported by public funds. In 2016, the project developed as a separate entity, making money by licensing intellectual property and selling chips to accelerate deep learning. Before long, he had established himself as one of the main suppliers of Huawei’s first AI chip smartphones and other flagship models later on.
But partner ties have weakened since Huawei started doubling its semiconductor arm – HiSilicon – to protect itself from U.S. sanctions. The direct consequence is a substantial drop in revenue for the IP licensed by Cambricon, which dropped to around 16-18 million yuan in 2018, down from 117 million yuan in 2018.
“Huawei Silicon has chosen to develop its AI chips for end devices and has not extended the partnership with our company, and our AI chip business with other customers remains relatively small,” the company replied to regulators during the process. evaluation for its listing. Finding new large-scale customers from Huawei is also a challenge, as “most other well-known Chinese smartphone manufacturers use Qualcomm and MediaTek’s well-established chips and phone solutions,” said Cambricon.
The chipmaker has also reported that it remains “well behind” by international competitors such as Nvidia, Intel, AMD in areas including “global scale, capital reserve, research and development resources and sales channels”. He is also well aware of the growing internal competition from his old ally, Huawei, who opted for chips from his home-grown HiSilicon unit.
Cambricon co-founders, Chen Tianshi and Chen Yunji, both come from academia. The company still maintains close relationships with CAS and works closely with Olivier Temam, a researcher at Inria, the French national institute of computer science and applied mathematics.
Cambricon is still operating in the red, adding a total loss of 1.6 billion yuan ($ 230 million) over the past three years in part due to large sums spent on research and development, according to its prospectus. It generated revenues of 444 million yuan ($ 63 million) in 2019, up from 7.84 million yuan in 2017.
The chipmaker is supported by a host of historical investors across the board. In addition to 41.7% of Chen Tianshi commands, other shareholders include Zhongke Suanyuan, a wealth management company established by CAS; Aixi Partners, an entity owned by Cambricon employees and controlled by Chen Tianshi; SDIC Venture Capital, a state-owned investment company approved by the Chinese state council; Titan e-commerce Alibaba; and iFlytek speech recognition provider.