Loongson Technology(688047)2024-04-26 10:24Corporate Governance and Compliance - The company has no special arrangements for corporate governance[5] - The company has no non-operational fund occupation by controlling shareholders or other related parties[5] - The company has no violations of decision-making procedures for external guarantees[5] - The company has no instances where more than half of the directors cannot guarantee the authenticity, accuracy, and completeness of the annual report[5] - The company's annual report is guaranteed to be true, accurate, and complete by the company's responsible person, the person in charge of accounting work, and the accounting institution[3] - The company's board of directors, board of supervisors, and senior management guarantee the authenticity, accuracy, and completeness of the annual report[2] - The company has established a comprehensive internal control system, including the Articles of Association, Rules of Procedure for Shareholders' Meetings, and Rules of Procedure for the Board of Directors, ensuring compliance with laws and regulations and protecting the interests of shareholders[145] - The company's internal control system was audited by Tianzhi International Accounting Firm, which issued a standard unqualified opinion on the effectiveness of the internal controls for 2023[147] - The company has implemented a unified management system for subsidiaries, focusing on risk management and improving operational efficiency through training and system improvements[146] Financial Performance and Metrics - Revenue in 2023 decreased by 31.54% to RMB 5,056.94 million compared to the previous year[20] - Net profit attributable to shareholders in 2023 was RMB -329.44 million, a decrease of 736.57% year-on-year[20] - R&D investment accounted for 103.47% of revenue in 2023, an increase of 49.64 percentage points from the previous year[21] - Gross profit margin decreased by 11.03 percentage points in 2023 due to increased fixed costs per unit and pricing pressure[22] - Operating cash flow in 2023 was RMB -410.33 million, compared to RMB -769.05 million in 2022[20] - Total assets at the end of 2023 were RMB 4,112.09 million, a decrease of 5.87% from the beginning of the year[20] - Basic and diluted earnings per share in 2023 were RMB -0.82, a decrease of 685.71% year-on-year[21] - Weighted average return on equity in 2023 was -8.84%, a decrease of 10.80 percentage points from the previous year[21] - Revenue in Q4 2023 was RMB 1,113.87 million, with a net loss attributable to shareholders of RMB -122.54 million[24] - R&D expenses increased by 35.68% in 2023 due to market expansion and intellectual property litigation[22] - Non-current asset disposal gains and losses amounted to -2,676.91 million, -4,917.61 million, and -51,200.12 million respectively[26] - Government subsidies included in current profits were 61,399,674.46, 196,241,583.27, and 81,390,965.78 respectively[26] - Gains and losses from changes in fair value of financial assets and liabilities were 38,821,703.01, 19,485,602.94, and -5,963.81 respectively[26] - Other non-operating income and expenses were 26,121,322.15, -2,923,955.75, and -404,339.22 respectively[27] - Total non-recurring gains and losses were 112,420,305.44, 208,529,827.46, and 66,818,744.74 respectively[27] - VAT refunds amounted to 714,966.40 due to software product tax incentives[28] - Government grants with an amortization period of 3 years or more amounted to 17,005,580.33[28] - The fair value of trading financial assets decreased by 23,334.27 million, impacting current profits by -334.28 million[29] - The fair value of other equity instrument investments increased by 1,162.69 million[29] - Total fair value of financial assets decreased by 22,162.57 million[29] - Revenue in 2023 was 506 million yuan, a year-on-year decrease of 31.54%[31] - Gross profit margin decreased by 11.03 percentage points to 36.06% due to increased fixed costs and pricing pressure[31] - R&D investment in 2023 was 523 million yuan, a year-on-year increase of 31.59%[31] - The company reported a net loss attributable to the parent company's owners of RMB -329,439,799.58 for 2023[141] - The parent company's undistributed profit as of December 31, 2023, was RMB 137,199,113.02[141] - No cash dividends, stock dividends, or capital reserve to share capital conversion will be distributed for 2023 due to the net loss[141] R&D and Technological Advancements - Loongson Technology Corporation Limited is the company's full name, with Loongson Technology as its abbreviation[14] - The company is headquartered at No. 2 Building, Loongson Industrial Park, Zhongguancun Environmental Protection Technology Demonstration Park, Haidian District, Beijing[14] - Loongson Coherent Link (LCL) is a new-generation high-speed inter-chip interface technology primarily used in server CPUs for high-speed cache-coherent message transmission[13] - The company's LoongArch instruction system, launched in 2020, is a new reduced instruction set computing (RISC) architecture[10] - Loongson operates under the Fabless model, focusing on chip design, R&D, application, and sales while outsourcing manufacturing, packaging, and testing[10] - The company's key products include general-purpose processors (CPUs), bridge chips, and system-on-chip (SoC) solutions[10] - Loongson's ecosystem involves collaboration with various hardware and software enterprises, forming a complex industrial ecosystem[11] - The company's technology portfolio includes advanced process nodes, EDA tools, and IP cores for integrated circuit design[10] - Loongson's products support both 32-bit and 64-bit architectures, catering to a wide range of computing needs[11] - The company's website is https://www.loongson.cn/, and its investor relations email is ir@loongson.cn[14] - New products developed in 2023 include the 1D100 MCU for ultrasonic water meters, the 2P0500 printer SoC, and the 4-core desktop CPU 3A6000[32] - The company opened its LoongArch CPU core IP to partners to expand the ecosystem[32] - The company's chip design capability has improved significantly, with the ability to develop around 5 new chips annually compared to 1-2 before listing[31] - Loongson 2P0500 chip integrates LA364 and LA132 processor cores with 512KB shared L2 cache, supporting DDR3, GMAC, USB, and other interfaces, suitable for printer and scanner applications[34] - Loongson 3A6000 features a 64-bit quad-core processor with a frequency of 2.0-2.5GHz, supporting simultaneous multithreading and dual-channel DDR4-3200, targeting desktop and server applications[34] - Loongson 3C5000 is a 64-bit 16-core processor with a frequency of 2.0-2.2GHz, supporting quad-channel DDR4-3200 and up to 16-way interconnection, designed for server applications[34] - Loongson 3D5000 integrates two 3C5000 dies, forming a 32-core processor with a frequency of 2.0GHz, supporting eight-channel DDR4-3200 and up to four-way interconnection, targeting server applications[34] - Loongson 7A2000, the second-generation bridge chip, supports PCIE3.0, USB3.0, SATA3.0, and integrates a self-developed 3D GPU with a maximum of 16GB DDR4 VRAM, compatible with Loongson 3 series processors[34] - The company strengthened its PC and server motherboard ODM capabilities, forming a "three-in-one" capability with CPU and operating systems, optimizing solutions in server BMC, storage servers, and industrial terminals[35] - Loongson opened its CPU core IP licensing to partners, enabling them to develop SoC chips based on Loongson's architecture, with revenue from this segment classified under industrial control or information technology chip revenue starting in 2023[35] - The company operates in a Fabless model, focusing on chip design while outsourcing wafer manufacturing, packaging, and testing, with in-house testing labs to enhance quality control[36] - Loongson's 3A6000 processor performance reached the level of the 10th generation quad-core Core processors, demonstrating the company's ability to optimize performance through design on mature processes[39] - The company achieved breakthroughs in international open-source software ecosystem development, establishing the LoongArch architecture as a parallel system to X86 and ARM, with improved compatibility for Linux-based software[39] - The global integrated circuit manufacturing capacity is relatively oversupplied in 2023, with significant differences in capacity utilization across different process platforms. In mature wafer and packaging process platforms, capacity significantly exceeds demand, while advanced wafer and packaging process platforms remain tight[40] - The company successfully taped out the LA664 processor core in its new high-performance general-purpose processor 3A6000, achieving design targets for functionality, performance, and power consumption[43] - The company released the first version of the driver software for the LG100 series GPU cores, supporting GPU acceleration for mass-produced chips like 7A2000 and 2K2000[44] - The second-generation GPU core LG200 has completed pre-silicon verification and passed OpenGL and OpenCL compatibility tests, with the 2K3000 chip expected to tape out in the first half of 2024[44] - The company developed multiple IP cores, including PCIE4.0 controllers, LCL controllers, DDR4 memory controllers, and LPDDR4 memory controllers, to enhance chip competitiveness[45] - The company improved its physical design platform, adopting new EDA tools and methods to enhance high-performance, low-power, and low-cost physical design capabilities[46] - The company achieved comprehensive support for LoongArch architecture in Linux kernel versions, enabling the latest community kernel versions to be used for Loongson platform OS development[47] - The company released Loongson Unified System Architecture 4.1, optimizing hardware design specifications and achieving cross-vendor and cross-generation compatibility for its operating systems[48] - The company initiated the development of the next-generation LA664 and LA364 processor cores, focusing on improving execution efficiency and energy efficiency[43] - The company continues to explore the adaptation and application of domestic EDA tools, with some preliminary achievements already made[46] - The Loongson binary translation system has been continuously improved, achieving AOT to accelerate application startup time and enhance user experience. It also implemented library pass-through technology for frequently called library functions, improving translation efficiency and compatibility with X86 Linux and partially with X86 Windows platforms[49] - The Loongson printer driver engine technology achieved a breakthrough, supporting over 6,300 printer models from more than 50 brands, significantly addressing the lack of printer driver support in Linux desktop systems[49] - The Loongson 3A6000 quad-core CPU achieved a 60% improvement in single-thread performance and a 100% improvement in multi-core performance compared to the previous generation 3A5000, while effectively reducing costs[51] - The LoongArch architecture has become a top-tier instruction set architecture alongside X86 and ARM in the international open-source software community, with support from major open-source projects like Linux kernel, GCC, LLVM, and others[52] - The company has contributed over 1 million lines of source code to nearly 200 international open-source software projects, fostering the development of the LoongArch ecosystem[52] - The company holds 690 authorized patents, including 546 invention patents, 143 utility model patents, and 1 design patent, along with 175 software copyrights and 22 integrated circuit layout design rights[53] - The total R&D investment in 2023 reached 5,232.219 million yuan, a 31.59% increase from the previous year, with R&D expenses accounting for 103.47% of operating revenue[55] - The capital-to-expense ratio of R&D investment decreased by 2.45 percentage points to 18.86% in 2023[55] - The company successfully taped out the 3C6000 16-core CPU, which can be packaged into 32-core and 64-core products, and completed the productization of the 32-core 3D5000 chip[51] - The Loongson application compatibility framework allows applications to run directly on other Linux platforms after a single migration, with the company providing the necessary runtime environment[52] - Chip R&D Project A: 32-core product has been officially launched, with a cumulative investment of 19,993.90 million yuan, targeting high-performance multi-core processor chips for the server market[58] - Chip R&D Project B: Completed initial verification of multiple industrial control SoC chip products, with a cumulative investment of 3,880.25 million yuan, targeting SoC chip products for industrial control and terminal markets[58] - Chip R&D Project E: Completed tape-out and initial verification of a new generation of products, with a cumulative investment of 7,232.68 million yuan, targeting high-performance processor chips for desktop and server markets[58] - Chip R&D Project I: Completed structural design optimization and tape-out of a new 16-core product, with a cumulative investment of 1,990.87 million yuan, aiming to improve inter-chip connectivity and increase processor performance by over 50%[59] - Key Core Technology R&D Project A: Completed development, achieving design goals with a cumulative investment of 9,025.26 million yuan, focusing on higher performance processor core IP[59] - Key Core Technology R&D Project B: Completed first-generation technology optimization, with a cumulative investment of 8,549.07 million yuan, targeting graphics processing and general computing requirements[59] - Key Core Technology R&D Project C: Completed design of inter-chip connectivity and high-speed interfaces, with a cumulative investment of 5,644.71 million yuan, aiming to increase data transmission speed and expand protocol compatibility[60] - Key Core Technology R&D Project D: Completed development, achieving design goals with a cumulative investment of 3,409.17 million yuan, focusing on improving mid-to-high-end processor core performance[60] - Operating System Basic Software R&D: Achieved support for LoongArch architecture in major international open-source software communities, with a cumulative investment of 29,876.85 million yuan, targeting desktop, server, embedded, IoT, cloud computing, and big data fields[62] - Packaging and Testing Technology R&D: Established mid-test and final-test capabilities for general-purpose processors, with a cumulative investment of 2,937.64 million yuan, focusing on high-performance multi-core chip packaging[60] - The company's R&D investment in the 3rd series solutions reached 5,416.93 million yuan, with a total investment of 17,114.11 million yuan, leading to the development of multiple PC/server solutions, some of which have achieved mass production[19] - The 2nd series solutions R&D investment was 3,173.69 million yuan, totaling 6,745.21 million yuan, resulting in various products and solutions based on Loongson SoC chips, with some projects in verification/testing and others in mass production[20] - The 1st series solutions R&D investment was 774.29 million yuan, totaling 3,462.48 million yuan, focusing on MCU chip-based solutions for industries like smart locks and smart meters[21] - The company's R&D personnel increased to 636, accounting for 68.24% of the total workforce, with a total R&D salary of 31,244.01 million yuan and an average salary of 49.13 thousand yuan[67] - The company has developed a comprehensive ecosystem with thousands of partners and tens of thousands of developers, leveraging its proprietary LA instruction set architecture[70] Market and Sales Performance - Sales in the industrial control sector were significantly impacted by market stagnation in a specific field[31] - Server and terminal board revenue increased significantly, partially offsetting the decline in traditional electronic government procurement[31] - The company developed a white-label server and cloud terminal products to mitigate the impact of the stagnant electronic government market[31] - The company focused on optimizing sales channels and product pricing to enhance market competitiveness[31] - Revenue from industrial control chips decreased by 41.21% year-on-year to 16,202.78 million yuan, with a gross margin decline of 8.42 percentage points[86] - Revenue from information-based chips dropped by 51.23% year-on-year to 9,150.83 million yuan, with a gross margin decline of 16.10 percentage points[86] - Revenue from solutions decreased by 8.13% year-on-year to 25,109.06 million yuan, with a gross margin decline of 8.95 percentage points[86] - Production of processors and supporting chips decreased by 60.57% year-on-year to 1,302,088 units, while sales decreased by 25.03% to 777,967 units[87] - Material and outsourcing costs for integrated circuits decreased by 20.83% year-on-year to 24,712.03 million yuan, accounting for 76.56% of total costs[89] - Labor costs for integrated circuits decreased by 23.21% year-on-year to 319.00 million yuan, accounting for 0.99% of total costs[89] - Manufacturing expenses for integrated circuits remained relatively stable, decreasing by only 0.44% year-on-year to 7,245.07 million yuan[89] - Sales to the top five customers amounted to 18,843.31 million yuan, accounting for 37.26% of total annual sales[91] - The first and fifth largest customers were new additions to the top five customer list in the reporting period[92] - Procurement from the top five suppliers amounted to 38,160.11 million yuan, accounting for 75.46% of total annual procurement[93] - Total procurement from top 5 suppliers accounted for 75.46% of the annual procurement, with BQ11 being the largest supplier at 26.67%[94] - Sales expenses increased by 18.14% to 10,602.31 million yuan, while R&D expenses surged by 35.68% to 42,456.23 million yuan[96] - Net cash flow from operating activities improved to -41,032.74 million yuan from -76,904.62 million yuan in the previous year[97] - Monetary funds decreased by 28.43% to 49,836.81