Summary of VeriSilicon Conference Call Company Overview - **Company**: VeriSilicon (688521.SS) - **Industry**: Semiconductor, specifically focusing on AI ASIC solutions and semiconductor IP products Key Points Order Momentum and Growth - Strong order momentum is evident, with orders on hand reaching **Rmb3 billion**, reflecting a **33% YoY** and **23% QoQ** increase, driven by AI ASIC design services and production management orders [4] - Over **80%** of these orders are expected to convert to revenue within one year, supporting sequential growth [4] - The company has **100+ design projects** on hand, indicating growing demand from AI computing projects [4] AI ASIC Projects - Management is optimistic about the growth of AI/ASIC solutions, particularly for cloud and edge devices, including AI/AR glasses, AI smartphones, AI Pads, and AI toys [4] - The trend towards localization of AI chips is expected to benefit the company [4] - Private placement funding is being utilized to accelerate new product development in ASIC IP and GPU IP [4] Semiconductor IP Coverage - VeriSilicon has a comprehensive semiconductor IP coverage, including GPU IP, NPU IP, VPU IP, DSP IP, Display IP, and over **1,600** analog/mixed signal IP and RF IP [4] - In-house IP products are designed to optimize chip size, bandwidth, and performance, saving clients time and costs [4] Financial Projections - The 12-month price target for VeriSilicon is set at **Rmb193**, representing a **26.1% upside** from the current price of **Rmb153** [7] - Revenue projections for the next few years are as follows: - **2024**: Rmb2,321.9 million - **2025E**: Rmb3,025.6 million - **2026E**: Rmb4,951.9 million - **2027E**: Rmb6,526.3 million [7] Risks - Potential risks include: 1. Slower-than-expected technology development [6] 2. Higher-than-expected costs for talent acquisition and retention [6] 3. Weaker-than-expected customer spending on IP and new chipset projects [6] Conclusion - Overall, management remains positive about the rising demand for AI solutions and the company's ability to capitalize on this trend through its AI ASIC turnkey solutions and extensive semiconductor IP offerings [4]

Core Viewpoint - The article discusses the planned acquisition of ChipRising Semiconductor Technology (Shanghai) Co., Ltd. by ChipOrigin Microelectronics (Shanghai) Co., Ltd. through a combination of share issuance and cash payment, highlighting the strategic importance of this move in the RISC-V architecture field [1][4]. Group 1: Transaction Details - ChipOrigin is planning to acquire ChipRising using a combination of shares and cash, with additional fundraising to support the transaction [1][4]. - The specific transaction amount and equity payment ratio have not been disclosed yet, but ChipOrigin has a history of successful cash transactions exceeding tens of millions in recent years [4]. - The transaction is subject to audit, board, and shareholder approval, as well as regulatory approval, indicating some uncertainty [4]. Group 2: Strategic Importance - This acquisition is seen as a key move for ChipOrigin in the RISC-V architecture sector, potentially creating synergies with its existing GPU and NPU product lines [4][7]. - ChipRising, established in 2018, is a leading player in the RISC-V field, offering a complete product line including 32-bit and 64-bit CPU IPs, and has served over 300 domestic and international clients [6][9]. - ChipOrigin ranks first in China and seventh globally in semiconductor IP revenue, with a diverse portfolio of IP types, indicating a strong foundation for the acquisition [6][9]. Group 3: Market Outlook - The acquisition is expected to enhance technological collaboration, particularly in creating a heterogeneous computing platform that combines general computing and specialized acceleration [7]. - The RISC-V architecture is projected to be a critical technology path for overcoming heterogeneous computing challenges, with the AI SoC market based on RISC-V expected to exceed $42 billion by 2030, growing at a compound annual growth rate of 49.2% [7][9].

Core Viewpoint - The article discusses the planned acquisition of Chip Origin Microelectronics (芯原股份) by purchasing equity in Chip Lai Zhi Rong Semiconductor Technology (芯来智融) through a combination of issuing shares and cash payments, which is expected to enhance Chip Origin's position in the RISC-V architecture sector and create synergies with its existing IP product lines [1][4]. Group 1: Transaction Details - Chip Origin is planning to acquire Chip Lai Zhi Rong using a combination of share issuance and cash payments, while also raising matching funds [1][4]. - The specific transaction amount and equity payment ratio have not yet been disclosed, but Chip Origin has a history of completing multiple cash transactions exceeding tens of millions in recent years [4]. - The transaction is subject to audit evaluation, board and shareholder approval, and regulatory approval, indicating some level of uncertainty [4]. Group 2: Strategic Importance - The acquisition is seen as a key move for Chip Origin in the RISC-V architecture field, potentially complementing its existing GPU and NPU product lines [4][7]. - Chip Lai Zhi Rong, established in 2018, is a leading player in the RISC-V sector, focusing on RISC-V CPU IP and platform solutions, with a complete product line serving over 300 domestic and international clients [6][9]. - Chip Origin has a strong presence in the semiconductor IP field, ranking seventh globally and first in China for IP revenue, with a diverse range of IP offerings [6][9]. Group 3: Market Outlook - The acquisition is expected to create multiple technological synergies, enhancing Chip Origin's capabilities in AI computing and automotive electronics [7][9]. - The RISC-V architecture is projected to be a critical technology path for overcoming heterogeneous computing bottlenecks, with the AI SoC market based on RISC-V expected to exceed $42 billion by 2030, growing at a compound annual growth rate of 49.2% [7][9].

Investment Rating - The report maintains a "Recommended" investment rating for the company [1] Core Views - The company has a rich accumulation of core semiconductor IP and has achieved a historical high in its order backlog [9][10] - The company reported a revenue of 974 million yuan in the first half of 2025, representing a year-on-year growth of 4.49%, but incurred a net loss attributable to shareholders of 320 million yuan [5][9] - The company’s order backlog reached 3.025 billion yuan by the end of Q2 2025, marking a year-on-year increase of 569 million yuan and a quarter-on-quarter increase of 23.17% [9][10] Financial Performance Summary - Revenue projections for 2025-2027 are adjusted to 2.896 billion yuan, 4.278 billion yuan, and 5.807 billion yuan respectively, with corresponding price-to-sales (P/S) ratios of 26.0X, 17.6X, and 13.0X based on the closing price on August 26 [10] - The company’s gross margin for the first half of 2025 was 43.32%, down 1.09 percentage points year-on-year, while the net margin was -32.85%, down 2.29 percentage points year-on-year [9] - The company’s R&D expenses accounted for a significant portion of its operating costs, with a rate of 62.85% in the first half of 2025 [9] Order and Business Development - The company has maintained a high level of order backlog for seven consecutive quarters, with new orders signed in Q2 2025 amounting to 1.182 billion yuan, a nearly 150% increase quarter-on-quarter [9][10] - The one-stop chip customization business accounts for nearly 90% of the order backlog, with an expected conversion rate of approximately 81% within a year [10] Market Position and Product Offering - The company’s NPU IP has been adopted by 91 clients for over 140 AI chip models, with nearly 200 million AI chips shipped globally [10] - The company’s core processor IP includes GPU IP, NPU IP, VPU IP, DSP IP, ISP IP, and Display Processing IP, which are widely used by well-known domestic and international companies [10]

Core Viewpoint - The article discusses the recent share transfer pricing of VeriSilicon Limited and other shareholders of Chip Origin Co., Ltd. (688521.SH), highlighting the significant price difference between the transfer price and the market price, as well as the company's business structure and financial performance. Group 1: Share Transfer Details - Chip Origin Co., Ltd. has set a preliminary share transfer price of 105.21 CNY per share, which is approximately 66.63% of the closing price of 157.90 CNY on August 25 [1] - The total number of shares to be transferred accounts for 5.00% of the company's total share capital, with 37 institutional investors participating in the transfer [1] - The total transaction value is expected to exceed 2.7 billion CNY based on the transfer price [1] Group 2: Stock Performance - Over the past year, from September 24 to August 25, Chip Origin's stock price has increased by over 500% [1] - Following the announcement, the stock price experienced a significant drop of 9.87% in the morning session on August 26 [4] Group 3: Business Structure and Revenue - Chip Origin's revenue structure is characterized by a high proportion of one-time licensing fees compared to ongoing royalties, which is atypical for semiconductor IP companies [4][6] - In the first half of 2025, the company's intellectual property licensing fees amounted to 281 million CNY, a year-on-year increase of 8.20%, while royalty fees slightly decreased by 0.03% [6] - The licensing fees accounted for 84.64% of the IP business revenue, indicating a reliance on one-time fees [6] Group 4: Profit Margins and Market Position - The gross margin for Chip Origin's one-stop custom chip services is relatively low at 18.17%, compared to industry leaders like Broadcom and Marvell, which have gross margins around 60% to 75% [14][16] - The company is recognized as a leader in AI ASIC chip design and has provided services to major international clients, with nearly 200 million AI chips shipped globally [15] - The low gross margin in custom chip services is attributed to the diverse customer base and product structure, which may improve as domestic manufacturers expand into AI ASIC markets [17]

Core Viewpoint - The company, VeriSilicon Limited, is conducting a share transfer at a price of 105.21 CNY per share, which is approximately 70% of the closing price on August 25, 157.9 CNY. The transfer involves 26,285,663 shares, accounting for 5% of the total share capital, due to the shareholders' funding needs [2][7][8]. Group 1: Share Transfer Details - The share transfer was quickly finalized within four days after the announcement, with 37 institutional investors participating, including fund management companies, insurance companies, and private equity firms [5]. - The shareholders involved in the transfer include VeriSilicon Limited, which is the largest shareholder, and several other investment partnerships, all citing funding needs as the reason for the transfer [8][9]. Group 2: Business Performance and Orders - The company has been recognized as a leader in AI ASIC technology, with successful chip tape-outs at advanced process nodes, including 5nm FinFET technology [10]. - In the second quarter, the company reported new orders exceeding 700 million CNY for ASIC design revenue, reflecting a more than 700% quarter-over-quarter increase and over 350% year-over-year growth [11]. - The company has a strong order backlog, reaching 3.025 billion CNY as of the end of the second quarter of 2025, marking a 23.17% increase from the previous quarter [12].

Core Viewpoint - The company, Chipone Technology (688521), has experienced significant growth in ASIC orders driven by demand from AI cloud and edge applications, despite reporting a net loss in the first half of the year [2][4]. Financial Performance - In the first half of the year, the company achieved total revenue of 974 million yuan, a year-on-year increase of 4.49%, while reporting a net loss of 320 million yuan [2]. - In the second quarter, the company generated revenue of 584 million yuan, a quarter-on-quarter increase of approximately 50%, with a significant reduction in quarterly losses by 54.84% [2]. Order Backlog - The company has maintained a high order backlog for seven consecutive quarters, reaching a historical high of 3.025 billion yuan by the end of the second quarter of 2025, representing a quarter-on-quarter growth of 23.17% [2]. - Nearly 90% of the order backlog consists of one-stop chip customization services, with about 81% expected to convert within a year, providing strong support for future revenue growth [2]. Business Model and Margins - The company operates a service-oriented business model, focusing on providing customized services rather than selling proprietary products, which helps mitigate market and inventory risks [3]. - As the company's one-stop chip customization capabilities improve, the revenue share from higher-value projects is increasing, enhancing pricing power and core competitiveness, which is expected to positively impact gross margins [3]. ASIC Business Development - The ASIC business has seen a notable increase in orders, with new signed orders exceeding 700 million yuan in design revenue during the second quarter, representing a quarter-on-quarter growth of over 700% and a year-on-year growth of over 350% [4]. - The company has successfully achieved first-pass silicon for 5nm FinFET system-level chips and is executing multiple one-stop service projects in the 5nm/4nm range [4]. AI Market Demand - The demand for AI ASICs is driven by the need for high performance and low power consumption in specific applications, as traditional general-purpose chips struggle to meet these requirements [3][4]. - The company's NPU IP has been adopted in over 140 chip designs for 91 customers, covering various markets, with nearly 200 million chips shipped [4]. RISC-V Ecosystem Development - The company is actively promoting the development of the RISC-V ecosystem, with its semiconductor IP being utilized in over 10 chip designs from major RISC-V suppliers and providing one-stop chip customization services for 23 RISC-V chips for 20 customers, which are entering mass production [5].

Core Insights - The company has experienced significant order growth driven by demand in AI cloud and edge sectors, with a notable increase in ASIC business contributing to revenue growth [1][2] - In the first half of the year, the company signed new orders worth 1.656 billion yuan, a year-on-year increase of 38.33%, primarily from chip design and volume production orders [1] - The company reported a revenue of 974 million yuan in the first half, a 4.49% increase year-on-year, but also saw an increase in net loss to 320 million yuan [1] Order and Revenue Growth - New orders in chip design reached 784 million yuan, up 141.32% year-on-year, while volume production orders were 665 million yuan, up 39.60% [1] - In Q2, ASIC design revenue orders exceeded 700 million yuan, with a quarter-on-quarter growth of over 700% and a year-on-year growth of over 350% [1] R&D and Talent Acquisition - The company has expanded its R&D team to 1,805 personnel, representing 89.31% of the workforce, up from 1,640 last year [2] - The company emphasizes the importance of maintaining growth and achieving scale to reach profitability, leveraging the scale effect typical of platform service companies [2] AI Market Demand - The company has successfully implemented advanced chip processes, including 5nm FinFET technology, and is executing multiple projects in the 5nm/4nm range [2] - The company's NPU IP has been adopted in over 140 chip designs across 91 global clients, with nearly 200 million chips shipped [3] Automotive and Edge AI Applications - The company has received ISO 26262 certification for automotive safety management and has successfully implemented its high-performance SoC design platform for automotive applications [4] - The company is focusing on AI/AR glasses, aiming for lightweight, long-lasting, and cost-effective solutions, with potential sales volumes of 1 to 2 million units if specifications are met [5]

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company has achieved a historical high in backlog orders exceeding 3 billion yuan, driven by significant growth in intellectual property licensing fees and volume business revenue [1] - The company is positioned as a leading player in customized ASIC and IP solutions, with a strong customer base including major tech firms [2][4] - The company is expected to experience substantial revenue growth in the coming years, with projected revenues of 31.8 billion yuan in 2025, 40.6 billion yuan in 2026, and 58.8 billion yuan in 2027, reflecting year-on-year growth rates of 36.9%, 27.6%, and 45.0% respectively [11] Summary by Sections Financial Performance - In Q2 2025, the company reported revenue of 584 million yuan, a quarter-on-quarter increase of 49.90%, primarily driven by a 99.63% increase in intellectual property licensing fees [1] - The company signed new orders worth 1.182 billion yuan in Q2 2025, marking a nearly 150% quarter-on-quarter increase [1] - The company’s backlog reached 3.025 billion yuan by the end of Q2 2025, a 23.17% increase from Q1 2025 [1] Business Segments - The company’s chip design business signed over 700 million yuan in new orders in Q2 2025, with a year-on-year increase of over 350% [2] - The volume business generated revenue of 261 million yuan in Q2 2025, reflecting a quarter-on-quarter growth of 79.01% and a year-on-year growth of 11.65% [3] - The company has a diverse application portfolio, including data centers, automotive, wearable devices, and IoT, which positions it to benefit from the growing demand in these sectors [4] Market Position - The company has established a strong presence in the semiconductor industry, with significant experience in various process nodes from 5nm to 250nm [2] - The company’s intellectual property (IP) revenue from GPU, NPU, and VPU IP accounted for approximately 75% of its total IP revenue in the first half of 2025 [9][10] - The company is actively collaborating with leading clients in AI and automotive sectors, enhancing its market competitiveness [4][10]

Investment Rating - The report maintains a "Recommended" rating for the company [1] Core Views - The company is strategically positioned in the AIGC sector, with a strong order backlog [1] - In 2024, the company achieved revenue of 2.322 billion yuan, a slight decrease of 0.69% year-on-year, while the net profit attributable to shareholders was -601 million yuan, a significant decrease of 102.68% year-on-year [5][9] - For Q1 2025, the company reported revenue of 390 million yuan, a year-on-year increase of 22.49%, with a net profit of -220 million yuan, a decrease of 6.45% year-on-year [5][10] Financial Performance Summary - Revenue and Profitability: - 2024 revenue: 2.322 billion yuan, down 0.69% YoY - 2024 net profit: -601 million yuan, down 102.68% YoY - 2025 Q1 revenue: 390 million yuan, up 22.49% YoY - 2025 Q1 net profit: -220 million yuan, down 6.45% YoY [5][9][10] - Revenue Growth Projections: - 2025E revenue: 2.955 billion yuan, up 27.3% YoY - 2026E revenue: 3.617 billion yuan, up 22.4% YoY - 2027E revenue: 4.404 billion yuan, up 21.8% YoY [7][12] - Profitability Ratios: - 2024 gross margin: 39.9%, down 4.89 percentage points YoY - 2024 net margin: -25.9%, down 13.20 percentage points YoY - 2025E net margin: -8.9% [9][12] Market Position and Future Outlook - The company has a leading position in the NPU IP market, with its technology adopted in 142 chip designs across 82 clients [10] - The company is benefiting from increased demand in data processing, consumer electronics, and automotive electronics, with respective revenue growth of 75.46%, 64.07%, and 37.32% in these sectors [9][10] - The company is expected to maintain a strong order backlog, with 2.456 billion yuan in orders as of Q1 2025, marking a historical high [10]