Author: Li Xi
Edit: Yu Kuai
The valuation surged by more than 20 billion yuan in 5 years
On December 16, Xingchen Technology held a meeting for the first time.
Xingchen Technology was established in December 2017. This young chip company has raised four rounds of financing in just five years, and its valuation has skyrocketed during this period.
In 2018, the valuation of Xingchen Technology was only 282 million yuan; after two rounds of financing in May and December 2019, the valuation increased from 551 million yuan after the Pre-A round to 1.333 billion yuan after the A round.
In the following three years, the valuation of Xingchen Technology has achieved a triple jump. In June 2020, the valuation after the B round was 3.571 billion yuan; in February 2021, the valuation after the C round was 4.522 billion yuan; Technology indirect shareholders transfer the company’s shareholder equity held by them, with a valuation of 22.61 billion yuan.
This means that within five years, the valuation of Xingchen Technology has soared by more than 20 billion yuan, an increase of about 80 times.
Simultaneous growth with the valuation is the performance of Xingchen Technology, which is mainly engaged in video surveillance chips, and its business is mainly in the three major fields of intelligent security, video intercom, and intelligent vehicle. The performance of Xingchen Technology in recent years can be said to be a helicopter:
From 2019 to 2021, the revenue of Xingchen Technology will be 711 million yuan, 1.193 billion yuan, and 2.686 billion yuan respectively, and the net profit will be 63 million yuan, 217 million yuan, and 754 million yuan respectively. The performance will continue to rise, especially in 2021. Xingchen Technology’s revenue increased by 125.19% year-on-year, and its net profit increased by 247.29% year-on-year.
According to Frost & Sullivan data, in 2021, in the field of smart security, its global IPC SoC market and global NVR SoC market share will be 36.5% and 38.7%, respectively, ranking first in the market; in the field of video intercom, the global USB video conferencing camera chip market share The market share is 51.8%, ranking first in the market; in the field of smart vehicles, China’s driving recorder chip market share is 24.0%, ranking second in the market, and the market share in China’s 1080P and above driving recorder chip market is 50.0%, ranking first in the market.
However, judging from the data, the performance of Xingchen Technology in the first half of 2022 has a clear downward trend.
From January to September 2022, Xingchen Technology’s operating income was 1.69 billion yuan, a year-on-year decrease of 22.38%, and its net profit was 394 million yuan, a year-on-year decrease of 41.18%. Mainly due to the decline in sales revenue of video intercom chip products.
The performance has declined, but the valuation has not decreased but increased. Even on the eve of Xingchen Technology’s IPO, shareholders paid a large dividend.
In the first half of 2022, the amount of cash dividends of Xingchen Technology is 364 million yuan. It is worth mentioning that its net profit attributable to the parent in 2021 is only 754 million yuan, of which the undistributed profit is 600 million yuan. This also means that Xingchen Technology distributed 60.19% of the company’s four-year profits to shareholders.
In addition, as of the end of 2020, the end of 2021, and the end of June 2022, Xingchen Technology’s transactional financial assets were 141.4074 million yuan, 304.9327 million yuan, and 216.6281 million yuan, respectively. The transactional financial assets are mainly wealth management products. In other words, Xingchen Technology spent 140 million yuan to purchase wealth management products within two years of its establishment.
Backed by MediaTek, the sword refers to the global NO.1 security chip
SigmaStar Technology, also called SigmaStar, its core team comes from MStar Semiconductor (MStar), its core business is in ISP, audio and video codec, analog circuit design, SoC system design and self-developed IP, and behind MStar, stands It is MediaTek (MTK for short).
MediaTek was established in 1997. Cai Mingjie left UMC and established it together with the multimedia chip design department led by him. It strategically positioned “third-rate price and first-class quality”. It once won the title of “King of Copycat Phones” through cooperation with Huaqiangbei. .
Interestingly, MStar and MediaTek used to be competitors. In 2012, MediaTek announced the acquisition of MStar for NT$100 billion, which was the largest acquisition in the field of mobile phone chips in China at that time. The acquisition was not fully completed until February 2018.
The year before the completion of the acquisition, that is, in 2017, former MStar Semiconductor COO Lin Yongyu and other MStar core personnel established Xingchen Technology in Xiamen. Lin Yongyu served as chairman and general manager, attacking consumer electronics, security, Internet of Things and multimedia AI. chip field.
The newly established Xingchen Technology was invested by MediaTek for 1 billion and officially settled in Xiamen in August 2018.
In terms of equity structure, before the IPO, MediaTek held 81.05% of the shares of Xingchen Technology through SigmaStar.
However, before going public, MediaTek held only 31.98% of Sigma’s shares through equity operations, making “Sigma Technology no controlling shareholder or actual controller” after January 1, 2020.
They even specially released the “Commitment Letter on Not Constituting Actual Control and Not Seeking Control of Xingchen Technology Co., Ltd.”, industry insiders said, this move may be to weaken the concerns of MediaTek as the actual controller.
Even so, Xingchen and MediaTek behind it are still inextricably linked.
Technically, Sigma Technology entrusts MediaTek and its holding subsidiaries to provide non-core product development services. During the reporting period, the purchased product development services were 50.8 million yuan, 38.45 million yuan, 30.308 million yuan, and 10.8649 million yuan, accounting for the current R&D The ratios of fees are 29.00%, 14.31%, 6.68% and 4.57% respectively.
As of August 19, 2022, among the core technologies of Xingchen Technology, 51 patents have been authorized, of which 24 were acquired by the company from MediaTek and its subsidiaries, accounting for 47.06%.
In fact, Xingchen Technology has 120 authorized patents, 57.5% of which come from the transfer method.
In terms of business, the IPO of Xingchen Technology and related procurement transactions with MediaTek reached 150 million yuan.
According to the prospectus, in 2019, Xingchen Technology purchased 4.6362 million yuan of related patents, 11.60 million yuan of inventory and 1.6386 million yuan of fixed assets from MediaTek and its holding subsidiaries.
Xingchen Technology has long coveted HiSilicon’s dominance in security for a long time. MediaTek has fought against HiSilicon in many fields, but most of them failed to win, and placed high expectations on Xingchen.
As early as 2019, there was a voice that “Challenge Huawei HiSilicon, MediaTek’s Xingchen Technology wants to win the first throne of IPC chips”.
But its ambition is more than that. Lin Yongyu also stated in public that the goal of Xingchen Technology is to become the world’s number one in the security monitoring chip market.
At that time, the company was only 2 years old.
It’s hard to be king
Although Xingchen has rapidly increased its market share in the past two years, it is not easy to truly win the No. 1 position in security.
Now the security industry is undergoing new changes:
The boundary between big consumer and traditional security is blurred, and the former penetrates into the latter
In the past, security mainly faced channels and required professional project-based products, but now in many scenarios, such as supermarkets, stores, communities, etc., consumer products can already meet the needs, and gradually penetrate into traditional security by virtue of advantages such as price and size .
Closed AI gradually fades out of the market, open AI becomes mainstream
The chemical reaction energy produced by “AI+Security” is huge, and the future AI must be open. AI without platform development capabilities will be gradually abandoned by the market.
Large series of product categories
Between the IPC chip, AI algorithm, NVR and low-power cameras, an overall series connection solution will be formed.
These three major changes mean that chip companies must not only consider product lines, but also increase investment in AI, and provide market-oriented products covering various categories, low-end, high-end products.
Security chip companies want to become bigger and stronger. In addition to having a keen market sense and strategic deployment, the chip itself is a technology + capital-intensive industry, and there is no speculation. Enterprises must have the determination to invest in talents and funds for a long time. The core technology must be fully accumulated, and this cannot be achieved overnight.
The problem that Xingchen Technology also faces is that there are wolves around.
HiSilicon fell from a peak of 60% in 2019 to 3.9%.
Amid the turmoil, the industry reshuffled and a number of domestic companies emerged.
Xingchen Technology, Fullhan Micro, Beijing Junzheng, Guoke Micro, and Vimicro are making rapid progress in the field of video IoT. Amlogic, Quanzhi Technology, and Rockchip have also deployed in the field of security SoCs, and competition is undercurrent.
Different manufacturers can choose different breakthrough directions based on their own advantages and resources, and each has its own advantages in ecology, business, and performance.
Beijing Junzheng has attacked back-end chips and launched NVR chips. It has been working in the visual field for more than ten years, and in recent years has made great efforts in the smart security market. From 2016 to 2020, the revenue in the security SoC field has continued to increase. In the first half of 2021, revenue was 2.336 billion yuan, a year-on-year increase of 558.46%, and net profit increased by 2994.8%.
Fullhan Micro, backed by the leading security company Haikang, as a domestic ISP head company, has been actively deploying IPC and back-end SoC in recent years. The holding subsidiary Moxin aims at the NVR field. surge.
Novatek has been cultivating for many years, has a complete product line, and has developed steadily in recent years.
Vimicro Technology successfully released the SVAC/H.265 dual-mode codec chip – “Starlight Smart No. 3”, which is a new generation of video codec chip independently innovated in China.
Then there is the question of application.
Right now, most players will choose business, performance, ecology and other directions as breakthrough points based on their own resources and advantages.
However, a good chip must be polished and iterated in actual scenarios. Without years of positive polishing, it is difficult to accumulate AI engineering delivery capabilities.
The security market is extremely fragmented, and the cost advantage can only be achieved if the shipment quantity exceeds 5 million pieces; front-end, storage, product development, and organization construction all need corresponding time to make sufficient accumulation.
Furthermore, it is a technological breakthrough.
Beijing Ingenic, Fullhan, Novatek, and Sigma Technology have become the biggest beneficiaries of the shortage of mid-range security chips, ranking among the top in the market, but no company’s products have replaced HiSilicon’s high-end 3559A.
The competition in the high-end security chip market continues, especially in artificial intelligence chips.
There are a large number of algorithms in the security field that need to be front-end, and the current algorithm training is basically based on the back-end deep learning model.
In addition, the security industry also needs to process a large number of continuous image data streams in real time. Data processing lies in two dimensions: 1. The processing frame rate per second must be higher and higher; 2. Image resolution must be higher and higher.
At the same time, the most critical thing in the chip is not simply to increase the computing power. If the storage is not optimized, the actual computing power provided by the chip will be greatly reduced. Leifeng.com Leifeng.com
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