Core viewpoints
Core original Co., Ltd. is a company that relies on independent semiconductor IP to provide customers with platform, omni-directional and one-stop chip customization services and semiconductor IP licensing services. The company is the first semiconductor IP supplier of Chinese mainland, and the fifth in the world in intellectual property royalty revenue. IP provides basic modules for chip design, and new products and process iterations give rise to IP requirements. With the development of artificial intelligence, autopilot and high-bandwidth memory, the advantages of IP reusability and diversity will bring innovation in SoC chip and Chiplet technology, and will bring performance flexibility to the company.
Abstract
Relying on independent semiconductor IP, it ranks first in China and seventh in the world.
The company is the first semiconductor IP supplier of Chinese mainland, and the fifth largest royalty income of intellectual property rights in the world. Relying on independent semiconductor IP, the company provides customers with platform, omni-directional, one-stop chip customization services and semiconductor IP authorization services. Autonomous and controllable graphics processor IP, neural network processor IP, video processor IP, digital signal processor IP, image signal processor IP and display processor IP six processors IP, more than 1500 digital-analog mixed IP and radio frequency IP. The main application fields of the company's IP include consumer electronics, automotive electronics, computers and peripherals, industry, data processing, Internet of things and so on. The main customers include chip design companies, IDM, system manufacturers, large Internet companies, cloud service providers and so on.
IP provides basic modules for chip design. New products and process iterations give rise to IP requirements. Semiconductor IP provides basic modules for chip design. Fabless and IDM enterprises are the main downstream customers of IP core manufacturers. In 2022, the revenue of design IP reached US $6.677 billion, an increase of 20.9% over the same period last year. The combined market share of the top 10 IP suppliers was 80.3%, of which the share of core shares was 2.0%. In terms of categories (processors, wired interfaces, physical, digital), the interface category grew from 18% to 24.9% between 2017 and 2022, making it the fastest growing category of IP. IP reuse reduces the chip development cost and reduces the development cycle. Take ARM ecology as an example, the development cost of 28nm SOC has dropped to nearly $20 million, which is more than 50 per cent lower than that without ARM ecology. At the same time, the reuse of IP can greatly reduce the development cycle and avoid repetitive work, and the design cycle can be reduced from 3-4 years to 1.5-2 years.
Chiplet heterogeneous integration breaks through the bottleneck, and is expected to become the company's second development curve, the perception of everything, the Internet of everything and the intelligence of everything push computing technology into a new round of rapid development. With the increasing demand for computing power and data processing, the current development of integrated circuits is restricted by "four walls" ("storage wall", "area wall", "power wall" and "function wall"). The advanced packaging technology with Chiplet heterointegration as the core will become the key path and breakthrough for the development of integrated circuits.
Chiplet (core particle) is one of the new technologies that can balance computing performance and cost, improve design flexibility, and improve the economy and reusability of IP modules.
Chiplet architecture can be widely used in high performance computing, autopilot, high bandwidth memory and other applications. As the demand for computing power increases, the size of the Chiplet market will increase from $7.37 billion in 2021 to $23.91 billion in 2027, with a compound growth rate of 26.54%.
With the advantages of reusability and diversity of IP, a new era of SoC chip and Chiplet technology innovation Chiplet is beginning, and a new reuse mode of IP is coming. At present, a number of IC industry chain leaders represented by AMD, Intel Corp and Taiwan Semiconductor Manufacturing Co Ltd have successively issued mass production feasible Chiplet solutions, interface protocols or packaging technology, and Core has become one of the first mainland enterprises to join the UCIe alliance. With the evolution of process nodes, the company continues to research and develop chip customization technology, and continues to improve the chip design capability of advanced process nodes based on FinFET and FDSOI. The company's customer base is gradually changing, with an increase in the proportion of system vendors, Internet enterprises and cloud service providers. As of the mid-2023 report, the company's revenue from system vendors, Internet enterprises and cloud service provider customers accounted for 44.31% of total revenue.
Domestic independent IP leader, downstream permeability improvement ushered in performance elasticity. We estimate that the company's revenue in 2023-2025 will be-6.74,16.99% and 24.34%, with a year-on-year increase of-6.74,16.99% and 24.34%. The net profit of homing company is 0.60Universe 0.79Univer 2.07 billion yuan, and EPS is 0.12100,16,0.21 yuan per share, corresponding to 9X in 2024, as the company is the first listed IP company in China. We selected overseas industry comparable companies ARM, Synopsys, Cadence, CEVA and Shixin, with an average PS valuation of 10x in 2024. As the company is Chinese mainland's number one semiconductor IP supplier, intellectual property royalty revenue ranks fifth in the world. The market share in 2022 is 2.0%. Compared with international manufacturers such as ARM, the company provides a unique SiPaaS service model. With the development of artificial intelligence, autopilot and high-bandwidth memory, the demand for IP reusability expands, and the company is expected to have the opportunity of rapid growth. Considering the low market share of core shares and obvious growth in the future, we give a 6-month target price of RMB 93.63 for PS 16x in 2024 and a "buy" rating.
Risk tips: design research and development, technology upgrade iteration, technology licensing, chip customization business gross profit margin fluctuations and other risks.