The automotive/mobile chip design project went smoothly & mass production orders resumed, and 24Q2 revenue increased 93% month-on-month.
The company's 24H1 revenue was 0.932 billion yuan, down 21.27% year on year, and net profit to mother was 0.285 billion yuan, changing from profit to loss year over year. 24Q2's single-quarter revenue was 0.614 billion yuan, up 92.96% month-on-month, and net profit to mother was 0.078 billion yuan. The loss was 62.40% narrower than 24Q1; the gross profit margin was 43.74%, down 1.96pct from month to month. The month-on-month decline in gross margin was an increase in the revenue share of the one-stop chip customization business.
The volume and price of 24Q2 IP licenses rose sharply, and mass production orders recovered significantly, driven by improved inventory from downstream customers.
By business, 24Q2 IP licensing revenue was 0.184 billion yuan, +45% month-on-month, of which IP licensing revenue was 0.16 billion yuan, +61% month-on-month. Specifically, 24Q2 semiconductor IP was authorized 65 times, +12 times a month over month; and the average IP license fee was about 2.46 million yuan/time, +31% month over month.
24Q2 chip customization business revenue was 0.427 billion yuan, +124% month-on-month. (1) The mass production business revenue was 0.234 billion yuan, +125% month-on-month, mainly benefiting from the significant improvement in downstream customer inventory conditions and the resumption of mass production orders.
(2) The chip design business generated revenue of 0.193 billion yuan, +122% month-on-month, mainly benefiting from the smooth progress of projects such as 5nm autonomous driving master control chips from new car companies and AI ISP coprocessor chips from domestic mobile phone manufacturers.
The amount of on-hand orders has exceeded 2 billion yuan for five consecutive quarters, and future revenue is highly certain.
By the end of 24Q2, the company had orders of 2.271 billion yuan. Among them, the chip design business has on-hand orders of 1.038 billion yuan, which is at a historically high level; the mass production business has placed orders of 0.754 billion yuan, an increase of 21% over the end of 23.
The company expects to convert about 81% of its orders within one year, laying the foundation for the company's future revenue growth.
Actively embrace AIGC and automotive intelligence, expand the product matrix, and deepen cooperation with leading customers in the industry.
The company's processor IP can meet various AI computing needs. 24H1's IP license usage revenue related to AI computing power was 0.122 billion yuan, accounting for 47.22%. (1) After NPU IP is expanded through multiple convolutional computing cores, the computing power can reach 400 TOPs, which can be better used in the field of AI. As of 24H1, NPU IP has been used by 72 customers in 128 AI chips, and more than 0.1 billion AI chips with NPU IP have been shipped.
(2) GPU IP can support large-scale general-purpose computing and AIGC related applications, and has been used and deployed by customers in various high-performance AI chips for data centers/high-performance computing/automotive fields.
24H1's automotive electronics revenue was 0.136 billion yuan, up 98% year over year. As of 24H1, the company's IP has been licensed to more than 20 automotive electronics customers around the world. Many world-renowned automotive OEMs use the company's GPUs for in-vehicle infotainment systems or dashboards, and NPU IP has also been used by many customers for ADAS products.
Domestic IP & ASIC unicorns embrace Chiplet's 100 billion market and maintain a “buy” rating.
The advent of AIGC such as ChatGPT marks an epoch-making moment for AI, and VeriSilicon is expected to fully benefit as the leading domestic IP &ASIC king. Net profit for 2024-2026 is expected to be 0.019/0.103/0.22 billion yuan respectively, corresponding to the 24/25/26 PE of 746.3/142.4/66.4 times, maintaining the “buy” rating.
Risk warning: geopolitical risk; technology licensing risk; intellectual property risk; technology iteration risk.