Core ideas

Black Sesame Intelligence is a new star in the field of smart driving chips and solutions in China. The core chip products are the Huashan series of intelligent driving chips and the Wudang series of integrated cross-domain integrated cabin driving chips. As China and the US continue to upgrade their chip regulations and counterattacks, the mainstream market will lean towards domestic manufacturers, and Black Sesame Intelligence is expected to become one of the main beneficiaries of domestic smart driving chip replacement. The company has strong technical strength. It has developed its own core technology chip IP image processor NeuralLQ ISP and the automotive-grade low-power neural network accelerator nPUDynaMinn engine, which can quickly respond to demand, complete product iteration and achieve differentiated competition, building the company's core competitive advantage. In the field of smart driving chips, relying on its cost-effective positioning, the Black Sesame Smart Huashan series invigorates the Chinese computing power chip market. In the future, with mass production of the A2000, the company is expected to occupy a place in the high computing power market with a lower price and a good level of computing power.

summary

Black Sesame Intelligence is a leading supplier of automotive-grade intelligent vehicle computing chips and solutions in China. The company was founded in 2016 and listed on the Hong Kong Stock Exchange in August 2024. The products supplied by the company include smart driving chips, supporting software and integrated intelligent driving solutions. The company's automotive-grade SoC uses the Huashan series and the Wudang series as core products, and incorporates the ISP and NPU IP cores independently developed by the company. The Huashan series is a high-computing smart driving chip focused on autonomous driving applications. The Huashan A1000 was launched in 2020 and mass-produced in 2022. It can provide 58 TOPS computing power at INT8 accuracy. It is the first high-computing autonomous driving chip with its own IP core in China; the upcoming A2000 will use 7nm process nodes to achieve 250+ TOPS computing power, and can support next-generation algorithm architectures such as Transformers. The Wudang series is mainly a high-computing power SoC designed for L2+ autonomous driving and cross-domain computing. Its structure uses heterogeneous isolation technology to integrate and distribute cross-domain computing power to various application scenarios, which will effectively improve data processing speed and significantly reduce OEM costs.

The smart driving chip circuit is fiercely competitive, and domestic manufacturers are more likely to break through. There are many similarities between the development history of the smart driving chip industry and the mobile phone chip industry. As intelligent driving technology gradually evolved from L1 to L4, smart driving chip manufacturers experienced a reshuffle from Mobileye to Nvidia/Black Sesame/ Horizon. In this process, Tesla chips switched from outsourcing (Mobileye) to self-development. Other mainstream OEMs purchased Nvidia, Mobileye, Black Sesame, and Horizon chips in addition to a small number of successful self-development projects (such as Huawei/NIO). Considering the broad growth space and broad price range of the smart driving industry, we expect that self-development and outsourcing of smart driving chips will coexist for a long time. Nvidia's position in Smart Driving SoC is similar to Qualcomm's position in mobile phone SoC, and Mobileye's position in Smart Driving SoC is similar to MediaTek's position in mobile phone SoC. Due to poor computing power and closed algorithms, Mobileye's market position will gradually be replaced by domestic manufacturers such as Black Sesame and Horizon in the future, and it is not ruled out that domestic manufacturers will have an impact on Nvidia in the future, similar to MediaTek's challenges to Qualcomm in the 4G to 5G stage. Unlike mobile phone SoCs, smart driving SoC competition is more likely to break through, mainly because Chinese new energy vehicles dominate the world on both the production side and the consumer side, and the gap between domestic manufacturers and overseas giants on the smart driving chip circuit is smaller than in the mobile phone chip field.

Driven by self-developed chip IP technology, it has outstanding potential for integrated cabin driving, and is rapidly developing by replacing Dongfeng with domestic production. As China and the US continue to upgrade their chip regulations and countermeasures, the mainstream market will lean towards domestic smart driving chips, and Black Sesame Smart is expected to become one of the main beneficiaries of domestic smart driving chip replacement. The company has strong technical strength. It has developed its own core technology chip IP image processor NeuralLQ ISP and the automotive-grade low-power neural network accelerator nPUDynaMinn engine, which can quickly respond to demand, complete product iteration and achieve differentiated competition, building the company's core competitive advantage. In the field of smart driving chips, relying on its cost-effective positioning, the Black Sesame Smart Huashan series invigorates the Chinese computing power chip market. In the future, with mass production of the A2000, the company is expected to occupy a place in the high computing power market at a lower price and a good level of computing power. In addition, the company is also one of the few manufacturers that have successfully released integrated chip solutions for cabin driving other than Nvidia and Qualcomm. The Wudang C1200 series uses a 7nm process and has built-in automotive-grade high-performance CPU, GPU, DSP, NPU, and real-time processing capabilities. The single chip can support cross-domain computing scenarios including CMS, integrated driving and parking, vehicle computing, smart cockpit, DMS, etc., which is very cost-effective compared to the Nvidia Thor and Qualcomm 8775P.

Risk warning: (1) Macro risks; the domestic economy is facing downward pressure, and demand for automobile terminals falls short of expectations; low expectations for the Fed's interest rate cut process are dragging down the overall performance of the Hong Kong stock market. (2) Industry risks: Low expectations for the intelligent driving development process; low expectations for urban NOA development process; smart driving chip technology iteration, performance improvement, cost control, and large-scale mass production fall short of expectations; industry competition is becoming increasingly intense; Sino-US relations have exceeded expectations, and the United States requires TSMC to stop supplying 7nm chips in mainland China in the future or affect product delivery by domestic automotive chip manufacturers. (3) Company risk: Low expectations for the company's technology iteration, low expectations for increased chip computing power, low expectations for new product launch progress; risk of loss of customers; low expectations for product delivery due to potential supply chain risks; low expectations for gross margin improvement, and low pace of loss.