According to Dai Baojia, Chairman of Aojie Technology, based on the company's shipment situation and customer information, the domestic Internet of Things market demand is gradually recovering, and some application scenarios such as vehicle networking and wearables are in good condition. The company holds a relatively optimistic attitude towards the IoT market in the second half of the year.

In the first half of this year, Aojie Technology achieved operating revenue of 1.655 billion yuan, an increase of 56.62% year-on-year; and a net loss of -0.265 billion yuan, with a narrowed loss compared to the same period last year.

Regarding the performance change, Aojie Technology stated that in the first half of the year, its chip products were iteratively upgraded, with a richer product variety, and sales scale achieved a significant increase. At the same time, the revenue from chip customization business and semiconductor IP authorization business showed a significant increase compared to the same period last year.

In terms of gross margin, the overall gross margin for the first half of 2024 was 24.27%, which has remained relatively stable since 2023. However, Aojie Technology stated during an institutional research in August this year that there is a possibility of continued downward pressure on the comprehensive gross margin. One reason is that the current market price competition situation has not changed significantly compared to the past, and the other reason is that the revenue from the company's customization business and IP authorization business tends to be higher in the first half of the year and lower in the second half of the year.

During today's earnings conference (September 6th), Dai Baojia stated that the competitive market environment has not changed significantly compared to the past few quarters, but the company's product shipments and market share continue to grow. "The company will adjust price strategy according to the competition situation and business objectives at different stages of market development. The company's competitiveness mainly comes from a rich product line formed by efficient research and development capabilities and rapid iteration of existing products, rather than primarily relying on price."

It is expected that the shipments of in-vehicle LTE Cat.4 will exceed 2 million units this year.

Dai Baojia believes that the domestic Internet of Things market demand is gradually recovering. At the same time, it is expected that the company's performance growth in the second half of the year will mainly come from cellular baseband chips, especially Cat.1 and Cat.4 products. "Cat.1 products are still the main sales force of the company, while the relative proportion of Cat.4 products is gradually increasing."

According to the TSR 2023 annual statistics, Aojie Technology ranks first in the Cat.1 bis sub-market.

According to the operation of the company in the first half of this year, the various series of cellular IoT chips, including Cat.1 and Cat.4, have significantly increased in both sales quantity and corresponding revenue compared to the same period last year. Especially in terms of sales quantity, the overall LTE products have grown by more than 80% year-on-year in the first half of this year, and based on the Q2 data compared to Q1, the shipment numbers have still achieved a certain level of growth.

According to the semi-annual report of Aojie Technology, its LTE Cat.4 has made smooth progress in the automotive market in the first half of the year. The shipment volume of in-car pre-installed solutions is much higher than the same period last year, and the scale of single-product sales has reached millions. It is expected that the shipment volume for this year will exceed 2 million units. The next-generation product has also started mass production with the first batch of car manufacturers, and it is expected to complete the testing work before mass production with about five car companies before the end of the year.

In the first half of this year, Aojie Technology launched the first 5G RedCap chip, which integrates baseband, RF, and storage modules. It is reported that this product has completed laboratory interoperability and 5G native enhancement feature verification with major equipment manufacturers. It has also passed the field network compatibility test organized by the network operator, as well as the China Mobile 5G RedCap chip certification test and entry into the inventory. It is currently cooperating with the first batch of customers and actively promoting the marketization of terminal products based on this chip. It is expected to start mass production in the second half of the year.

"In terms of 5G RedCap, the company is in a relatively advanced group." Dai Baojia said that based on the current testing situation of the operational network environment, there is significant improvement in network coverage, speed, compatibility, etc. The company believes that it is close to the commercial stage. With the support of network operators, it is expected that terminal applications will gradually increase from the first half of next year as demand grows.

AoJie Technology stated that the Design in of the 5G RedCap in-car pre-installed system is also progressing smoothly.

The 4G 8-core chip is expected to be introduced to customers by the end of the year.

In terms of smart phone chips, AoJie Technology's first smart phone chip, ASR8601, is used in the Logicmobility L65A phone, which entered the Latin American market in the first half of this year. Currently, the shipment of this chip has covered smart watches, smart tablets, children's learning devices, and other scenarios, and it is in the customer import phase. It is expected that the sales scale will continue to expand in the second half of the year.

At the performance conference, Aojie Technology further stated that its 4G octa-core chipset is currently in the testing phase after chip return. From the current test results, all indicators have met the R&D expectations, and it has good market competitiveness. It is expected that this product will enter the customer introduction stage before the end of this year, and the company will solidify its customer base, increase market sales efforts, and have confidence in gradually achieving large-scale shipments.

"Many technologies and experiences of the 4G octa-core smartphones, especially the application processor-related technologies and experiences such as CPU, GPU, multimedia, etc., can be applied to the development of 5G smartphone chips." Aojie Technology answered investors' questions, stating that compared to 4G smartphone chips, the design difficulty of 5G smartphone chips mainly lies in the communication-related parts, including more complex communication protocols, algorithms, and higher bandwidth, speed, etc.

Dai Baojia also revealed that the company is actively promoting the development of 5G smartphone chips, planning to launch the 5G RedCap smart terminal chip in 2025 and the 5G smartphone SoC chip in 2026.

Aojie Technology is expanding its overseas markets. In Southeast Asia, the company mainly cooperates deeply with mainstream operators in the functional phone and smartwatch segments. In the European market, Aojie Technology has established cooperative relationships with local operators in Italy, Poland, France, Switzerland, and other countries to achieve scale shipments. In the Latin American market, functional phones and smartphones equipped with Aojie Technology's baseband chips are sold in multiple countries.

Dai Baojia further stated at the performance conference that the above regions will continue to exert efforts in the future. "The company's main competitor in the overseas market is Qualcomm. Although Qualcomm currently has the largest market share, we have a richer layout in the field of IoT products, and our shipment scale is continuously growing. This year, overseas market orders are quite abundant."