The core technicians are all from the Chinese Academy of Sciences, with a total market value of 35.8 billion yuan.
Godson Zhongke originated from the “Godson” project started in 2001 by the Institute of Computing Technology of the Chinese Academy of Sciences. It was established in 2008 and started market-oriented operation in 2010. “Godson” is one of the earliest general-purpose processor series developed in China.
According to the prospectus, Loongson Zhongke’s products are mainly aimed at industrial control and informatization chips, which are applied in the field of key information infrastructure and are gradually expanding to the commercial market. At present, Loongson Zhongke has basically completed the technical “supplementary course” and formed its own instruction set LoongArch. Its general-purpose processor performance has approached the level of mainstream products in the commercial market, and the operating system has become mature and stable.
During the reporting period, the revenue of Loongson Zhongke achieved rapid growth. From 2019 to 2021, its revenue was 486 million yuan, 1.082 billion yuan and 1.201 billion yuan respectively.
The controlling shareholder of Godson Zhongke is Tiantong Xinyuan Company, and the actual controllers are Hu Weiwu, chairman and general manager of Godson Zhongke, and Jin Hong and his wife, investment director.
In this IPO, Loongson Zhongke plans to raise 3.512 billion yuan, which will be used for three projects: “R&D and industrialization of advanced process chips”, “R&D of high-performance general-purpose graphics processor chips and systems” and “Supplementary working capital”. After the subscription, Loongson Zhongke raised a total of 24.62 yuan, a difference of more than 1 billion yuan from the expected fundraising.
▲The fundraising situation of Loongson China Science and Technology Co., Ltd.
01.
from the Institute of Computing Technology, Chinese Academy of Sciences
But they want to “clean up the academy-style poison”
Godson Zhongke originated from the “Godson” project of the Institute of Computing Technology, Chinese Academy of Sciences. According to Hu Weiwu, chairman and general manager of Loongson Zhongke, not long after he graduated from his doctorate, he was full of enthusiasm and felt that a big country like China could not have its own CPU, so he began to develop CPU by himself.
However, the development of the “Godson” project has not been smooth sailing.
During the “Tenth Five-Year Plan” period, there was also a “Hanxin fraud” incident in the domestic chip industry, and the reputation of “Godson”, which was also supported by state funds, was also implicated. In 2005, Zhang Fuxin, Wu Shaogang, Hu Mingchang and others from “Godson” went to Changshu to build an industrialization base. When no one was using it, they started with the whole machine and promoted 150,000 sets of Godson for Jiangsu primary and secondary schools.educatecomputer.
In 2009, the “Godson” team began to organize enterprises, and few people were interested. Hu Weiwu laughed at himself: “I’m just like Don Quixote, with a spear called Godson, wanting to fight two windmills, one called GodsonIntel, one is called Arm. “In the end, the Zhongguancun Management Committee held more than 20 coordination meetings and asked Beijing Industrial Development Investment Corporation (Beijing Industrial Development and Investment Corporation) to invest.
▲Hu Weiwu, Chairman and General Manager of Loongson Zhongke
The chairman of BIT went to the Institute of Computing Technology of the Chinese Academy of Sciences and said bluntly that he knew that investing in Godson would definitely cost him, but he had to invest even if he lost, because this is a political task. Beijing Industrial Investment invested 100 million yuan, and led private capital to invest 100 million yuan, which became the first financing of Godson Zhongke.
In 2010, the “Godson” team transformed into a market-oriented operation. Hu Weiwu mentioned that a researcher like himself started a business from a “negative number”, because he had read too many papers and national project guides, and it was necessary to eliminate the “academic” poison.
To this end, Hu Weiwu set several basic principles, one of which is: the Godson team will not judge the national award or report to the academician. In 2009 and 2011, the Institute of Computing Technology of the Chinese Academy of Sciences voted to select Hu Weiwu as an academician, but he refused, because “China does not lack academicians, but there is a lack of a company like Intel.”
In 2013, Loongson Zhongke carried out the transformation of management, market and R&D, and clarified the policy of “taking innovation and development as the theme, industrial development as the main line, and ecological construction as the goal”. In 2015, the sales revenue of Loongson Zhongke exceeded 100 million yuan for the first time and achieved breakeven for the first time.
It is reported that in 2016, CDH Capital led the B round financing of Loongson Zhongke. In 2017 and 2019, Loongson Zhongke completed the C and D rounds of financing respectively. The C round investors include Linzhi Dingfu, CDH Investment, etc. The D round lead investor is the Guoxin Science and Technology Innovation Fund.
In the market practice, Godson Zhongke finally clarified the two market directions of industrial control and informatization. Its industrial control chips are oriented to embedded special equipment, industrial control and terminals, etc.; the information technology chips are oriented to desktops and servers.
So far, Loongson Zhongke has launched Loongson 1 series, Loongson 2 series and Loongson 3 series products. Loongson 1 and Loongson 2 are mainly for industrial control applications, while Loongson 3 is mainly for information applications.
▲Loongson server CPU roadmap
02.
Average annual revenue growth of 57%
Net profit of over 200 million in 2021
During the reporting period, due to the formation of technical core competitiveness and the continuous improvement of the industrial environment, Loongson Zhongke’s revenue continued to grow during the period from 2019 to 2021, with an average annual compound growth rate of 57.28%.
In 2019, 2020 and 2021, the revenue of Loongson Zhongke was 486 million yuan, 1.082 billion yuan and 1.201 billion yuan respectively. Its net profit also rose from 192 million yuan in 2019 to 237 million yuan in 2021, and its net profit in 2020 was 72.23 million yuan.
▲Loongson Zhongke’s 2019-2021 revenue and net profit changes
In the three years from 2019 to 2021, the annual R&D investment of Loongson Zhongke was 78.2139 million yuan, 208 million yuan and 322 million yuan, accounting for 16.11%, 19.26% and 26.78% of the annual revenue respectively.
During the reporting period, the main business income of Loongson Zhongke can be divided into industrial control chips, information chips and solutions according to products. Informatization chips are the main source of income of Loongson Zhongke, and the revenue of this business will account for more than 50% from 2019 to 2021.
▲The revenue ratio of each business of Loongson Zhongke from 2019 to 2021
03.
Self-developed instruction set
Top 10 technologies compatible with x86 and Android apps
At present, in the global IT industry, Intel andMicrosoftThe “Wintel” ecosystem has been formed, while Arm and Google Android have formed the “AA” ecosystem.
Loongson Zhongke does not use the more mature Intel x86 and Arm architecture, but from MIPS to the self-developed LoongArch instruction set. An instruction set is a collection of a complete set of instructions that a processor chip can execute, and is an interface between processor hardware and software applications.
In 2011, Loongson Zhongke valued the open ecology of the MIPS instruction set, so it signed MIPS technology licensing contracts in 2011 and 2017, and obtained the license for R&D, production and sales based on the MIPS instruction set.
Before 2020, the CPU products of Loongson Zhongke basically adopted the MIPS instruction set. During the reporting period, the revenue of Loongson Zhongke based on the MIPS instruction set accounted for about 70%. In 2020, Loongson Zhongke launched its own instruction set, LoongArch, and no longer uses MIPS to develop new CPU products.
In the same year, Chiplink, which has obtained the MIPS technology license contract, sued MIPS in the U.S. District Court for the Northern District of California. MIPS Corporation and its parent company Wave Computing entered bankruptcy protection judicial proceedings.
In February 2021, Chiplink and the Hong Kong International Arbitration Center initiated the arbitration of the MIPS technology licensing contract dispute with Loongson Zhongke, and the arbitration is currently in progress.
The prospectus emphasizes that Loongson Zhongke is committed to building an independent ecosystem independent of “Wintel” and “AA”. It not only launched an independent instruction set, but also mastered all the source codes of the CPU IP core, and has the operating system and basic software. core competencies. At present, the performance of Loongson Zhongke’s general-purpose processors has approached the level of mainstream products in the commercial market.
However, this kind of self-research from the instruction set also makes it difficult for the computer equipment based on the Loongson Zhongke processor to be compatible with most graphics applications, and many programs will also report errors due to lack of support for many basic components.
In order to solve the problem of software ecology, Hu Weiwu summed up the required “2+3+3+2” 10 major technologies. The first “2” is the BIOS and the kernel; the two “3” are the three major compilers GCC, LLVM, GoLong and the three major virtual machines Java, JavaScript, and .NET. The above-mentioned 8 technologies are the keys for Loongson Zhongke to compile a complete Linux system, and the last “2” is the two binary translators.
At present, Loongson Zhongke has mastered all 10 major technologies, and is still developing software applications based on Loongson processors and instruction sets. At the same time, it uses binary translation technology to be compatible with some x86 and Arm applications. Although Godson Zhongke does not useWindowsand Android operating system, but will be compatible with its software applications.
At the “2022 LoongArch Ecological Development and Tongming Lake Innovative Application Forum” on June 6, Hu Weiwu of Loongson Zhongke said that the main contradiction of Loongson’s technology platform in 2022 will turn to application ecology. The software ecosystem based on LoongArch has three major development directions: first, to provide a basic version of an open source operating system; second, to eliminate instruction system barriers through an efficient binary translation system to achieve broad compatibility; third, to form independent programming languages and programming frameworks.
During the forum, Godson Zhongke announced that it will build a new generation of server software and hardware platforms with companies such as Tianyi Cloud, Tencent, Inspur Cloud, Dragon Lizard Community, Euler Community, Tongxin, Kirin, Tongfang, Guoguang, Haier, etc., which will include instruction sets. , chips, servers, software systems and server clusters.
▲LoongArch server industry ecology
In the domestic market, Loongson Zhongke mainly faces Dengke Shentai,HuaweiThe competition of domestic CPU players such as HiSilicon, Feiteng Information, Haiguang Information, and Shanghai Zhaoxin.
However, since many domestic CPU players have not been listed, there are certain differences in business between Loongson Zhongke and comparable companies in the same industry. During the reporting period, the gross profit margin of Loongson Zhongke was slightly higher than the average level of comparable companies in the industry.
▲Comparison of gross profit margin between Loongson Zhongke and comparable companies in the same industry
Loongson Zhongke has obtained more than 400 patents in general processor design, system software, compilation technology and other fields, including 388 domestic invention patents and 21 overseas invention patents, filling the gap of domestic core basic software and hardware. As of the end of 2021, Loongson Zhongke has a total of 539 R&D personnel, accounting for 65.57% of the total number of employees.
Loongson Zhongke has a total of 6 core technicians, all of whom are from the Institute of Computing Technology, Chinese Academy of Sciences.
04.
The Institute of Computing Technology of the Chinese Academy of Sciences has been the top five customers
Tongfu Microelectronics is a packaging service provider
In the prospectus, except for the Institute of Computing Technology of the Chinese Academy of Sciences, the top five customers of Loongson Zhongke from 2019 to 2021 are all represented by alphanumeric codes, and the customer names of Loongson Zhongke are not disclosed. The Institute of Computing Technology of the Chinese Academy of Sciences was the fourth largest customer of Loongson Zhongke in 2020.
In 2019, 2020 and 2021, the sales amount of the top five customers of Loongson Zhongke accounted for 67.92%, 70.24% and 60.86% of the current operating income, and the customer concentration was high.
▲The top five customers of Loongson Zhongke in 2021
Loongson Zhongke adopts the Fabless (fabless) business model, and the main procurement items include chip processing, electronic components, outsourcing complete machine boards and outsourcing processing services.
Most of its suppliers also use alphanumeric codes, and only three suppliers are disclosed: Tongfu Microelectronics, Zhongda Jingdian and Zhongbang Automation. These three suppliers are the top five suppliers of Loongson Zhongke during the reporting period. Among them, Tongfu Microelectronics Electricity provides chip processing services for Loongson Zhongke, and Zhongda Precision and Zhongbang Automation provide outsourcing board card services for Loongson Zhongke.
▲The top five suppliers of Loongson Zhongke in 2021
05.
Hu Weiwu and his wife are the actual controllers
The controlling shareholder of Godson Zhongke is Tiantong Xinyuan, which holds 23.98% of the shares of Godson Zhongke. The actual controllers of Godson Zhongke are Hu Weiwu and Jin Hong.
Hu Weiwu received a bachelor’s degree from the University of Science and Technology of China in 1991 and a doctorate degree from the Institute of Computing Technology, Chinese Academy of Sciences in 1996. From 1996 to January 2021, Hu Weiwu worked in the Institute of Computing Technology, Chinese Academy of Sciences, and served as assistant researcher, associate researcher, researcher, doctoral tutor, assistant director, deputy chief engineer, and chief engineer. In August 2009, Hu Weiwu was the vice chairman and general manager of Godson Zhongke; since November 2019, he has been the chairman and general manager of Godson Zhongke.
Jin Hong has served as the department manager of Beijing Vega Grid Technology Co., Ltd., and the department manager of Beijing Haidian Zhongke Computing Technology Transfer Center. Since May 2008, she has served as the department manager, risk control director and investment director of Godson Zhongke.
▲The shareholding structure of Loongson Zhongke
In addition to Tiantong Xinyuan, shareholders accounting for more than 5% of the shares of Godson Zhongke are Zhongke Suanyuan, Zhongke Baifu, Hengqin Lihebo and Beijing Industrial Investment, accounting for 21.52%, 14.35%, 10.04% and 7.17%.
▲Loongson Zhongke’s share capital
06.
Conclusion: The listing of Godson Zhongke helps domestic CPUs to break through
Software ecosystem is still a short board
Loongson Zhongke is a representative chip design company in the domestic CPU field. This time it plans to raise 3.5 billion yuan for advanced process chips and general-purpose graphics processors, or to help its next-generation Loongson processors and graphics processors. R&D and technological breakthroughs.
In the prospectus, Loongson Zhongke has repeatedly emphasized its own ecological construction, not only developing its own software application ecology, but also compatible with some applications based on x86 and Arm. However, this aspect is still a shortcoming of the Loongson processor. If Loongson Zhongke wants to enter the commercial processor market, it still needs to provide consumers with more application support.
