Domestic CPU leading enterprise! Loongson Zhongke listed on the Science and Technology Innovation Board

Loongson Zhongke opened at 96.28 yuan per share, an increase of 60.31%. After the opening bell, the stock price of Loongson Zhongke declined. As of the writing of Core East and West, the share price of Loongson Zhongke was 89.33 yuan per share, an increase of 48.73%, and the total market value was 35.8 billion yuan.

Domestic CPU leading enterprise! Loongson Zhongke was listed on the Science and Technology Innovation Board, and the opening price rose by more than 60%

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 began to market in 2010. “Godson” is one of the earliest general-purpose processor series developed in China. It has been supported by the Knowledge Innovation Project of the Academy of Sciences, the 863 Program, the 973 Program, the Natural Science Foundation, and the Nuclear High-Tech Major Project.

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 buy ios app reviews 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.

Fundraising of Loongson Zhongke Plan

▲ The fundraising situation of Godson China Science and Technology Co., Ltd.

It started from the Institute of Computing Technology of the Chinese Academy of Sciences, but it was necessary 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 CPUs 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 educational computers for primary and secondary schools in Jiangsu.

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. He takes a spear and calls him Godson. He wants to fight two windmills, one is Intel and the other is Arm.” Industrial Development Investment Corporation (Beijing Industrial Investment) came to invest.

Hu Weiwu, Chairman and General Manager of Loongson Zhongke

▲ 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, which led private capital to invest 100 million yuan, which became the first financing of Loongson 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 rejected it because “China does not lack academicians, but it lacks 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 of 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

▲ Loongson server CPU roadmap

The average annual revenue growth is 57%, and the net profit in 2021 will exceed 200 million
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 Godson 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.

Changes in revenue and net profit of Loongson Zhongke from 2019 to 2021

▲ 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.

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