With revenue and profit both growing, Loongson Technology prepares IPO on Sci-tech Innovation Board
On June 28, Loongson Technology submitted a prospectus to the Shanghai Stock Exchange, planning to list on the Science and Technology Innovation Board, with CITIC Securities as sponsor. By this listing, the company plans to raise 3.512 billion yuan for projects of advanced process chips and high-performance graphics chips.
Loongson Technology was established in 2008 and was jointly led by the Chinese Academy of Sciences and the Beijing Municipal Government. The company grew up from the Loongson project of the Institute of Computing Technology of the Chinese Academy of Sciences in 2001, and has now become the leader of CPUs in China and the builder of independent ecology.
**Double growth in revenue and profit**
In an environment where emerging fields including artificial intelligence, consumer electronics, Internet of Things, and cloud computing are growing, the global integrated circuit industry is developing rapidly. With the huge market demand and rich demographic benefits, China has now become the world's largest integrated circuit market. In recent years, benefiting from the rapid construction of emerging industries, the scale of China's integrated circuit industry has been increasing year by year, with a compound growth rate of 16.81% from 2012 to 2020. Specifically, Loongson's CPU is the core component of intelligence, and is widely used in industrial control systems.
Important areas of CPU’s applications include desktops and servers. China is still the world's largest CPU market, but China’s market share of CPU is less than 5%. With the accelerated process of domestic substitution, there is still a large incremental market for CPUs in China.
The prospectus shows that Loongson's revenue and net profit from 2018 to 2020 have achieved rapid growth. During the period, revenue was 193 million yuan, 486 million yuan and 1.082 billion yuan, and net profits were 2.06 million yuan, 113 million yuan and 201 million yuan.
**Intel, AMD monopolize the market**
At present, the CPU commercial market is mainly occupied by Intel and AMD. Intel maintains an 80% market share constantly and is in an absolute lead. AMD follows closely, and other manufacturers’ overall market share is less than 1%. China still relies heavily on imported general-purpose processors, and most CPUs are purchased from abroad, which brings considerable pressure to the CPU companies in China.
CPU is the computing and control core of computer systems, and has a huge incremental market in China. However, due to the strong monopoly of overseas leading companies, Chinese chip companies only account for a small market share. Supported by national policies, China's domestic CPU development process has accelerated. Loongson Technology needs to actively catch up with leading companies and seize more market shares.