As one of the important digital infrastructures, the Internet of Things supports the digital transformation of all walks of life. As a result, the Internet of Things (IoT) has developed rapidly in the past few years, with tens of billions of IoT connections fused with technologies such as artificial intelligence and cloud computing to support the digital transformation of thousands of industries. It is worth mentioning that China, as an important global Internet of Things market, will maintain a stable and positive trend in the next five years.
According to the latest report released by IDC, at this stage, the Internet of Things infrastructure, technology development, and industrial applications continue to develop in depth, and as the whole society in China attaches importance to data elements and intelligent applications, as an important part of digital infrastructure, the scale of China's Internet of Things connection will continue to grow. It is estimated that the number of IoT connections in China will exceed 6.6 billion in 2023, with a compound growth rate of about 16 in the next five years4% to maintain rapid development.
Extensive Internet of Things connections, then, a large number of Internet of Things smart devices have a strong demand for chips, and chip manufacturers are expected to seize the market demand opportunities brought by the Internet of Everything. Among them, as a platform-based chip company for wireless communication and ultra-large-scale chips, Aojie Technology focuses on the Internet of Things market and smartphone market-related fields.
Although it has developed rapidly in the past few years, there are still huge challenges in when it can turn losses into profits due to the long-term losses of Aojie Technology. Then in the long-term downturn in the capital market, compared with the market value of 68.8 billion yuan, the current market value is only 21.7 billion yuan, a decrease of 47.1 billion, a drop of 68%.
You must know that despite continuous losses, by virtue of being in the hot track of chips and the Internet of Things, it is still 164The issue price of 54 yuan raised 654.6 billion yuan, overraised nearly 4.2 billion yuan, showing that it has attracted the attention of capital, but the continuous loss is difficult to support the high valuation. The loss in the past five years has exceeded 4.2 billion yuan, and the loss will expand in 2023, with an estimated loss of 5100 million yuan, an increase of 102 over the loss in the same period last year7%。
Revenue in 2023 is expected to be 2.6 billion yuan, a year-on-year increase of 2148%；The main reason for the increase in revenue is that in the second half of the year, the supply and demand relationship in the semiconductor market gradually stabilized, and Aojie Technology continued to launch new products, with increasingly rich specifications and models, showing strong market competitiveness, so the operating income in the second half of 2023 increased significantly compared with the same period last year, resulting in an increase of 21% in sales revenue for the whole year compared with the same period last year48% or so.
Due to the low-price competition strategy adopted by the main competitors of chip products, Aojie Technology made corresponding adjustments, so the gross profit margin of chip products, which accounted for the largest proportion of sales during the reporting period, has been at a low level since the beginning of the year, resulting in a significant decline in the comprehensive gross profit margin compared with the same period last year. In addition, in order to maintain its core competitiveness, Arcjet continues to carry out technology accumulation, product iteration and business layout, with an R&D investment of about 11about 1.7 billion yuan, an increase of 11 from 202211% or so.
Combined with the above factors, although the operating income in 2023 will increase by 21% compared to last year48%, but due to the decline in gross profit from sales and the increase in R&D investment and other expenses, the loss of net profit attributable to owners of the parent company increased significantly compared to the same period last year.
It is worth noting that Aojie Technology was founded in 2015, which is still a short time old, and cellular communication is a typical field of high R&D investment, which requires a large amount of R&D investment to commercialize its products in the early stage. To this end, a large amount of R&D investment is required to ensure the accumulation of technology and the development of products. At the same time, in the Internet of Things track, the market prospect is huge.
In the face of investors' questions, Aojie Technology pointed out that in the medium and long term, the future growth space of the entire Internet of Things market is relatively optimistic, of course, in the short term, it will be subject to the current economic situation and industrial rhythm and have certain fluctuations. In the long run, whether it is the consumer electronics market or the intelligent Internet of Things market, its terminal application scenarios are more and more diverse and rich, and the cellular baseband chip has a large space for development as the basic hardware of the Internet of Things.
At present, Arcjet's chip products include cellular baseband chips and non-cellular IoT chips. Non-cellular IoT chips mainly include LoRa, WiFi, Bluetooth and global navigation and positioning chips, covering a variety of application scenarios such as smart home appliances, smart homes, smart cities, and smart meters.
The downstream terminal application scenarios of cellular baseband chips are abundant, and the products are promoted in many fields such as mobile broadband equipment, Internet of Vehicles, smart wearables, location tracking, industrial Internet, and smart payment. Among them, in the field of Internet of Vehicles applications, Aojie Technology has entered the chip chain of Quectel, Youfang, Gaoxing IoT, Quec, MeiG and other Internet of Vehicles modules, and the modules containing Iojet chips have been mass-produced in many models such as Great Wall, Geely, Changan LUMIN, Chery Jietu, Dongfeng Commercial, etc.
The main application fields of 5G cellular IoT chips are CPE, Internet of Vehicles, MIFI, ** monitoring, smart grid, etc. And there are a number of chip layouts, such as the first 5G EMB chip is actively promoting mass production; The first 5gredcap chip has been verified in the third quarter of 2023, and the test is in line with expectations.
Finally, the IoT industry has broad prospects and the market size continues to expand. The main reason is that digital transformation is in a period of rapid development, with strong demand for technologies such as 5G, AI, and big data, and the demand for various industries of the Internet of Things is also rising. As the basic hardware of the Internet of Things, the cellular baseband chip will have a large space for development and demand.
Yang Jianyong is a Forbes China contributor who provides insights into cutting-edge technologies such as the Internet of Things, cloud services, artificial intelligence, and smart homes.