Chiplink Integrated General Manager Zhao Qi: The company's revenue is expected to exceed 10 billion in 2026

Can Xinlian Integrated Circuit continue its good growth momentum in the fourth quarter? What is the profit trend of the silicon carbide business? Who are the customers of analog IC? What is the revenue growth prospect of the power module business?

In response to the topic of widespread concern to investors, on October 29, Xinlian Integrated Circuit held a telephone briefing on the third quarter report of 2024. The company's director and general manager Zhao Qi, financial director and board secretary Wang Wei, and Xinlian Power Chairman Yuan Feng attended the briefing.

Zhao Qi made a performance release report at the meeting, comprehensively interpreted the operating results for the first three quarters of 2024, analyzed industry trends, and looked forward to future development priorities.

Q1 Xinlian Integrated Circuit's performance in the first three quarters was outstanding, with quarterly revenue hitting a record high and gross profit margin turning positive. What is the development trend in the fourth quarter?

Looking ahead to the fourth quarter, the company's downstream customer market performance will release more positive factors, mainly including:

The penetration rate of new energy vehicles continues to grow; the consumer electronics industry benefits from the recovery in demand and the promotion of new AI products; the supply and demand relationship in the industrial control field, especially in the photovoltaic market, gradually improves, and inventory clearance on the supply side is coming to an end.

Therefore, the company's revenue in the three major areas of automotive, consumer, and industrial control will continue to grow. Considering the pace of volume growth in power modules and other businesses, it is expected that the fourth quarter's revenue will continue to hit new highs. The company is confident that it will exceed its full-year revenue and loss reduction targets.

Q2: What is Xinlian Integrated's outlook on its development prospects in the next few years, including the three major growth curves, revenue structure, etc.?

As an innovative technology company in the semiconductor industry, the company has made comprehensive arrangements around chips required for new energy and intelligence. Currently, the three major growth curves have all achieved rapid growth:

Silicon-based power devices, as the company's first growth curve, have continued to achieve high growth; the second growth curve consisting of SiC MOSFET chips and module production lines will continue to maintain its leading position in China, driving sustained growth in performance, and is expected to achieve the goal of 1 billion yuan in revenue for the whole year; the third growth curve in the direction of analog ICs based on high-voltage and high-power BCD processes will usher in a large volume, driving the sustainable growth of the company's future revenue. Based on the three growth curves working together, the company's revenue is expected to continue to maintain double-digit growth every year, and revenue will exceed 10 billion yuan in 2026. In terms of profit, with the growth of revenue scale and effective cost control, the net profit will be significantly reduced in 2024, and at the same time, we are confident of achieving profitability in 2026.

As the company's layout in power and analog ICs gradually improves, the company is accelerating its development towards a world-leading one-stop digital-analog hybrid chip system foundry platform.

Q3: What is the profit trend of SiC business of Xinlian Integrated Circuit this year? 8-inch SiC will be mass-produced next year. What is the company's outlook on the future development of prices and the market?

This is mainly considered from the following three aspects:

Improvement of material yield and optimization of price. Further optimization of yield and price in each link of the silicon carbide industry chain, including substrate, epitaxy, device manufacturing, and module packaging, is an inevitable process for the industry to enter the large-scale production stage.

Three major measures to enhance cost advantage. Next year, 8-inch SiC MOSFET products will be further mass-produced. Due to the expansion of area and the increase in the number of chips attached to a single chip, the value of the monolithic SiC wafer product will be greater than the increase in its monolithic production cost. In addition to upgrading chip manufacturing from 6 inches to 8 inches, the company has also helped silicon carbide technology innovation and overall cost optimization by switching the device type from planar to trench type and improving yield.

Obtained project orders from multiple customers. At present, the company has accumulated 25 design wins in the automotive field. At the same time, SiC power modules have been mass-produced in many vehicle manufacturers, which will provide strong support for the company's continued rapid growth in silicon carbide business revenue in 2025 and 2026.

In Q4, Xinlian Integrated released multiple high-voltage BCD platforms. Which downstream customers are they mainly targeting? What is the pace of future order release? What are the main areas of customer contribution to the structure of analog IC revenue next year?

Since 2023, the company has successively released more than ten domestically unique or domestically leading BCD process platforms, and can provide the domestically scarce BCD120V automotive-grade G0 process platform and 55nm BCD process platform, providing customers with complete high-voltage, high-current and high-density technology analog and power solutions.

At present, the company has received orders from multiple customers and will start to supply them this year, and it is expected to grow significantly in 2025. In terms of analog ICs, the company has in-depth cooperation with excellent analog design companies at home and abroad, and currently the customer coverage of design companies has reached more than 60%.

Q5: Xinlian Integrated's automotive power module market share is increasing rapidly. What will be the company's share of the module market in the next 2-3 years? And what is the expected proportion of module revenue in the company's future revenue structure?

The company expects to double its module revenue this year.

According to NE Times data, domestic supply of IGBT power modules for new energy passenger vehicles accounted for more than 70% from January to September 2024. From January to September, the company shipped a total of 910,000 power modules, a year-on-year increase of 557%, with a market share of 8.2%.

The company's module foundry capabilities in the power field have reached the domestic leading level. With the advantages of chip + module production and manufacturing in the same entity, it can respond to customers faster and assist customers in iterating products faster. The proportion of module business revenue will continue to rise.