Analysis of Zhixing Technology: Using self-developed iDC domain controller to break the market and enter the overseas market

On December 20, 2023, Zhixing Automotive Technology (Suzhou) Co., Ltd. (hereinafter referred to as "Zhixing Technology") was officially listed on the main board of the Hong Kong Stock Exchange with the stock code "1274".

Founded in 2016, Zhixing Technology is an autonomous driving solution provider focusing on autonomous driving domain controllers . Currently, the company has commercialized L2 to L2+ autonomous driving solutions and develops L2 to L4 autonomous driving solutions for OEMs.

Revenue grew explosively, and 16 OEMs were appointed

From 2020 to 2022, Zhixing Technology's revenue was 48 million yuan, 178 million yuan, and 1.326 billion yuan respectively, with a compound annual growth rate of more than 427%; in the first half of 2023, revenue was 543 million yuan, a year-on-year increase of 51.2%. The main reasons for the growth are the continued supply of SuperVision™ and the start of mass production of the self-developed iDC Mid domain controller in January 2023 and the acquisition of new targets. As of the reporting period, Zhixing Technology has received relevant designation letters from 16 OEM customers, including Geely Automobile, Great Wall Motors, Chery Automobile, and Dongfeng Motor, and has delivered a total of approximately 130,000 autonomous driving domain controllers.

Overall revenue of Zhixing Technology from 2020 to the first half of 2023

Data source: public information

Zhixing Technology's R&D team has 250 people (as of June 30, 2023), accounting for 74.2% of the total employees, and it will continue to expand in the future. From 2020 to 2022, Zhixing Technology’s R&D investment will be 44 million yuan, 55 million yuan, and 104 million yuan respectively, with a compound annual growth rate of 53.6%. R&D investment in the first half of 2023 was 104 million yuan, a year-on-year increase of 124%. The main products developed are iDC High and intelligent front-view camera iFC3.0, which are expected to be mass-produced in 2024.

Zhixing Technology’s R&D investment and year-on-year comparison in the first half of 2020-2023

Data source: Zhixing Technology

About 45% of the net funds raised by Zhixing Technology from this IPO will be used to strengthen the research and development of autonomous driving solutions and products, and 35% will be used for capital expenditures related to the company's R&D headquarters, production plants and new production lines.

It is planned to build a R&D headquarters and production site with a total area of ​​70,000 square meters in Suzhou by the end of 2025;

Establish a new iFC product line with an annual production capacity of approximately 1 million units by the end of 2023, and the iFC production capacity is expected to reach 1.129 million units;

Enhance its new test line with an expected annual production capacity of approximately 300,000 units (which can be used to assemble autonomous driving domain controllers);

A new SMT (manufacturing PCBA products for sale to third parties or PCBA products for autonomous driving solutions and product components) production line with an annual production capacity of approximately 600,000-700,000 units has been added .

Full-stack self-developed iDC, product development towards vehicle central computer

As of now, Zhixing Technology's business is mainly divided into three categories: autonomous driving solutions and products, autonomous driving related R&D services, and sales of PCBA products.

Zhixing Technology’s business revenue and revenue proportion from 2020 to the first half of 2023

Data source: Zhixing Technology public information

Autonomous driving solutions and products

From the perspective of autonomous driving solutions and products business, it can be divided into two categories of products, namely autonomous driving domain controller solutions (SuperVision™ and iDC) and intelligent front-view cameras (iFC series).

In the first half of 2023, Zhixing Technology's autonomous driving domain controller solution revenue was 516 million yuan, accounting for 98.98% of the autonomous driving solutions and product business revenue, accounting for 94.90% of the overall business; smart front-view camera revenue was 0.053 billion yuan, accounting for 94.90% of the autonomous driving solution and product business revenue, accounting for 94.90% of the total business revenue. Driving solutions and products business revenue accounted for 1.02%, accounting for 0.98% of the overall business.

Zhixing Technology's solutions and products can cover vehicle products worth RMB 50,000-400,000. Currently, commercialization supports L2 to L2+ autonomous driving, covering all driving scenarios including highways, ring roads, complex urban roads, rural roads and parking lots.

Zhixing Technology's domain controller products mainly include SuperVision™ and iDC.

SuperVision™ is a point-to-point assisted driving navigation solution that can realize urban NOA, high-speed NOA, HPA, RPA, and APA. It is equipped with 2 EyeQ5H  chips and the sensor configuration is 11V1R12U. This product is mainly aimed at models with more than 250,000 cars, and will be mass-produced in October 2021 with Ji Krypton models. As of June 30, 2023, a total of 130,000 SuperVision™ units have been delivered. The iDC series is an autonomous driving domain control solution self-developed by Zhixing Technology. It integrates high-speed driving functions and parking into a single SoC, saving 30%-40% in costs compared to traditional separation of parking and parking. As of December 2023, iDC Mid products have received a total of 6 designated projects.

iDC Mid will be mass-produced in January 2023 and integrates high-speed NOA, memory parking (HPA) function, surround view 3D display (SV3D), HMI rendering and OTA functions. It is compatible with domestic chips , supports cross-platform operating systems and operating environments, provides an open development environment, and supports cloud and big data closed-loop development. In 2023, iDC Mid will be launched on the Chery Xingtu Lanyue model. iDC High is an upgraded version of iDC Mid. It adds urban NOA and more advanced parking functions based on the functions of iDC Mid. It is expected to be mass-produced in 2024.

Zhixing Technology autonomous driving domain controller products

Source: Zhixing Technology public information

Zhixing Technology designed and developed all key software and hardware . Among them, the self-developed software middleware does not rely on any open source framework and can deploy the software to different computing platforms and operating systems. In the iDC domain controller, the middleware can provide zero-copy data sharing across RTOS (including inter-core communication ) and HLOS (such as LINUX, including inter-process communication ), and supports the transmission of big data such as images . Zhixing Technology’s algorithms cover perception fusion, planning, control, and positioning sections. Perception algorithms include multi-mode data fusion algorithms, transformer-based bird's-eye view perception algorithms, USS ( ultrasonic ) perception algorithms, etc. The vehicle positioning algorithm is designed to work on both open and closed roads. Using its visual scale recovery algorithm and vehicle positioning algorithm, HPA can support remote memory parking in underground garages up to two kilometers long.

Advantages of Zhixing Technology’s perception algorithm

Source: Zhixing Technology public information

As far as smart front-view cameras (iFC products) are concerned, Zhixing Technology mainly provides OEMs with smart front-view camera iFC products based on its core algorithms. In the first half of 2023, Zhixing Technology’s iFC product revenue was 5.321 million yuan, accounting for 1.02% of the autonomous driving solutions and product business.

iFC products are mainly iFC 2.0 and iFC 3.0. iFC 2.0 will be mass-produced in August 2021. It is supported by Mobileye ’s EyeQ4 SoC and is equipped with a 1.7-megapixel 100° camera.

iFC 3.0 is an upgraded version of iFC 2.0 and is expected to be mass-produced in 2024. iFC 3.0 plans to use Mobileye EyeQ6L chip, and the camera will be upgraded to an 8-megapixel 120° camera. The volume is expected to be reduced by 20%, which is more conducive to vehicle integration. iFC 3.0 will support Ethernet interface, optional driver monitoring system or rear camera, and has the ability to expand functions. And iFC3.0 products will be designed to meet C-NCPA and EURO-NCAP five-star safety rating standards and can be exported overseas.

Autonomous driving related R&D services

Zhixing Technology began providing autonomous driving R&D services to OEMs in July 2017. This business includes autonomous driving software and hardware development , autonomous driving algorithm and function development, and functional safety consulting and verification. In the first half of 2023, this business revenue was 12.08 million yuan, accounting for 2.2% of total revenue.

Autonomous driving R&D services mainly focus on two aspects:

1. Proof-of-concept project: OEM hired Zhixing Technology to conduct proof-of-concept for new technologies. Since 2017, a total of 5 R&D projects related to L3 and L4 autonomous driving have been completed.

2. Provide R&D services for autonomous driving solutions: After obtaining the designation letter, Zhixing Technology began to provide R&D services to customers, mainly including the research and development of hardware, software, algorithms and autonomous driving functions, as well as implementation, integration, verification and testing services.

Selling PCBA products

Zhixing Technology sells PCBA products to third parties and installs different electronic components, such as SoCs, resistors , capacitors and transmitters on the PCB according to the customer's individual requirements to create a fully ready-to-use circuit board . Sales customers are mainly Chinese electronic product manufacturers. Since Zhixing Technology's current business focus is autonomous driving solutions and products, its PCBA product revenue share has dropped from 89.0% in 2020 to 2.6% in 2022, and has further declined to 1.9% as of the first half of 2023.