The localization process of smart driving chips: Horizon and Black Sesame

The road to smart driving chips is not easy. Let’s review Horizon Robotics and Black Sesame together over the weekend.

● Horizon Robotics has completed 15 rounds of financing, raising a total of US$2.362 billion. After the D round of financing, its post-investment valuation reached US$8.71 billion.

● Heizhima Intelligence has received 10 rounds of financing, with a total financing amount of approximately US$695 million.

We will continue to observe what stage these two companies can reach in the Hong Kong stock market. Hong Kong stocks have a special technology company listing mechanism, which allows technology companies with no income and no profit to list in Hong Kong. It is suitable for companies in the five special technology industries of new generation information technology, advanced hardware , advanced materials, new energy and energy conservation and environmental protection, new food and agricultural technology.

Part 1. Operating conditions of the two companies

From 2021 to 2023:

● Horizon’s revenue increased from RMB 467 million to RMB 1.552 billion (average growth of 80.51%), and gross profit increased from RMB 331 million (average growth of 85.64%) to RMB 1.094 billion, while the gross profit margin has remained stable at around 70%.

● In contrast, Black Sesame’s operating revenue was RMB 61 million, RMB 165 million, and RMB 312 million, which has increased fivefold in the past three years.

● Horizon also experienced losses during the same period, which were RMB 2.064 billion, RMB 8.720 billion and RMB 6.739 billion, respectively, and the adjusted net losses were RMB 1.103 billion, RMB 1.891 billion and RMB 1.635 billion;

● Black Sesame’s net losses were RMB 2.357 billion, RMB 2.754 billion, and RMB 4.855 billion, respectively.

The reasons for the losses of the two companies are similar, including initial investment, initial scale limitations and the company's R&D investment increasing year by year.

● Horizon's R&D expenses were RMB 1.143 billion, RMB 1.879 billion, and RMB 2.366 billion, respectively.

● The R&D expenses for black sesame were RMB 595 million, RMB 764 million and RMB 1.363 billion.

By the end of 2023,

● Horizon held cash and cash equivalents totaling RMB 11.359 billion, but its net cash from operating activities was negative RMB 1.744 billion.

● Black Sesame’s cash and cash equivalents balance is RMB1.298 billion.

Part 2: The landscape of smart driving chips

The smart driving chip market is in the midst of fierce competition, with major companies scrambling to break through and gain a leading advantage.

From the existing data and analysis, it can be seen that the competition landscape of the intelligent driving chip market presents the following characteristics:

● NVIDIA’s leading position: NVIDIA is currently the leading supplier of smart driving and occupies an important position in the field of smart driving. With the launch of Thor, BYD , Xpeng, Ideal and Zeekr have all chosen the latest platform.

● Outstanding performance of Tesla's FSD chip: Tesla's FSD chip occupies the largest market share in China. Due to Tesla's vertical integration considerations, its performance and installed capacity are higher than other competitors, which provides strong support for Tesla's leading position in intelligent driving technology.

● Mobileye receives support: Although Mobileye’s market share is not as good as Nvidia and Tesla, its products are still competitive. Recently, Mobileye received support from Volkswagen Group.

At present, Horizon Robotics and Black Sesame are both replacing mainstream chips from other general chip solutions. Of course, China's solutions actually include Huawei , Core Engine and Aixin Yuanzhi. We will analyze them in the Zhixin channel later.

The development of the smart driving chip market is affected by the slowdown in the growth of the new energy vehicle market. As the market becomes saturated, price wars become more intense, which poses a challenge to the profitability of smart driving chip companies. The risk of chip overcapacity is gradually emerging worldwide, which has brought supply chain pressure and profitability challenges to smart driving chip companies. Price wars are actually inevitable.

summary

The global smart driving chip market is highly competitive, and major companies are working hard to improve technology, expand market share, and respond to various challenges within and outside the industry.

In such a competitive environment, only by continuous innovation and improvement can Huawei and Horizon Robotics be expected to remain relatively stable in China. The other three companies, Black Sesame, CoreQin and iChip, face greater challenges. We will analyze them again when we have the chance.