Juchen's performance in the first half of the year grew steadily, and it further improved its storage chip layout

On August 16, Juchen Co., Ltd. released its 2021 first half performance report, showing that it achieved revenue of 264 million yuan, compared with 218 million yuan in the same period last year, a year-on-year increase of 21.24%; the net profit attributable to shareholders of listed companies was 65.75 million yuan, a year-on-year increase of 41.23%.

The data also reflects that Juchen's revenue and net profit growth momentum in the first half of 2021 is obvious. Judging from the financial report, its steady performance growth is due to long-term R&D investment and technology accumulation on the one hand, and to the construction of a professional talent team on the other. Driven by technology accumulation and talent innovation capabilities, Juchen will continue to strengthen the core competitiveness of its diversified businesses, improve product gross profit margins, and write a new chapter under the opportunity of domestic substitution.

High R&D investment strengthens core competitiveness

Juchen's stable revenue growth in the first half of the year is due to the comprehensive development of its diversified businesses. Juchen currently has three major businesses, including non-volatile memory chips, voice coil motor driver chips, and smart card chips. According to the semi-annual report, during the reporting period, Juchen's main product lines such as non-volatile memory chips, voice coil motor driver chips, and smart card chips achieved sales revenues of RMB 205.3198 million, RMB 32.6941 million, and RMB 25.0144 million in the first half of the year, respectively, up 9.27%, 126.76%, and 67.95% year-on-year.

Judging from the H1 performance, Juchen Co., Ltd. continued last year's high growth trend, and its comprehensive gross profit margin also increased from 28.49% in 20Q4 to 32.56% in 21Q2, a consecutive two quarters of month-on-month growth; in the long run, Juchen Co., Ltd. focuses on three major chip businesses, and with the continuous accumulation of R&D investment, it continues to improve its own strength and promote domestic substitution of semiconductors, and has broad development space in the future.

Technological innovation is the endogenous force for the growth of a company's business scale, which is inseparable from the company's continuous R&D investment. In terms of technological innovation, Juchen Co., Ltd. continues to carry out important technical research in the chip field and strengthen the company's core competitiveness through technological innovation. In the first half of 2021, Juchen Co., Ltd. invested 32.1809 million yuan in R&D, a significant increase of 43.87% over the same period last year. The proportion of R&D investment in revenue also increased by 1.92 percentage points compared with last year. As a technology-intensive enterprise, Juchen Co., Ltd. has always attached great importance to R&D investment and continuously improved its independent R&D capabilities for core chips.

At the same time, the continuous strengthening of the core competitiveness of enterprises is inseparable from the professional talent team. It is understood that in the years of chip development practice, Juchen Co., Ltd. has formed a high-level, professional and stable talent team and intellectual property advantages in core products such as non-volatile memory chips, voice coil motor driver chips, and smart card chips. The number of R&D personnel has also increased from 67 in the same period last year to 73, laying a solid foundation for the improvement of the core competitiveness of products.

Patent results are an important reflection of the R&D strength of the talent team. Judging from the patent situation in the first half of 2021, Juchen Co., Ltd. has added 21 intellectual property authorizations, including 4 invention patents, 1 utility model patent, and 16 integrated circuit layout designs. The technical advantages of Juchen Co., Ltd.'s core products have been further enhanced.

Strengthen the layout of memory chips and promote the process of domestic substitution

Driven by continuous R&D investment and technological innovation, Juchen Co., Ltd. currently has three major businesses, including voice coil motor driver chips, smart card chips and memory chips, among which memory chips remain one of its core businesses.

As the storage application market gradually opens up, Juchen Co., Ltd. further explores markets with high technological barriers and added value, such as automotive electronics and DDR5 memory; in addition, Juchen Co., Ltd. has also started to deploy in the NOR Flash field to further strengthen its layout in the storage chip market.

As is known in the industry, the automotive electronics industry has a huge market size and high requirements for memory chips, which also builds a high threshold for automotive chips. Juchen Co., Ltd. is a leading domestic EEPROM company with a full range of A2-level automotive-grade EEPROM products, which are mainly used in peripheral components such as on-board cameras, LCD displays, entertainment systems, and core components such as battery management systems.

In the first half of this year, Juchen's automotive-grade EEPROM has made key progress. According to Juchen's interim report, the automotive-grade EEPROM has obtained the IATF 16949:2016 automotive industry quality management system compliance certificate issued by a third-party authority.

To help the automotive industry solve the chip shortage problem, Juchen Co., Ltd. actively promotes the verification of automotive-grade EEPROM. Some A1-level EEPROM products are expected to complete AEC-Q100 reliability standard certification in the fourth quarter of this year.

Overall, the layout of automotive-grade EEPROM is just a representative of Juchen Co., Ltd. in the field of domestic storage. Under the opportunity of domestic substitution, Juchen Co., Ltd. is also extending new businesses in the fields of EEPROM, NOR Flash in DDR5.

At present, Juchen Co., Ltd.'s EEPROM products used in DDR5 have passed the testing and certification of some downstream memory module manufacturers, and are expected to achieve mass production and sales as early as the second half of this year.

Regarding the competitive advantage in NOR Flash, Juchen executives said that some of Juchen's EEPROM customers also have demand for NOR Flash, so the company's promotion to such customers will be faster. In addition, he believes that the current NOR Flash industry is not in a situation of "oversupply" but "shortage of supply".

According to the financial report, Juchen's NOR Flash products have also established certain technological advantages over similar products on the market in terms of reliability (over 200,000 erase and write times, over 50 years of data retention, temperature range of -40°C-125°C) and power consumption and other key performance indicators. Currently, low-capacity NOR Flash products have been sent to target customers in small batches, and it is expected that mass production of products with a capacity of 64Mb and below will be achieved from Q3 this year.

Overall, while sticking to the storage chip track, Juchen Co., Ltd. has vigorously explored new markets and enriched its product layout in areas such as driver chips.

summary

According to the forecast of market research institutions, during the 14th Five-Year Plan period, my country's integrated circuit design industry is expected to continue to maintain a high growth rate of more than 20%. my country has become the world's largest and fastest-growing integrated circuit market, and the integrated circuit industry is in a golden period of development.

At the same time, under the trend of the Internet of Everything, the capacity of information is rapidly expanding, and people are paying more attention to the reliability and security of storage, which will drive the growth of demand for storage chips. In the context of the current global chip shortage, local storage chip companies will usher in important development opportunities.

Judging from Juchen’s products, its product line layout fits the development trend of the domestic integrated circuit industry and has great room for future growth. More importantly, Juchen has a clear understanding of domestic demand and its own positioning and is able to do it in-depth and practically. It will maintain a good growth momentum in the future and create a new development pattern.