Another chip company plans to log in to the Science and Technology Innovation Board. Recently, Shenzhen Tiandeyu Technology Co., Ltd. (hereinafter referred to as "Tiandeyu") has submitted a draft prospectus to the Shanghai Stock Exchange, and the company accelerates its IPO on the Science and Technology Innovation Board. According to its prospectus, the company plans to raise 379 million yuan in this IPO to be used for projects such as the industrial upgrading of mobile smart terminal integrated chips.
So let’s take a look at what this company is today.
html's annual revenue exceeded 1.1 billion yuan, and display driver chips account for nearly 80%Data shows that Tiandeyu is an integrated single-chip research and development, design and sales company focusing on the field of mobile smart terminals. The company is based in the Chinese market and is developing globally, providing customers with chips in many HCI human-computer interactive application fields such as mobile phones, wearable devices, smart audio, and new retail. The company's products cover smart mobile terminal display driver chips, camera voice coil motor driver chips, fast charging protocol chips, electronic tag driver chips and solutions.
Although the company said in its introduction that its chip products cover multiple aspects, if the revenue structure of the sub-company, its operating income mainly comes from display driver chips (including touch and display integrated chips) products.
prospectus shows that in the past three reporting periods, the proportion of operating income generated by Tiandeyu in display driver chips accounted for 78.67%, 80.21% and 74.87% of the company's main business income, respectively. In 2021, Tiandeyu's total operating income was approximately 1.116 billion yuan, of which the display driver chip revenue was 835 million yuan. It can be said that the company's revenue source is relatively fixed, but it is also relatively single.
Speaking of the company's layout in other products, its revenue scale needs to be further improved. For example, in terms of camera voice coil motor driver chips, the company's annual revenue in 2021 was 48.1161 million yuan, accounting for only 4.31%, and the revenue scale and proportion have been declining year by year; in terms of fast charging protocol chips, the company's annual revenue in 2021 was 69.0266 million yuan, accounting for only 6.19%. In terms of electronic price tag driver chips, the company has developed rapidly, from its annual revenue of 9.2465 million yuan in 2019 to 163 million yuan in 2021, accounting for 14.63%, but the proportion still has a lot of room for improvement.
It is worth noting that the company's revenue is mostly from display driver chip products, but in this field, leading companies are mainly distributed in Taiwan, South Korea, the United States and other regions. Some industry leading companies have mass-produced cutting-edge products such as AMOLED DDIC and FTDI in the mobile phone field. Compared with leading companies, Tiandeyu has a big gap in product iteration speed and layout depth.
Tiandeyu also admitted in the prospectus that if the company cannot accelerate product research and development and iteration in the future, there will be a gap compared with leading companies in the industry, which may lead to a decline in the company's competitiveness, bringing risks such as market share declines and revenue declines.
adopts the Fabless business model and is highly dependent on external suppliers
In terms of business model, Tiandeyu adopts the Fabless model. The so-called Fabless model refers to the fables model. Under this model, chip design companies are mainly engaged in chip research and development, design and sales, and wafer production, manufacturing and packaging testing are completed by wafer manufacturing companies and packaging testing companies respectively.
At present, Tiandeyu focuses on the research, development, design and sales of chips, and then entrusts wafer production and packaging testing to wafer manufacturers and packaging testing manufacturers respectively to complete them, and then sells them after obtaining the finished chip product.
However, the risk of Fabless is that it may make chip design manufacturers rely on external suppliers. The prospectus shows that from 2019 to 2021, the proportion of Tiandeyu's procurement amount to the top five suppliers was 73.50%, 81.88% and 79.60% of the total procurement amount, respectively, which were relatively concentrated.
Take 2021 as an example. The company's top five suppliers are Hefei Jinghe Integrated Circuit Co., Ltd. (wafer), Xinhuicheng and its subsidiaries Jiangsu Huicheng Optoelectronics Co., Ltd. (packaging and testing), Interhub Technology Co., Ltd. and SYNIC Solution Co., Ltd. (wafer), Lianxin Integrated Circuit Manufacturing (Xiamen) Co., Ltd., Lianhua Electronics Co., Ltd., Hejian Chip Manufacturing (Suzhou) Co., Ltd. (wafer), and HI-STEP Technology Ltd. (wafer).
Among them, one supplier that provides wafer manufacturing, Hefei Jinghe Integrated Circuit Co., Ltd., has a purchase amount of 54.70%, while only one supplier that provides packaging and testing (Xinhuicheng and its subsidiary Jiangsu Huicheng Optoelectronics Co., Ltd.) has entered the top five.
In 2020, among Tiandeyu's top five suppliers, the purchase amount of Hefei Jinghe Integrated Circuit Co., Ltd. accounted for only 33.75%, and the purchase amount of another wafer manufacturing supplier, World Advanced Integrated Circuit Co., Ltd., accounted for 17.77%. The suppliers for packaging testing are still Xinhuicheng and its subsidiaries. Earlier in 2019, the same packaging and testing supplier was still among the top five.
In other words, it seems that the proportion of procurement amounts of the top five suppliers has decreased to a certain extent, but the concentration has further increased, and the situation of high dependence on packaging and testing supplier Xinhuicheng and its subsidiaries has not changed. Tiandeyu explained that the packaging process of display driver chips is relatively complex, and there are few packaging and testing factories that can provide related packaging services.
But on the other hand, Tiandeyu disclosed in the prospectus that if the company and suppliers have a change in the future cooperative relationship or the supplier's operating conditions change, it may cause the company to fail to obtain supply in a timely manner, which will have an adverse impact on the company's production and operation activities.
bundles major shareholders to sell products? Business independence is questioned
In terms of sales model, Tiandeyu adopts a sales model of "agent as the main and direct sales as the auxiliary", with the issuer and its subsidiary Hong Kong Jetta as the main sales platform. The company's direct sales are mainly for terminal brand customers, module factories and panel factories, while agents place orders with the company according to the needs of downstream module factories and panel factories, and sell products to terminal customers. The sales between the company and the agent are buyout sales.
Judging from the sales channel data, agents are the main source of the company's revenue. Taking 2021 as an example, the company's direct sales accounted for only 10.47%, while the sales accounted for 89.53%.
However, Tiandeyu's agent and terminal customers overlap with the indirect controlling shareholder Tianyu Technology (also its parent company before its independent business and its current indirect controlling shareholder). According to data, in November 2010, the Taiwanese-funded enterprise Tianyu Technology established Tiandeyu through its subsidiary, recruited an independent R&D team for mobile terminal chips and set up Tainan Jetta to carry out new product research and development and sales.
prospectus shows that as of the end of 2020, Tiandeyu's sales revenue to overlapping agents and its proportion of total sales revenue in the current period was 30.97%. In addition, the overlapping end customers are large listed companies such as Helitai, BOE, Guoxian Technology (a subsidiary of listed company Kaisheng Technology), with the total overlap ratios of 13.38%, 11.50% and 11.61% respectively. The overlapping direct customers are mainly large enterprise groups such as Sharp Company and Qunchuang Optoelectronics or their subsidiaries. Among them, Sharp is a affiliated company of Hon Hai Precision, and Qunchuang Optoelectronics is an affiliated party that indirectly holds more than 5% of the issuer's shares. As of the end of 2020, the revenue of related-party customers among overlapping direct customers was RMB 66.8818 million, accounting for 11.92% of the total sales revenue in the current period.
In the second round of inquiries, the Shanghai Stock Exchange also paid attention to Tiandeyu's peer competition and business independence. The Shanghai Stock Exchange requires that the issuer (Tiandeyu) explain the overlap and rationality of the terminal customers and agent customers, as well as whether it complies with industry practices and whether it has a significant dependence on Tianyu Technology, whether both parties transfer benefits through overlapping customers, and whether it affects the issuer's business independence.
Tiandeyu replied to this that the overlap between the company and Tianyu Technology agent customers is in line with the objective facts of the industry. It also stated that the situation of overlapping with Tianyu Technology in the direct customer field is expected to exist within a certain range in the future. But it is promised that the sales proportion of overlapping customers will be continuously reduced in the future. However, whether this promise can be fulfilled will take time to prove it.
However, according to the announcement of the 41st review meeting of the Science and Technology Innovation Board Listing Committee in 2022, Tiandeyu will be held at the meeting for deliberation on May 23. The company's listing has been successfully approved, which is worth paying attention to.
