(Yicai Global) June 21 -- Cambricon Technologies, the world's most valuable smart chip startup, will consider listing on mainland China's A-share market, according to its founder and chief executive.
"We would prefer listing in the A-share market," Prof. Chen Tianshi told Yicai Global without disclosing a timetable.
This week's surprise decision by Chinese smartphone giant Xiaomi to delay a much-vaunted plan to go public on the mainland has not dismayed Chen, who seems buoyed by potential enthusiasm among investors to buy into his Beijing-based firm. His upbeat outlook is perhaps not misplaced. Cambricon has just raised hundreds of millions of US dollars in a Series B round of financing, valuing it at USD2.5 billion.
"The government is offering support to the chip industry and unicorns, so investors remain active in investing in A-shares and Cambricon's valuation will be bolstered," he said. "Although the A-share market and Hong Kong's stock market recently saw adjustments in valuations, A-shares will still have higher valuations in the long term."
Founded in 2016 by brothers Chen Tianshi and Chen Yunji, both researchers at the Chinese Academy of Sciences' Institute of Computing Technology, Cambricon has said it will constitute 30 percent of China's smart chip market in the next three years and supply more than one billion units globally.
The pioneering firm launched two products in May: a cloud-based smart chip Cambricon MLU100 and a new version of its AI processor Cambricon 1M. The former can handle sound, image and natural language processing.
Still, a senior industry insider has doubts about the possibility of Cambricon listing in the short-term.
"A valuation just represents investment institutions' expectation of the company," he said. "It remains to be seen whether Cambricon's products can be accepted by the market and widely used, while its product stability and support for app development and upgrades are also in question."
The insider highlighted the importance of making chips that can be used for a long period of time. "If a company wants a seat in the fields of data center and AI, its products must be good for use for several years," he said. "No one will upgrade a device or chip every one to two years."
"Market competition requires huge capital investments, Cambricon is now valued at over USD 2 billion, but that's not enough," Hu Yu, chief executive of fellow artificial intelligence unicorn iFlytech told Yicai Global. "The development of chips entails the development of peripheral products, and this may be a challenge for startups."
When Cambricon unveiled its new products in Shanghai last month, it signified the firm's official entry into the server market. "The significance of cloud products lies in the ability to integrate data in a more intensive manner," Chen Yunji told Yicai Global.
Referring to the new offering, CEO Chen said, "We hope to let people worldwide use smart processors. By using Cambricon chips, customers can spend less but do more."
The company has nurtured multiple alliances in the semiconductor and AI sectors with major players such as Lenovo, Sugon, and iFlytech. Cambricon's 1A terminal chip has so far been used in several smart terminals such as Huawei's Mate 10, P20, and Honor 10 handsets.
"Cambricon's strategy is very smart, but it also faces huge challenges, because there are many giants in the chip industry," iFlytek's Hu said. "For example, nowadays, customers can develop any app on the NVIDIA platform very easily, and this may not be possible with startups like Cambricon."
Nevertheless, the firm is strengthening its efforts to develop its own programming language. "We will definitely develop programming languages in the future," Chen said. "I'm now focusing my energy on this area."
Though the average age of Cambricon's tech team members is just 25, most of them are already well versed in chip design and development as well as AI research. Many started to work in these fields while in college.
"Cambricon has become a frontrunner in the academic research and industrial application of smart processors and has acquired over 100 key patents related to deep-learning chips," said Chen. "In the future, the company will face a market worth more than CNY100 billion covering servers, smart terminals, and robots."
Editor: William Clegg