Jin Enqi, reporter of Shenzhen Business Daily and Reading Client

On December 16, VeriSilicon (688521) released a private placement plan to invest in AIGC and smart mobility projects.

Released the fixed increase plan

Invest in AIGC and smart mobility projects

It is understood that VeriSilicon Co., Ltd. announced a plan to issue A-shares to specific targets in 2023, and the total amount of funds planned to be raised will not exceed 1.807 billion yuan (including this number).

According to the plan, the target of this issuance is no more than 35 securities investment fund management companies, securities companies, trust and investment companies, finance companies, insurance institutional investors, qualified foreign institutional investors (QFII), other domestic legal person investors and natural persons and other specific investors who meet the conditions stipulated by the China Securities Regulatory Commission.

The issue price shall not be less than 80% of the average trading price of the company's shares in the 20 trading days prior to the pricing benchmark date.

According to the plan, the issuance will be mainly used for the R&D projects of Chiplet solution platforms in the field of AIGC and smart travel, as well as the R&D and industrialization projects of a new generation of IP for AIGC, graphics processing and other scenarios.

The total investment of the project is 1.089 billion yuan and 719 million yuan respectively, and the planned investment and raised funds are 1.088 billion yuan and 719 million yuan.

screenshot from VeriSilicon's stock plan announcement

For the purpose of this issuance, VeriSilicon said that the company's raised funds will be invested in the R&D projects of Chiplet solution platforms in the field of AIGC and smart mobility, as well as the R&D and industrialization projects of a new generation of IP for AIGC, graphics processing and other scenarios, and expand the R&D team by enriching the integrated circuit-related technologies and IPs required for R&D, further enhancing the company's R&D soft and hard power, and promoting the company's long-term development.

At the same time, it is conducive to enhancing the company's core competitiveness and improving profitability.

VeriSilicon said that before the issuance, the company had no actual controller, and the company's largest shareholder was VeriSilicon Limited, which held 75,678,400 shares of the company as of the end of the reporting period, accounting for 15.12% of the total share capital before the issuance. After the completion of this issuance, the company still has no actual controller, which will not lead to a change in the control of the company.

There is a high dependence on technicians

There is a risk of overseas operation

In the announcement, VeriSilicon reminded of this risk, including the risk of integrated circuit design and development, the risk of loss of R&D personnel and the risk of insufficient raised funds.

VeriSilicon said that integrated circuit design companies need to carry out forward-looking R&D and design according to the development trend of the industry, and whether the R&D direction is consistent with the future development direction of the industry is more important, if the company cannot keep up with the mainstream technology and cutting-edge needs of the industry in the future, it will be possible to make the company's technology R&D direction deviate from the development direction and demand of the industry, and cannot meet the needs of downstream customers, which will have an adverse impact on the company's operation.

At the same time, the integrated circuit design industry is a technology-intensive industry and has a high dependence on technical personnel. As of the end of June 2024, the company has 1,640 R&D personnel, accounting for 89.18% of the total number of employees.

In the future, if the company's salary level loses its competitive advantage compared with competitors in the same industry, it will be difficult to introduce more high-end technical talents, and even lead to the loss of existing backbone technical personnel, which will have an adverse impact on the company's production and operation.

VeriSilicon also mentioned that there are risks of overseas operations. The company has branches in the United States, Europe, Japan, Hong Kong, Taiwan and other regions and actively expands overseas business. From January to June 2024, the company's revenue from overseas sources was 329 million yuan, accounting for 35.28% of the company's total operating income.

In addition, VeriSilicon said that there is a risk of large accounts receivable balances and bad debts. At the end of the reporting period, the book value of the company's accounts receivable was 745 million yuan, 1.054 billion yuan, 1.022 billion yuan and 1.053 billion yuan respectively, accounting for 24.86%, 37.56%, 37.59% and 37.23% of the current assets at the end of the current period respectively.

The loss in the first three quarters was nearly 400 million yuan

The loss is more than the whole of last year

According to public information, VeriSilicon Microelectronics (Shanghai) Co., Ltd. is an enterprise that relies on independent semiconductor IP to provide customers with platform-based, all-round, one-stop chip customization services and semiconductor IP licensing services. The company's business scope covers consumer electronics, automotive electronics, computers and peripherals, industry, data processing, Internet of Things and other industry applications.

According to the latest financial report, VeriSilicon's loss in the first three quarters of 2024 exceeded 396 million yuan, which has exceeded the annual loss in 2023.

According to the data, as of the end of the reporting period, the company's total operating income was 1.65 billion yuan, a year-on-year decrease of 6.5%; The net profit attributable to the parent company was -396 million yuan, a year-on-year decrease of 194.94%. Among them, the total operating income in the third quarter was 718 million yuan, an increase of 23.6% year-on-year; The net profit attributable to the parent company was -111 million yuan, an increase of 29.01% year-on-year.

Screenshot from VeriSilicon's 2024 third quarter report

For the whole year of 2023, VeriSilicon's loss will be 296 million yuan.

According to the data, in the first three quarters, VeriSilicon's semiconductor IP licensing business revenue increased by 6.13% year-on-year, and the one-stop chip customization business revenue decreased by 11.63% year-on-year.

In addition, the financial report shows that VeriSilicon's R&D expenses increased significantly during the reporting period, to 880 million yuan, compared with 699 million yuan in the same period last year.

VeriSilicon said that the change in the company's net profit in the reporting period was mainly due to the year-on-year decline in revenue and gross profit, as well as the increase in R&D expenses and other period expenses, resulting in fluctuations in net profit.

In the secondary market, VeriSilicon's shares opened higher on December 17 and then went lower, rising as high as 4.41% at the opening, and down 4.39% at 47.9 yuan per share as of press time.