Voice AI chipmaker Nationalchip ready to

　　By LI Biao

　　Nationalchip is seeking to raise 460 million yuan (US$63 million) in a Shenzhen IPO.

　　Nationalchip was founded in 2001 by four Zhejiang University professors to make chips for digital TVs. The company was valued at around 400 million yuan in 2008 and listed on the New Third Board in 2016.

　　Around that time China’s tech industry turned its attention to AI. Nationalchips formed its AI Business Group in 2016 and produced the first voice AI chip prototype the following year. In marketing brochures, the company is described as a maker of “IoT-oriented AI chip products.” Between 2018 and 2021, Nationalchips closed three funding rounds, each over 100 million yuan, and its valuation shot up to 2 billion yuan.

　　From 2019 to 2022, revenue jumped from 340 million yuan to 650 million, and the company turned a profit of 54 million yuan last year, with over 90 percent of the sales from TV chips. The much-publicized IoT business brought in less than 20 million yuan, most of which was not AI-related.

　　Although Nationalchip has recently signed with g JD.com and Xiaomi to supply voice chips, the relationship has yet to translate into sales.

　　With 21.5 percent of the market, Nationalchip is the biggest TV chip maker, with gross margins of up to 30 percent, but the market has saturated. Nationchip's growth was driven by a government program to provide digital TV in rural areas. Demand is already down as the program nears completion, while inventories have bulged from 81 million yuan to over 200 million in three years. For some IoT chips, Nationalchip has sold sell less than two-thirds of what it produced.

　　The five biggest clients, all TV makers, contributed over 80 percent of total sales. Revenue and profits shot up in 2021 when TV maker Skyworth became an investor.

　　Nationalchip doesn’t own key technology nor has its own assembly lines. It designs chips but licenses IP cores (the layout of a unit that is the intellectual property of the chip) from other chip makers, and contracts manufacturing to a handful of factories.