on September 27, 2023, lanqi technology (688008) announced that the company would accept institutional research on September 26, 2023, blackRock Asset Management, Changxin Fund Management Co., Ltd., Bodao Fund Management Co., Ltd., Western Profit Fund Management Co., Ltd., Huatai Baoxing Fund Management Co., Ltd., Shenwanlingxin Fund Management Co., Ltd., PICC Asset Management Co., Ltd., China Merchants Cigna Asset Management Co., Ltd., Boyu Capital Co., Ltd., Gefei Asset Management Co., Ltd., Everbright Securities Asset Management Co., Ltd., Bank of America, Anxin Securities Self-operated Department, Shanghai Qinxin Private Fund management partnership (limited partnership), Xingyin Wealth Management Co., Ltd., Huaxia Future Capital Management Co., Ltd., Guangfa Securities Co., Ltd., Minsheng Securities Co., Ltd., China Post Securities Co., Ltd., Lombard Odier(Singapore)Ltd, Stillpoint Investments, Tianhong Fund Management Co., Ltd., Xingzheng Global Fund Management Co., Ltd., Guojin Fund Management Co., Ltd., Cathay Pacific Fund Management Co., Ltd., Zhuque Fund Management Co., Ltd. participated.

The details are as follows:

Q: In the context of the rapid development of AIGC, what products will benefit the company?

a: the development of IGC will directly drive the rapid growth of the demand for "computing power". the system needs higher and stronger computing power, and it will also directly drive the continuous growth of the demand for "storage power". the system needs memory with better bandwidth and larger capacity. With the growth of "computing power" and "saving power", there is also a higher demand for "transportation capacity. "Capacity" can be understood as the ability to move data between computing and storage, that is, the system requires higher bandwidth and faster transmission.

lanqi is an enterprise that provides "transportation capacity" for IGC computing. in recent years, the company has been deeply engaged in related interconnection technologies, including memory interconnection, PCIe interconnection and CXL interconnection technology. these high-speed interconnection technologies can effectively improve the "transportation capacity" of the system. lanqi has developed several chips based on the above technologies, including MRCD/MDB, PCIe Retimer, CXL MXC, etc, it will play an important role in the future IGC computing system.

The impact of IGC on the company's interconnect chips specifically includes the following three aspects

1, I application will increase the demand for memory capacity and bandwidth, correspondingly drive the demand for server memory interface and module supporting chips to remain stable upward, and further increase the demand for MRCD/MDB;

2. With the increasing demand for memory capacity, the application demand for memory expansion and memory pooling will increase in the future, which will bring long-term and broad growth space for CXL memory expansion controller chip (MXC);

3. With the growth of I applications, more and more scenarios need to configure GPU BOX, which will increase the demand for PCIe Retimer chips.

in addition, I applications will drive the continuous growth of demand for computing power. the I chip developed by the company is aimed at I reasoning applications under big data throughput. the goal is to improve system efficiency and provide customers with more cost-effective products.

q: have the RCD chips of the second generation of DDR5 been shipped at present? What is the pace of volume in the future?

a: in the first half of this year, the DDR5 RCD chips shipped by the company were mainly the first generation of mass-produced products. the second generation of DDR5 RCD chips were put into trial production last year and have been shipped on a small scale this year. According to the latest public information, one of the major CPU manufacturers announced that its next-generation server CPU platform will be released in December 2023, and it is expected that the demand for DDR5 second-generation RCD chips will further increase.

Q: The company's gross profit margin rose significantly in the second quarter. How do you view the trend of gross profit margin of related products in the second half of the year and will it continue the good trend in the first half of the year?

A: According to the industry's outlook for the pace of DDR5 penetration, it is estimated that the penetration rate may exceed 50% in 2024. Therefore, as the penetration rate of DDR5 related products continues to increase, the average gross margin of memory interface chips is expected to stabilize upward. Due to the large variety of the Company's existing products and the large differences in gross margins of different products, the Company's consolidated gross margin is closely related to the product structure and there is uncertainty, reminding investors of investment risks.

Q: What are the differences between MRDIMMs and traditional server memory chips? How do you predict future demand and what impact will it have on the memory interface chip industry and the company?

a: the development of I and big data applications and the evolution of related technologies have pushed the number of server CPU cores to increase rapidly. there is an urgent need to greatly increase the bandwidth of the memory system to meet the data throughput requirements of each core of the multi-core CPU. MRDIMM is generated based on this application requirement.

MRDIMM Chinese name is multi-way merged array dual in-line memory module, which is a higher bandwidth memory module and adopts DDR5 LRDIMM "1+10" infrastructure (I .e. it needs to be matched with 1 MRCD chip and 10 MDB chips. Compared with LRDIMM, MRDIMM can access two arrays on the memory module at the same time, providing double bandwidth, and the first generation products can support up to 8800MT/s.

MRCD/MDB is used in MRDIMM. Compared with the memory interface chips of the same period, its design is more complex, its support rate is higher, and its value will be increased. More importantly, as MRDIMM adopts the architecture of "1 MRCD +10 MDB", with the improvement of its future penetration rate, the industry's demand for MDB chips will be greatly increased.

Q: When is the MRCD/MDB chip expected to start?

a: according to the latest public information of relevant mainstream server CPU manufacturers, the server CPU platform supporting MRDIMM is planned to be released next year. therefore, MRCD/MDB chips for MRDIMM are expected to be gradually increased from next year.

Q: What is the relationship between the demand for mainstream AI servers and the demand for PCIe Retimer chips? Does the company's products have a competitive advantage?

Answer: With the growth of I applications, there are more and more scenarios that need to configure GPU BOX, and the demand for PCIe Retimer chips will also increase. Taking a typical mainstream I server with 8 GPU as an example, considering the requirements for signal integrity and transmission rate, the system needs to be configured with 8 or even 16 PCIe Retimer chips. If it is a mainstream I server with 16 GPU, the number of PCIe Retimer chips to be configured will increase accordingly. According to industry analysis, the market size of PCIe 5.0 Retimer chips is expected to grow significantly compared with PCIe 4.0. At the same time, for the sake of supply security, customers will generally choose 2-3 PCIe 5.0 Retimer chip suppliers to supply.

As one of the world's leading suppliers of PCIe 5.0/CXL 2.0 Retimer chips, the company's self-developed PCIe SerDes IP has been successfully applied to this product, and the self-developed IP has brought good integration, and the company has certain advantages in terms of product latency and channel adaptability.

Q: What are the current application areas of CXL MXC chips? What is the current mass production progress of the company's related chips?

Answer: The CXL MXC chip came into being based on the downstream demand for continuous growth in memory capacity. It is mainly used in two directions, memory expansion and memory pooling.

The first large-scale application will be memory expansion. At present, mainstream memory manufacturers have successively introduced CXL memory expansion products. After the world's first MXC chip in May last year, the company has cooperated with many of the world's top cloud computing vendors and memory leaders. In May this year, Samsung Electronics launched its first 128GB DRM supporting CXL 2.0, and said it would mass produce this year to accelerate the commercialization of the next generation memory solution. The company's MXC chip is used in the solution and is the core control chip. The other application is memory pooling, which is more about improving the economic benefits of the entire data center, such as balancing the needs of server memory peaks and troughs.

In the first half of 2023, the company completed the first generation of CXL MXC chip production version of the flow film and sample preparation, is currently advancing pre-mass production related preparations, is expected to seize the opportunity in the future global market competition. The product is expected to begin next year on the volume climbing phase.

Q: Introduce the application field and competition pattern of the company's clock generator chip, and what is the current research and development progress?

Answer: The clock generator developed by the company is a kind of clock chip, which is used to generate clock signals. Currently, it is mainly used in enterprise-level storage devices and other fields. Due to the difficulty of design and high technical requirements of this kind of products, its main market share has been occupied by a few American and Japanese manufacturers for a long time. At present, the company is advancing the research and development of the first generation of clock generator chip engineering samples in an orderly manner, with the goal of completing the research and development of engineering samples by the end of 2023.

Q: How big is the market space for CKD in the future? What is the current progress of the company's research and development of this product? When will it start to be measured?

a: CKD chip is a standardized product defined by JEDEC. when DDR5 data rate reaches 6400MT/s and above, CKD chip will become standard for UDIMM and SODIMM (for desktop and notebook computers). CKD chips are a new increment for the industry, when the annual industry demand for CKD chips will be positively correlated with the number of UDIMMs and SODIMMs required for the year (with support rates of 6400MT/s and above). The company plans to complete the development and shipment of the mass production version of the first child CKD chip of DDR5 by the end of 2023, and is expected to enter the ramp-up phase next year.

Q: Will the company expand more applications on SerDes IP in the future?

A: SerDes is the basic technology for the physical layer of several important protocols (such as PCIe, USB, Ethernet, etc.), and is widely used in high-speed interconnection in the fields of servers, automotive electronics, and communications.

The company attaches great importance to the research and development of SerDes and the layout of intellectual property rights. The self-developed SerDes IP has been applied to PCIe 5.0/CXL 2.0 R.etimer chip. Due to the good integration brought by the self-developed IP, the delay and channel adaptability of the company's products have advantages. In the future, the company will continue to upgrade and optimize SerDes IP. At the same time, based on this underlying technology, the company will study some potential business opportunities and lay out them at the right time.

Q: What are the future application scenarios of the company's AI chips?

a: the typical application scenarios of the first generation I chip under development include recommendation system and natural language processing model processing under big data throughput in the internet field. at the same time, the application scenarios of biomedical/medical big picture stream processing in the medical field and big data in the internet of things of artificial intelligence are also one of the target markets of the company I chip in the future.

The goal of the company's I chip solution is to provide customers with more efficient and cost-effective solutions compared to traditional solutions under application scenarios similar to the above.

Lanqi Technology (688008) main business: providing chip-based solutions in the field of cloud computing and artificial intelligence.

Lanqi Technology 2023 reported that the company's main revenue was 0.928 billion yuan, down 51.87 percent from the same period last year. Net profit attributable to the parent was 81.8558 million yuan, down 87.98 percent from the same period last year. Deduction of non-net profit was 3.812 million yuan, down 99.23 percent from the same period last year. Among them, in the second quarter of 2023, the company's single-quarter main revenue was 0.508 billion yuan, down 50.52 percent from the same period last year; non-net profit was deducted by 3.5161 million yuan in a single quarter, down 98.66 year on year. Debt ratio 7.43, investment income 26.6855 million yuan, financial expenses -73.3594 million yuan, gross profit margin 56.32.

The stock has been rated by 13 agencies in the last 90 days, with 10 buy ratings and 3 overweight ratings; the average institutional target price for the past 90 days is 71.28.

The following is detailed earnings forecast information:

Margin trading data show that the net outflow of financing of the stock in the past three months is 89.7604 million, and the financing balance is reduced; the net outflow of securities is 0.748 billion, and the balance of securities is reduced.

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