on the afternoon of November 15, lanqi technology (688008) held a performance briefing for the third quarter of 2023. the company's senior management exchanged views with investors on the operation, research and development progress, industry trends and other issues.

when asked about the company's layout in AI-related fields, yang chonghe, chairman and CEO of lanqi technology, stated at the performance meeting that the development of artificial intelligence will directly drive the rapid growth of demand for "computing power" and "storage power". the system needs higher and stronger computing power, higher bandwidth and larger capacity memory. 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 the field of artificial intelligence. 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 of artificial intelligence. In the future, the company will rationally allocate resources and develop competitive products according to the needs of customers and the industry." Yang Chonghe talked about.

In terms of related chip progress, the company's PCIe 5.0/CXL 2.0 Retimer chip was successfully mass-produced at the beginning of this year, and during the reporting period, it has steadily advanced the development of MRCD/MDB chip and CXL MXC chip production version.

according to the company's director and general manager Stephen Kuong-Io Tai, PCIe 5.0 Retimer chips continued to be imported by customers this year and have already started shipping. With the gradual increase in downstream shipments of PCIe 5.0-related server platforms, the demand for PCIe 5.0 Retimer chips is expected to increase further next year.

previous financial reports showed that although the company's DDR4 memory interface chip and CPU shipments have declined year-on-year since this year due to the impact of customer destocking due to the decline in global server and computer industry demand. In the first three quarters of 2023, the company's operating income was 1.525 billion yuan, a year-on-year decrease of 47.06; the net profit attributable to shareholders of listed companies was 0.234 billion yuan, a year-on-year decrease of 76.60.

However, in the third quarter of 2023, as shipments of DDR5 memory interface chips continued to increase, the company's main operating indicators improved significantly for two consecutive quarters. In the quarter, the company realized operating income of 0.598 billion yuan, up 17.61 from the previous quarter; net profit attributable to shareholders of listed companies was 0.152 billion yuan, up 144.47 from the previous quarter; net profit attributable to shareholders of listed companies was 0.152 billion yuan, up 4222.53 from the previous quarter; in the third quarter, the sales revenue of the company's interconnected chip product line was 0.581 billion yuan, up 16.80 from the previous quarter, and the gross profit margin was 66.33, up 6.78 percentage points from the second quarter; the company's sales revenue of the server platform product line was 0.014 billion yuan, up 67.68 from the previous month, with a gross profit margin of 5.65.

How do you view the overall trend of the industry and the company's prospects? Yang Chonghe analyzed to investors that, according to industry analysis, the server and computer industry destocking is nearing completion, and the industry expects server demand to resume growth from next year, which in turn will drive the demand for the company's related products to continue to improve.

he believes that next year will be an important time node for DDR5 penetration. at present, the mainstream view in the industry is that DDR5 penetration will exceed 50% in mid -2024 and will further increase by 2025. This will help the company's sales revenue of DDR5 related products continue to grow in the following year. At the same time, the child iteration of the DDR5 memory interface chip has officially started, and its iteration speed is significantly faster than the DDR4 generation.

"Starting from 2024, several new products of the company will be gradually increased, including PCIe 5.0 Retimer chips, MRCD/MDB chips, MXC chips, CKD chips, etc. As these new products are all self-developed products of Lanqi, they are expected to achieve a higher level of gross profit margin. At the same time, Lanqi has a global leading or global first competitive advantage in these fields, and the volume of new products will have a positive impact on the company's future performance." Yang Chonghe said.