ICG.NASDAQIntchains Group LTD
20-F: Intchains Group Limited Reports Fiscal Year 2023 Results Amidst Blockchain Industry Challenges
Sentiment:
Annual Results
Intchains Group Limited's 2023 financial results reflect a challenging year marked by decreased revenue and a net loss, despite maintaining confidence in long-term prospects and technological innovation.
Worse than expectedThe company's revenue decreased significantly, and it experienced a net loss compared to net income in previous years.
Summary
- Intchains Group Limited's 2023 financial results were impacted by challenges in the blockchain industry, resulting in a decrease in total revenue from RMB631.8 million in 2021 to RMB82.2 million (US$11.6 million) in 2023.
- The company recorded a net loss of RMB26.8 million (US$3.8 million) in 2023, a significant shift from the net income of RMB450.1 million in 2021.
- Despite these challenges, Intchains maintains confidence in its business strategy, driven by its commitment to research and development and the upcoming mass production of its 12nm ASIC chip in March 2024.
- In December 2023, Intchains entered into an asset acquisition agreement to purchase assets related to the Goldshell WEB3 infrastructure brand, aiming to expand into the downstream production and sales sector.
- The company operates primarily in China and is subject to evolving PRC laws and regulations, which introduces uncertainties and potential risks to its business operations.
Sentiment
Score: 4
Explanation: The document presents a mixed sentiment. While the company acknowledges significant financial setbacks in 2023, it expresses confidence in its long-term strategy, technological advancements, and expansion initiatives. The overall tone is cautiously optimistic, balancing current challenges with future potential.
Positives
- The company maintains a strong commitment to research and development, enabling continuous innovation.
- The latest ASIC chip, designed and manufactured using a 12nm process node, is set to enter mass production in March 2024.
- Business expansion in Singapore and acquisition of Goldshell WEB3 infrastructure brand assets indicate strategic growth initiatives.
- The company achieved a 100% success rate for all nine tape-outs using its Xihe Platform for 22nm and 12nm ASIC chips as of December 31, 2023.
Negatives
- The company experienced a significant decrease in revenue and a shift to a net loss in 2023.
- The blockchain industry experienced challenges in 2023 and uncertainties in the market had negatively impacted the company's business performance.
- The company generates all of its revenue from sales to customers in the PRC, which exposes it to regulatory risks.
Risks
- Uncertainties in PRC laws and regulations could limit legal protection and hinder the company's ability to offer ADSs in the future.
- The company's ASIC chips business depends mainly on supplies from a single third-party foundry, creating supply chain vulnerabilities.
- Mining difficulty for any reason would negatively affect the economic returns of cryptocurrency mining activities, which in turn would decrease the demand for and/or pricing of the company's products.
- Cryptocurrency exchanges and wallets, and to a lesser extent, the cryptocurrency network itself, may suffer from hacking and fraud risks, which may erode user confidence in cryptocurrency which would in turn decrease the demand for the company's ASIC chip products.
- Cryptocurrency mining activities are energy-intensive, and the availability and cost of electricity will restrict the geographic locations of mining activities, thereby restricting the geographic locations of miners and sales of the company's products.
Future Outlook
The company anticipates mass production of its 12nm ASIC chip in March 2024 and expects to expand its sales outside of the PRC.
Industry Context
The document highlights the challenges faced by the blockchain industry in 2023, which negatively impacted Intchains' business performance. It also mentions the evolving regulatory environment in the PRC concerning cryptocurrency mining, which could further affect the company's operations.
Comparison to Industry Standards
- The document does not provide specific comparisons to industry standards or competitors.
- It does mention that the company's Xihe Platform allows for faster time-to-market compared to industry peers (5-8 months vs. 10-14 months).
Stakeholder Impact
- Shareholders may be concerned about the company's financial performance in 2023 and the decrease in revenue and net income.
- Employees may be affected by potential changes in the company's operations and strategy.
- Customers may be interested in the company's new products and services, such as the 12nm ASIC chip and computing equipment for blockchain applications.
- Suppliers may be affected by changes in the company's production plans and procurement strategy.
Next Steps
- The company plans to begin mass production of its 12nm ASIC chip in March 2024.
- Intchains intends to expand its sales outside of the PRC.
- The company will continue to monitor and adapt to the evolving regulatory environment in the PRC.
Key Dates
| Date | Description |
|---|---|
| 2000-06-24 | The Circular of the State Council on Printing and Distributing Policies for Encouraging the Development of the Software Industry and the Integrated Circuit Industry was issued. |
| 2005-07-21 | The PRC government ended its policy of pegging the value of the RMB to the U.S. dollar. |
| 2006-08 | Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income entered into. |
| 2006-10-03 | The company obtained an undertaking from the Governor-in-Cabinet that no law imposing any tax to be levied on profits or income or gains or appreciations shall apply to the Company or its operations for a period of twenty years. |
| 2007 | China passed a new Enterprise Income Tax Law, or the EIT Law. |
| 2008-01-01 | The EIT Law and its Implementing Rules became effective. |
| 2011-01-28 | The State Council issued the Circular of the State Council on Printing and Distributing Policies for Further Encouraging the Development of the Software Industry and the Integrated Circuit Industry. |
| 2013-12-03 | The Circular on Prevention of Risks Associated with Bitcoin was jointly promulgated by the PBOC, the MIIT, the China Banking Regulatory Commission, the CSRC and the China Insurance Regulatory Commission. |
| 2014-06-24 | The MIIT, the NDRC, the Ministry of Science and Technology of the PRC and the Ministry of Finance of the PRC issued the Outline for Promoting the Development of the National Integrated Circuit Industry. |
| 2014-07-04 | The Notice on Administration of Foreign Exchange Involved in Offshore Investment, Financing and Round-Trip Investment Conducted by Domestic Residents Through Special Purpose Vehicles was promulgated by SAFE. |
| 2015-03-30 | SAFE promulgated the Circular on Reforming the Administration Measures on Conversion of Foreign Exchange Registered Capital of Foreign-invested Enterprises, or SAFE Circular 19. |
| 2015-06-08 | The NDRC issued the Notice on Implementing Major Engineering Packages in Emerging Industries. |
| 2016-06-09 | SAFE issued the Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16. |
| 2016-12-15 | The State Council issued the Notice of the 13th Five-Year Plan for National Informatization. |
| 2017-05-18 | Guarding against the Speculative Risks of Cryptocurrency Trading promulgated by the National Internet Finance Association of China, the China Banking Association; and the Payment & Clearing Association of China. |
| 2017-07-06 | The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. |
| 2017-07-08 | The State Council issued the Notice on Issuing New Generation AI Development Plan. |
| 2017-09-04 | The Announcement on Prevention of Risks from Offering and Financing of Cryptocurrencies was promulgated by seven PRC governmental authorities including the PBOC. |
| 2017-10-05 | The General Office of the State Council issued the Guiding Opinions on Actively Promoting Supply Chain Innovation and Application. |
| 2017-12-26 | The Measures for Administration of Overseas Investment of Enterprises promulgated by the NDRC. |
| 2018-02-03 | The Announcement on Issues Relating to Beneficial Owner in Tax Treaties promulgated by the SAT. |
| 2018-11-07 | The State Statistical Bureau issued the Classification of Strategic Emerging Industries. |
| 2019-03 | The Standing Committee of the National Peoples Congress of the PRC passed the Foreign Investment Law of the Peoples Republic of China. |
| 2019-10-23 | SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-Border Trade and Investment, or SAFE Circular 28. |
| 2019 | Shanghai Intchains was certified as a High and New Technology Enterprise in Shanghai. |
| 2020-12-11 | Announcement on Corporate Income Tax Policies for Promoting High-quality Development of the Integrated Circuit and Software Industries issued by the Ministry of Finance and other relevant authorities. |
| 2020-12-18 | The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted. |
| 2021-03-12 | NPC adopted Outline of the 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2035. |
| 2021-03-18 | The SEC adopted on an interim basis rules disclosure requirements for companies with PCAOB member auditors whom the PCAOB has determined that it cannot inspect their operations within a foreign jurisdiction (Covered Issuers). |
| 2021-06-10 | The SCNPC promulgated the Data Security Law of the PRC, or the PRC Data Security Law. |
| 2021-07-06 | The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law. |
| 2021-08-26 | The PCAOB entered into a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the PRC. |
| 2021-09-03 | The Circular of the Regulating Cryptocurrency Mining Activities promulgated by eleven PRC governmental authorities including the PBOC. |
| 2021-09-15 | Ten PRC governmental authorities including the PBOC issued the Notice on Further Preventing and Disposing of Risks in Cryptocurrency Trading and Speculation. |
| 2021-09-22 | The PCAOB adopted rules governing its procedures for making determinations as to its inability to inspect or investigate registered firms headquartered in a particular foreign jurisdiction or which has an office in a foreign jurisdiction (a PCAOB-Identified Firm). |
| 2021-11-01 | The MIIT issued the 14th Five-Year Plan Development Plan for the Information and Communication Industry. |
| 2021-11-04 | The SEC approved the PCAOB rule. |
| 2021-11-14 | The CAC published the Regulations on the Administration of Cyber Data Security (Draft for Comments), or Draft Cyber Data Regulations. |
| 2021-12-02 | The SEC finalized its rules regarding disclosure by Covered Issuers. |
| 2021-12-15 | The PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. |
| 2021-12-16 | The PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC authorities in those jurisdictions. |
| 2021-12-28 | The CAC together with other PRC governmental authorities, promulgated the Measures for Cybersecurity Review, or Cybersecurity Measures. |
| 2021-12-29 | The Consolidated Appropriations Act, 2023 was signed into law. |
| 2021 | Shanghai Intchains had fully utilized its tax losses. |
| 2022-02-15 | The Cybersecurity Measures took effect. |
| 2022-03-12 | The National Development and Reform Commission of the PRC, or NDRC, published the Market Access Negative List (2022 Edition). |
| 2022-07-08 | The company subdivided its authorized share capital. |
| 2022-07-12 | The company adopted the 2022 share incentive plan. |
| 2022 | Shanghai Intchains was certified as a High and New Technology Enterprise in Shanghai, and therefore has been entitled to an EIT rate of 15.0% for a period of three years. |
| 2023-02-17 | The CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines. |
| 2023-02-24 | The CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing. |
| 2023-03 | The company completed its initial public offering on the Nasdaq Capital Market. |
| 2023-03-12 | Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation. |
| 2023-03-31 | The Trial Measures and the revised Provisions came into effect. |
| 2023-12-08 | The company entered into an asset acquisition agreement with a Singapore-based company to purchase certain assets used in the operation of its Goldshell WEB3 infrastructure brand. |
| 2024-02 | The company completed the acquisition of certain assets used in the operation of its Goldshell WEB3 infrastructure brand. |
| 2024-02 | The latest ASIC chip, designed and manufactured using a 12nm process node, completed the relevant IC verification and trial production processes. |
| 2024-03 | The latest ASIC chip, designed and manufactured using a 12nm process node, is set to enter mass production. |
Keywords
ASIC chips, blockchain, cryptocurrency, Intchains Group, financial results, revenue, net loss, Xihe Platform, 12nm process, Singapore, Goldshell, WEB3, tape-outs
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.