In 2020, Huawei will continue to “buy, buy, buy” rhythm.
Editor’s note: This article comes from the WeChat public account “Invest in China” (ID: China-Venture) , author: Tao Huidong.
In April 2020, the application for the listing of the science and technology board of Huawei ’s chip company Sripu was accepted. This is the first time that Huawei invested in the IPO stage after setting up its subsidiary Hubble Technology in April 2019 as a domestic investment platform s project.
Coincidentally, this time is just one year after Hubble Technology. The IPO project was harvested in just one year, and Hubble’s performance was perfect by VC standards. What is more worthy of praise is that Huawei has played a huge role in helping the products, technology and business of Sripu in addition to its investment. This is something that no VC can learn. It can be said that SRP can quickly achieve the listing of the science and technology board, and Huawei has made great contributions.
Industry registration information shows that the starting capital of Hubble Technology is 700 million yuan. In 2019, Huawei invested 7 companies in one go. In January 2020, Huawei continued to increase its investment in Hubble Technology to 1.4 billion yuan. Since then, Huawei has invested two more projects. It is conceivable that in 2020 Huawei will continue to “buy, buy, buy” rhythm.
After the “break of supply” incident, catch the Huawei Express
“Huawei didn’t care about domestic companies in the past, but after ZTE’s incident, Huawei’s attitude changed significantly. Some of our companies not only give orders and funds, but also directly send technical teams to guide.” A fund partner People told the vote.
After sorting out the timeline, it is easy to see that Sripu took the “fast train” of Huawei’s transformation.
The prospectus shows that a mysterious “Customer A” contributed 170 million yuan in sales to Sripu in 2019, accounting for 57.13% of the latter ’s total revenue.
The prospectus shows that customer A started purchasing from Siripu in 2018 and began to increase volume in 2019. The purchased products are mainly signal chain analog chips, which are the key components of 5G base stations.
Customer A ’s specific name is not disclosed, but it is confirmed to be a related party of Sripu. Review the list of Sripu ’s affiliates, but Huawei may be so large Pen purchase.
Comprehensive prospectus information, the cooperation process between SRP and Customer A is as follows:
· In 2016, Sripu established a cooperative relationship with customer A, and began to develop a variety of difficult analog chips for it.
· At the end of 2017, through the on-site audits of Customer A’s Quality Department, Purchasing Department and other departments, Sriper obtained the certification of Customer A’s Qualified Supplier.
· At the end of 2018, customer A began to purchase because of the comprehensive performance and stability of Seripura’s products.
· In 2019, with the further deepening of the cooperation between the two parties, the purchase of customer A from Sripu began to increase in volume and became the largest customer.
Comparable to this, it was in March 2016 that the US Department of Commerce imposed export restrictions on ZTE, and Huawei began to promote domestic substitution of the supply chain to support small domestic suppliers.
Once taken off: from a net loss of 8 million to a net profit of 70 million
If customer A is indeed Huawei, then for SRP, getting Huawei ’s support is like installing a rocket engine and taking off in an instant.
Sripu ’s main product is a signal chain analog chip, whose function is to complete the conversion of analog signals and digital signals. According to the prospectus, Sripura mass-produced more than 100 million chips for customers in the communications industry in 2017-2019, and successfully entered the supply chain of China’s leading communications equipment companies, breaking through the monopoly of foreign manufacturers. To understand it simply, Srippu’s chip products have made great contributions to improving the localization of 5G base stations.
However, it was very difficult for Srippu to develop at the beginning of its business. Sripu was established in 2012, and its founding team is basically composed of overseas returnees. The chairman ZHIXU ZHOU used to be Motorola Semiconductor in the United States; the other director HINGWONG has experience in IBM chip development.
SripoHuaxin Ventures, the largest shareholder at present, is the fund of China’s famous international VC institution Walden International. Before the establishment of the National Integrated Circuit Fund in 2012, there were no more than five institutions that systematically invested in the semiconductor field in China, and Walden International was one of them. According to a report by Chuangyebang, before getting the investment from Walden International, because the market performance was too poor, Sripu had already fallen into a life and death crisis, and the team was scattered.
In fact, until Huawei intervened, Siripu’s product sales and profits have been unable to rise, and it is in a situation of losing one year and earning one year. In 2016, SRP applied for listing on the New Third Board. The financial data disclosed showed that in 2014, the income was 30.565 million yuan, and the net profit was only 180,000 yuan. By 2018, Seripura, which had been in business for six years, had a revenue of 114 million yuan and a net profit of -8.82 million yuan.
But in 2019, Mystery Customer A ’s order took Srippu directly to the next level. Revenue increased by 167% to 304 million yuan, and net profit reached 70.98 million yuan, making up for all losses since the start of the business and clearing the way to listing.
Of course, this also gives Huawei’s investment a very rich return prospect.
In July 2019, Hubble Investment subscribed for 2.241147 million shares issued by Sripu for 72 million yuan, with a capital increase of 32.13 yuan per share. The valuation of Siripu after investment is 900 million yuan.
According to the prospectus, SRP plans to issue at least 20 million shares on the Science and Technology Board, and plans to raise 850 million yuan. From this point of view, according to the expected issue price, the market value of Sripu can reach more than 4 billion yuan, and Huawei’s investment return can be several times. Taking into account the certainty of sales growth backed by Huawei, as well as Huawei’s conceptual effect, Srippu’s market value is not capped.
Huawei ’s investment logic: income is just incidental and the purpose is survival
A former employee of Huawei’s investment department told China Investment Network that according to his understanding, Hubble still has no independent investment team, but is only a funding platform. Hubei Chairman Bai Yi is the head of Huawei’s Enterprise Development Department, which is responsible for the implementation of Huawei’s investment and mergers and acquisitions, but what companies and tracks to invest in generally come from the decisions of specific business departments and group management.
From this point of view, although the investment activities of Hubble Technology have a fairly good profit prospect, the starting point is more pure strategic investment, and the color of financial investment is very weak.
The nine companies that Hubble has invested in are all located in the semiconductor field, with a focused vision and a clear strategic purpose: to solve the domestic substitution problem of Huawei’s supply chain. This is a huge change for Huawei: In the past, Huawei almost did not invest in supply chain enterprises. Ren Zhengfei has repeatedly said that Huawei does not raise a “child daughter-in-law”, because raising a “child daughter-in-law” can not “think different”. Only at any time “seeing changes” and choosing the best supplier can we ensure the best products. But in the “broken supply”Under the threat of threatening domestic supply chains, Huawei is a realistic choice.
As of now, the list of Hubble technology investments is as follows:
From this list, Hubble-invested companies have earlier rounds and all have the potential of “invisible champions” in subdivided fields.
Siripu, who applied for the Science and Technology Board this time, is one of the few local companies that has achieved breakthroughs in communication system analog chip technology, and is the leader of domestic signal chain chips.
Another example is the recently invested Newport Coast, which uses enterprise-level high-speed optical communication and clock chips and high-definition display related chips as its main products, and has its own internationally leading proprietary technology.
Kunyou Optoelectronics, which invested in the same round with VC such as Yueyue Capital in March, is one of the few companies on the market that can design and produce holographic grating optical waveguides.
As the industry ’s largest downstream system provider, Huawei ’s investment layout based on market demand has no substitute for the promotion of the Chinese semiconductor industry.
Comprehensive prospectus information, the cooperation process between SRP and Customer A is as follows:
· In 2016, Sripu established a cooperative relationship with customer A, and began to develop a variety of difficult analog chips for it.
· At the end of 2017, through the on-site audits of Customer A’s Quality Department, Purchasing Department and other departments, Sriper obtained the certification of Customer A’s Qualified Supplier.
· At the end of 2018, customer A began to purchase because of the comprehensive performance and stability of Seripura’s products.
· In 2019, with the further deepening of the cooperation between the two parties, the purchase of customer A from Sripu began to increase in volume and became the largest customer.
Comparable to this, it was in March 2016 that the US Department of Commerce imposed export restrictions on ZTE, and Huawei began to promote domestic substitution of the supply chain to support small domestic suppliers.
Once taken off: from a net loss of 8 million to a net profit of 70 million
If customer A is indeed Huawei, then for SRP, getting Huawei ’s support is like installing a rocket engine and taking off in an instant.
Sripu ’s main product is a signal chain analog chip, whose function is to complete the conversion of analog signals and digital signals. According to the prospectus, Sripura mass-produced more than 100 million chips for customers in the communications industry in 2017-2019, and successfully entered the supply chain of China’s leading communications equipment companies, breaking through the monopoly of foreign manufacturers. To understand it simply, Srippu’s chip products have made great contributions to improving the localization of 5G base stations.
However, it was very difficult for Srippu to develop at the beginning of its business. Sripu was established in 2012, and its founding team is basically composed of overseas returnees. The chairman ZHIXU ZHOU used to be Motorola Semiconductor in the United States; the other director HINGWONG has experience in IBM chip development.
SripoHuaxin Ventures, the largest shareholder at present, is the fund of China’s famous international VC institution Walden International. Before the establishment of the National Integrated Circuit Fund in 2012, there were no more than five institutions that systematically invested in the semiconductor field in China, and Walden International was one of them. According to a report by Chuangyebang, before getting the investment from Walden International, because the market performance was too poor, Sripu had already fallen into a life and death crisis, and the team was scattered.
In fact, until Huawei intervened, Siripu’s product sales and profits have been unable to rise, and it is in a situation of losing one year and earning one year. In 2016, SRP applied for listing on the New Third Board. The financial data disclosed showed that in 2014, the income was 30.565 million yuan, and the net profit was only 180,000 yuan. By 2018, Seripura, which had been in business for six years, had a revenue of 114 million yuan and a net profit of -8.82 million yuan.
But in 2019, Mystery Customer A ’s order took Srippu directly to the next level. Revenue increased by 167% to 304 million yuan, and net profit reached 70.98 million yuan, making up for all losses since the start of the business and clearing the way to listing.
Of course, this also gives Huawei’s investment a very rich return prospect.
In July 2019, Hubble Investment subscribed for 2.241147 million shares issued by Sripu for 72 million yuan, with a capital increase of 32.13 yuan per share. The valuation of Siripu after investment is 900 million yuan.
According to the prospectus, SRP plans to issue at least 20 million shares on the Science and Technology Board, and plans to raise 850 million yuan. From this point of view, according to the expected issue price, the market value of Sripu can reach more than 4 billion yuan, and Huawei’s investment return can be several times. Taking into account the certainty of sales growth backed by Huawei, as well as Huawei’s conceptual effect, Srippu’s market value is not capped.
Huawei ’s investment logic: income is just incidental and the purpose is survival
A former employee of Huawei’s investment department told China Investment Network that according to his understanding, Hubble still has no independent investment team, but is only a funding platform. Hubei Chairman Bai Yi is the head of Huawei’s Enterprise Development Department, which is responsible for the implementation of Huawei’s investment and mergers and acquisitions, but what companies and tracks to invest in generally come from the decisions of specific business departments and group management.
From this point of view, although the investment activities of Hubble Technology have a fairly good profit prospect, the starting point is more pure strategic investment, and the color of financial investment is very weak.
The nine companies that Hubble has invested in are all located in the semiconductor field, with a focused vision and a clear strategic purpose: to solve the domestic substitution problem of Huawei’s supply chain. This is a huge change for Huawei: In the past, Huawei almost did not invest in supply chain enterprises. Ren Zhengfei has repeatedly said that Huawei does not raise a “child daughter-in-law”, because raising a “child daughter-in-law” can not “think different”. Only at any time “seeing changes” and choosing the best supplier can we ensure the best products. But in the “broken supply”Under the threat of threatening domestic supply chains, Huawei is a realistic choice.
As of now, the list of Hubble technology investments is as follows:
From this list, Hubble-invested companies have earlier rounds and all have the potential of “invisible champions” in subdivided fields.
Siripu, who applied for the Science and Technology Board this time, is one of the few local companies that has achieved breakthroughs in communication system analog chip technology, and is the leader of domestic signal chain chips.
Another example is the recently invested Newport Coast, which uses enterprise-level high-speed optical communication and clock chips and high-definition display related chips as its main products, and has its own internationally leading proprietary technology.
Kunyou Optoelectronics, which invested in the same round with VC such as Yueyue Capital in March, is one of the few companies on the market that can design and produce holographic grating optical waveguides.
As the industry ’s largest downstream system provider, Huawei ’s investment layout based on market demand has no substitute for the promotion of the Chinese semiconductor industry.