Capital Watch
Canaan Inc.
Company Profile
Sector: Semiconductor
Industry: Integrated Circuit (IC)
Canaan Inc. is a bitcoin mining hardware manufacturer based in Hangzhou, China. The company was the second largest designer and manufacturer of Bitcoin mining machines globally in terms of computing power in the six months ended June 30, 2019, according to independent market research firm Frost & Sullivan. During the same period, its mining machines sold accounted for 21.9% of the combined computing power of all the Bitcoin mining machines sold globally.
Canaan’s chief executive, Nangeng Zhang, founded the company in 2013. Together with his team, he invented and delivered one of the first cryptocurrency mining machines incorporating application-specific integrated circuit (ASIC) technology. The company initially dedicated its research and development efforts to ASIC applications for Bitcoin mining and rapidly built up its know-how of ASIC design. 
Apart from manufacturing cryptocurrency mining equipment, Canaan dedicated significant resources for the research and development of artificial intelligence (AI) chips.
In September 2018, Canaan became the first in the industry to deliver commercial edge computing AI chips based on Risc-V architecture, which is a set of instructions that describes the way in which software connects with an underlying processor, and self-developed neural-network accelerator.
The ICs that Canaan designs are manufactured, packaged and tested by industry-leading suppliers, including TSMC, Samsung, STATS ChipPac, ASE and SPIL.
The company said its total revenues increased 106.8% from $187 million in 2017 to $378.5 million in 2018. During the same period, its net income dropped 67.4% from $53.8 million to $17.1 million. Its revenue in the six months through June plummeted to $42.1 million, down 85% year-over-year. Canaan also suffered a net loss of $48.2 million, in contrast to net income of $32.8 million a year ago. According to the company prospectus, Canaan attributed the weakened performance to a decline in the average selling price of its bitcoin mining machines.
Corporate Information
30/F, Dicara Silver Tower,
29 Jiefang East Road,Jianggan District,
Hangzhou, People’s Republic of China
Phone: +86-571-8999-5063
Key Executives
Nangeng Zhang, Chairman and CEO
Mr. Zhang has 11 years of experience in electronic device design, engineering, manufacturing, quality control and research and development and is responsible for formulating and overseeing its overall development strategies and operations. Before founding Canaan, Mr. Zhang was an assistant researcher at the Beijing Remote Sensing and Communication Technology Institution, a research institution which specializes in research and development and production and marketing of antenna, detector, photoelectric measuring equipment and mid-wave infrared camera, from August 2005 to July 2008. Mr. Zhang received a bachelor’s degree in electronic information engineering and a master’s degree in software engineering from Beihang University. From September 2010 to October 2013, Mr. Zhang was pursuing a Ph.D. degree at Beihang University.
Jianping Kong, Director and Co-Chairman
Mr. Kong has 11 years of experience in business and corporate management, including serving as executive director and general manager at both Hangzhou Weidi Tu Technology Co. Ltd. and Zhejiang Weiji Technology Co. Ltd. Mr. Kong also serves as the chairman of Hangzhou Hengtong Cloud Information Technology Co. Ltd., a company listed on PRC National Equities Exchange and Quotations. Mr. Kong has a bachelor’s degree in law from Wenzhou University and an EMBA from Tsinghua University.
Jiaxuan Li, Director
Mr. Li has 9 years of experience in IC design. Prior to joining Canaan, Mr. Li served as an IC engineer responsible for researching, planning and overseeing IC design and production at Vimicro Corp., a Chinese fabless chip company which specializes in research and development, production and marketing of multimedia processors for personal computers and mobile phones, from 2010 to 2013. Mr. Li has a bachelor’s degree in computer science and technology from Harbin Institute of Technology and a master’s degree in software engineering from Beihang University.
Investor FAQs
1. When was Canaan established?
Canaan first started its business developing Bitcoin mining machines incorporating ASIC technology in 2013 through Beijing Canaan Creative Information Technology Co. Ltd., which was subsequently renamed to Hangzhou Canaan Creative Information Technology Co. Ltd., or Hangzhou Canaan, in September 2015.
2. When does Canaan's fiscal year end?
Canaan's fiscal year ends on December 31.
3. On which exchange is Canaan's stock traded and what is the ticker symbol?
Canaan expects to list on the Nasdaq Global Select Market under the symbol "CAN."
4.How many Canaan's ordinary shares does one American depositary share ("ADS") of the company represent?
Each ADS represents 15 Class A ordinary shares.
5. How can I obtain a copy of Canaan's Annual Report?
Annual reports are available via this website. All SEC documents are also accessible online through the SEC Filings page.
6. Who is Canaan's U.S. legal counsel?
Simpson Thacher & Bartlett LLP
7. What is Canaan's depositary bank for ADSs?
The Bank of New York Mellon.
8. Who are Canaan’s underwriters?
The deal was underwritten by Citigroup Global Markets Inc., China Renaissance Securities (Hong Kong) Ltd. and CMB International Capital Ltd.
9. How does Canaan intend to use its proceeds from the IPO?
Canaan said it intends to use the proceeds from its IPO for research and development of AI algorithms and applications, along with blockchain algorithms and applications. It also plans to invest in its expansion of AI and blockchain business globally, supply chain optimization and to repay debts, as well as in other general corporate purposes, according to the prospectus.
Key Eexcutives
Li Zhang, Vice President
Ms. Zhang has 10 years of experience in accounting, investment and business management and is responsible for overseeing Canaan’s capital markets, investments, AI business and legal matters. Prior to Canaan, Ms. Zhang worked as a senior auditor at PricewaterhouseCoopers Zhong Tian LLP. She later worked as a senior manager at the acquisition and financing department of Guotai Junan Securities. Ms. Zhang obtained a bachelor’s degree and a master’s degree in automobile engineering from Tsinghua University and also obtained an EMBA from Peking University in July 2019. Ms. Zhang is a non-practicing member of the Chinese Institute of Certified Public Accountants.
Jingjie Wu, Vice President of Technology
Mr. Wu has 8 years of experience in chip design and software engineering and is responsible for overseeing the company’s technology development and IC supply chain operation. Prior to Canaan, Mr. Wu worked as a chip design engineer at Ingenic Semiconductor Co. Ltd., a company listed on the Shenzhen Stock Exchange. Mr. Wu has a master’s degree in software engineering from Beihang University.
Qifeng Sun, Director
Mr. Sun oversees Canaan’s sales and marketing activities in China and has 10 years of experience in business and corporate management. He has served as executive director at Hangzhou Weitu Technology (Beijing) Co. Ltd. since 2017, executive partner at Hangzhou Pite Dier Investment Limited Partnership since 2015, director at Linan Bite Tiancheng Technology Co., Ltd. since March 2015 and director at Yi Bite Number Technology (Beijing) Co., Ltd. since January 2014.
IR Contacts
In the United States:
Selina Cheng, CFA
Head of Investor Relations
Research Report