Canaan's ASIC Business Bound for Growth

Canaan has implemented the strategy of “mining for AI” that is similar to Bitmain Technologies.

Binwei Wang
    Nov 01, 2019 12:05 PM  PT
Canaan's ASIC Business Bound for Growth
author: Binwei Wang   

Canaan Inc., which aims to commercialize its supercomputing technology, this week has filed for a U.S. IPO in hopes to become the first Chinese bitcoin mining machine maker to get a listing.

To compare it with Bitmain Technologies Ltd., a Beijing multinational semiconductor company with IC design capabilities, the business of Canaan is more focused on the mining machines. Bitmain offers products, including chips, servers and cloud solutions for blockchain and artificial intelligence (AI) applications, according to its official website. Canaan, based in Hangzhou, provides supercomputing solutions through its proprietary high-performance computing application-specific integrated circuits (ASICs).

The following table sets forth a breakdown of Canaan's revenue by services, each expressed in the absolute amount and as a percentage of its total revenue, for the periods indicated. The percentage of sales revenue for mining machines has remained above 99% in recent years, which means the performance of mining machine sales can directly show the financial situation of Canaan.

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(Source: Canaan F-1)

As the world's second-largest producer of bitcoin mining machines, Canaan's total shipments of bitcoin mining machines in 2017 amounted to approximately 294,500 units, accounting for 20.9% of the global market share, DWNews reported.

As reported by Sina Finance, in September 2018, Canaan released the first AI chip, Kendryte K210. For the full year 2018, Canaan AI's business generated 275,000 yuan and grew to 468,000 yuan in the first half of 2019. As an early business, AI brings limited benefits to Canaan, but its input costs are very high. The company's mining capacity accounts for 21.9% of the total computing power of bitcoin miners in the global market. Kendryte K210 uses TSMC's 28nm process with a chip size of 8 x 8 mm, Sina wrote. 

Canaan's AI team size, according to its prospectus, consists of 127 technical research and development personnel, of which 61 are in the high-performance technical team (i.e. mining business team) and 50 are in the AI team.

This means that Canaan has also implemented the strategy of "mining for AI" that is similar to Bitmain, though the former wins in the company structure.

China President Xi Jinping stressed at the politburo meeting of the CPC Central Committee in October that the integrated application of blockchain technology plays an important role in new technological innovation and industrial transformation. After the Committee, Xunlei Ltd. (Nasdaq: XNET) surged 107.8% overnight in U.S., with its share price hitting a seven-month high. Concept stocks related to blockchain development, such as ChinaNet Online Holdings (Nasdaq: CNET), Cheetah Mobile Inc. (NYSE: CMCM) and The9 Ltd. (Nasdaq: NCTY), also surged. Bitcoin, meanwhile, broke the $10,000 mark, up more than 30% in 24 hours.

World Journal said Blockchain became the focus of the A-share market for the first time in 2016. At present, 506 blockchain projects have been filed in China, of which the financial industry is the most widely used. 

Canaan expects to raise up to $400 million on the Nasdaq Global Select Market under the symbol "CAN."

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