Canaan claims to be "the world's first AI chip stock", what is its real strength?

Canaan Technology was successfully listed in the United States recently. The rhetoric it spread to the outside world was quite high-profile, saying that in addition to being the "first blockchain stock", it was also the "first AI chip stock in the world". However, the media also questioned its AI business, which had a revenue of less than RMB 500,000 in the first half of the year. What kind of AI chip does Canaan make? How strong is it? Please read the author's story.

1: What kind of AI chip does Canaan make?

AI chips are mainly divided into three types: end-side, edge-side, and cloud-side, which can be understood as three categories: intelligent terminal devices, small and medium-sized servers, and data center servers. Their performance, power consumption, cost, and selling price are all ranked from low to high. Among them, NVIDIA, the real "AI chip" king, mainly produces data center, that is, cloud AI chips.

Canaan is currently developing low-power edge chips, focusing on vision and voice, and will extend to the edge and cloud in the future.

2: How many generations of AI chips has Canaan produced?

Canaan has only launched the first generation of AI chips. In comparison, Huawei has directly launched a 7nm cloud AI chip; Cambricon has launched three AI chips covering cloud terminals, namely Siyuan 100/270/220; Horizon has launched two generations of edge AI chips; Bitmain has launched three generations of cloud AI chips and one generation of terminal AI chips.

3: Why does Canaan adopt RISC-V architecture?

The mainstream chip architectures at present are Intel's X86 architecture and ARM architecture, but both require huge IP costs. RISC-V is an open source free architecture, and using it will undoubtedly save huge costs, but it will also have software compatibility issues, and the possibility of practicality and large-scale commercial use is low.

4: What is the revenue status of Canaan’s AI chips?

The prospectus shows that Canaan's AI business has delivered more than 53,000 K210 chips and development modules to AI product developers in the first half of 2019, with a revenue of RMB 468,000. The average revenue per product is less than RMB 10, which is still a long way from large-scale commercial use. In comparison, Nvidia's AI chip business has an annual revenue of approximately US$3 billion.

5: Are Canaan’s AI chips and Bitmain’s competitors?

Although both are competing products of mining machine manufacturers, Canaan Technology's AI chips are not competing products with Bitmain. Bitmain mainly produces cloud AI chips. According to Zhan Ketuan, the former head of Bitmain's AI business, its revenue in 2019 was about 100 million yuan, and it has just won a large order of 216 million yuan from the Fuzhou Municipal Government's City Brain. Bitmain's AI business competitors are Nvidia, Huawei, Cambrian, etc.

6: Who are the competitors of Canaan’s AI chip?

As far as RISC-V is concerned, Canaan has no competitors, because basically no company has completed large-scale mass production of RISC-V terminal chips, and most of them are small and medium-sized startups. To be fair, other players in the field of terminal AI chips include Huawei HiSilicon, MediaTek, Horizon Robotics, Rockchip, etc. Cambrian and Bitmain also have terminal-related product lines.

7: What is the future development of Canaan’s AI chips?

According to the roadmap, Canaan will launch the second-generation AI chip by the end of this year and the third-generation AI chip next year. Compared with the trial of the first AI chip, the competitiveness of subsequent products is more worthy of attention.

In summary: Canaan's AI chip uses a free architecture to reduce costs, but the possibility of large-scale application is not high; the revenue and unit price are very low, there are many competing products in the market, and future development will be difficult; NVIDIA, MediaTek, Rockchip, etc., which also manufacture AI chips, are also listed companies, and their AI chip business accounts for a higher proportion. Canaan's claim to be "the world's first AI chip stock" or "China's first AI chip stock" is untrue.