The AI Chip Has Formed A Domestic Substitute Enterprise To Respond To External Shocks.

The tree wants peace but the wind does not stop.

In October 9th, Li Ke, President of Dahua shares, told reporters on twenty-first Century economic report that Dahua has basically established a safe and reliable compliance system in terms of business. In the aspect of business continuity, some alternative work has also been done. "A small number of alternatives can not meet the needs of customers, and can basically meet the continuity of supply."

It is worth noting that recent events do not restrict enterprises from exporting to other countries, including the United States. "Hikvision has not abandoned the US market plan. We will continue to open up the US market and continue to serve the customers in the US market." Huang Fanghong, senior vice president of Hikvision and Secretary of the board of directors, said in a conference call.

According to the financial report, in the first half of this year, Hikvision earned 6 billion 943 million yuan abroad, an increase of 10.29% compared to the same period last year, accounting for 29.02% of the total revenue. The sales volume of Zhejiang Dahua in the same period from abroad was 3 billion 719 million yuan, an increase of 8.1% compared to the same period last year, accounting for 34.4% of revenue.

Yan Jun Meng, director of research at Counterpoint Research, said in an interview with the twenty-first Century economic report reporter that domestic manufacturers have certain technical reserves in terms of AI, processor and memory storage, and the impact is still relatively limited. At the same time, for the domestic industry chain companies, it can also be said to be an opportunity, of course, there will be challenges.

Coping strategies pluralism

A number of enterprises say they are actively adopting multiple measures. Moreover, many enterprises have already made plans to deploy materials, technology and R & D to reduce their dependence on the international market, including the US market.

"We have plans, including open innovation platform and deep learning model training server localization scheme, C terminal intelligent hardware and operation system switching and so on." Liu Qingfeng, chief executive of the University of technology, wrote in an internal letter to all employees.

From the perspective of short-term business impact, the revenue of the big news came from the United States, which accounted for only 0.01% of the revenue generated by the US in 2018. It focuses on the "one belt and one way" strategic country, Japan, Europe, Southeast Asian countries and regions. The direct impact of Sino US trade disputes on the company's sales revenue is very limited.

Huang Fanghong also revealed that Hikvision has combed all the American materials and launched a comprehensive replacement of us components. At present, the vast majority of American components can be directly replaced or replaced by new design alternatives, which will not affect the performance or impact of the products. "For a small amount of material that is temporarily too late to replace, we can increase the stock in exchange for a longer replacement time. There are also a small number of materials, through the adjustment of business strategy, purchased by customers themselves, combined use.

Fang Jing, an e-commerce analyst at China Merchants Securities, said in an interview with the economic news reporters in twenty-first Century that since the company is a public company, it needs to consider the quality of the report. So the movement is relatively limited, unable to prepare stock as large as HUAWEI. However, the core IPC processor in Hai Kang Dahua's chip supply chain has basically been made domestically, and the main suppliers of memory chips come from Japan and South Korea. The domestic substitution of analog chips is accelerating.

In addition, in terms of AI chips, the domestic AI chip manufacturers, such as Hass and Cambrian, already have perfect product mix at the reasoning end, which can replace the international manufacturers such as NVIDIA.

Li Ke pointed out that the proportion of North American devices in the total amount of Dahua Technology is about 10%, which is difficult to replace in the back-end processing part (such as CPU, GPU, etc.). Although some devices are difficult to replace in the short term, the company has some corresponding countermeasures. Take CPU as an example, American manufacturers' CPU single core processing capability is relatively strong. If companies can not find alternative suppliers, they can adopt the multi core parallel mode to achieve the same functions, and the cost is basically controllable.

He believes that, as a whole, generic products will not be affected for half a year, and within half a year, the company is confident that it will complete the test of the alternatives. It is expected that the continuity of the company's business will not be affected.

From this perspective, the domestic industry chain companies can benefit from this. However, in terms of technical solutions, it also faces practical challenges.

Controllable future impact

It is understood that many domestic high-tech enterprises will be restricted mainly in two aspects. First, imports, from the United States or other countries imported goods, technology or software from the United States are restricted; imports of other countries, if the value of the United States controlled items accounted for more than 25%, will be restricted. Two, in production, products are produced directly by using the original technology or software of the United States, or restricted by the production of factories originating in the original technology or software in the United States.

In October 8th, Dahua shares of Hikvision and Dahua shares announced temporary suspension. Hikvision and Dahua shares resumed on the 10 th, but the share price dropped sharply after opening, and then remained low. As of 10, Hikvision fell 4.33% and Dahua shares fell 5.79%. Another company, the 8 day of the company, fell 2.67%, and rebounded the next day. The 10 shares closed at 33.98 yuan, up 7.7%.

The emotional response of the market is not pessimistic. "Since 2018, the proportion of software and hardware products purchased directly from US companies accounts for a very small proportion of total purchases. The main supporting hardware products purchased by the company are general and commercial related machines and modules, with strong replaceability and the vast majority of suppliers are domestic manufacturers. A small number of suppliers of software products are also mainly domestic enterprises with independent intellectual property rights. Maya in the relevant announcement said.

On the other hand, under the background of globalization and the convenience of China's vast domestic demand market, the US market accounts for a limited proportion of the total revenue and overseas business of every company.

According to the financial report, in the first half of this year, Hikvision earned 6 billion 943 million yuan abroad, an increase of 10.29% compared to the same period last year, accounting for 29.02% of the total revenue. Meyer's official response said that the main customers in the country, overseas sales accounted for a very small proportion, mainly the "one belt" all along the country and neighboring developing countries, and the amount of sales less than 1% of the company's sales revenue.

"There may be some fluctuations in the short term. The impact of the client is likely to be smaller than we expected, because the incident has been taking a long time. Hu Yangzhong, President of Hikvision, told the media, "we have talked with a client on the 9 and are talking about future cooperation. Many customers are less concerned about sanctions. They believe that Chinese companies have continued competitiveness in this respect, and the entity list is not a problem. "

In response, Liu Qingfeng also said, "will not have a major impact on our day-to-day operation. In the first half of this year, our total revenue reached 4 billion 228 million, a record high, and net profit grew by 45.06% over the same period last year. The first three quarter earnings forecast issued today shows that the company's net profit growth will further increase to more than 50%, showing a good momentum of accelerated growth.

The lesson of the HUAWEI incident is not sudden. "More than a year ago, Hikvision was jointly proposed by US Congressmen on this list. We have worked through it for more than a year," Huang Fanghong said. "We finally got on this list, but over the past year or so, we moved a lot of space to the company."

In addition, the sense of crisis brought by this incident has also enabled these AI enterprises to say that they will further increase R & D investment. "Our attitude is very firm, the chip is restricted, we change chips, not chips, we change components, can not change components, we redesign products. If necessary, we will design the chip ourselves. We will further increase R & D investment, from products, systems, detectors and processors to R & D resources in more fundamental areas. " Huang Fanghong made a firm commitment in October 9th at the investor communication conference.

Liu Qingfeng also said, "we have the world's leading AI core technology. All of these core technologies come from our independent research and development, and have independent intellectual property rights."