Beijing, China – Loongson Technology, a leading Chinese chip designer, today released its preliminary financial results for 2024, revealing a net loss of ¥624 million (approximately $86.7 million USD). The results highlight the challenges the company faces in a shifting market landscape, particularly the significant decline in revenue from its industrial control chip business.
The company’s announcement, initially reported by IT Home, stated that total operating revenue for 2024 reached ¥507 million, a marginal increase of 0.24% year-over-year. However, the net loss attributable to the parent company’s owners amounted to ¥624 million, with a net loss of ¥660 million after deducting non-recurring gains and losses.
Key Takeaways from Loongson’s 2024 Performance:
- Industrial Control Market Stagnation: Loongson cited the continued stagnation in its traditional stronghold, the industrial control market, as a primary factor contributing to the significant drop in revenue from industrial control chips.
- E-Government Market Rebound: While the industrial control sector struggled, the e-government market showed signs of recovery, leading to a substantial increase in revenue from information technology chips.
- Shift in Business Strategy: Loongson actively reduced its solutions-based business, resulting in a significant year-over-year decrease in revenue from that segment, even as chip product revenue saw a considerable increase.
- Margin Pressures: Despite a rebound in gross margins driven by increased sales in the information technology sector, margins remained below ideal levels. The decline in revenue from the higher-margin industrial control chip business further impacted overall profitability.
- Increased Impairment Losses: The company reported a substantial increase in credit and asset impairment losses, exceeding ¥200 million, due to factors including reduced government subsidies and investment income. A significant portion of these losses is attributed to inventory write-downs, although Loongson anticipates potential future sales of these products in the industrial control sector.
The Road Ahead:
Loongson’s 2024 results paint a picture of a company navigating a complex and evolving market. While the decline in the industrial control sector presents a significant challenge, the growth in the e-government market and the strategic shift away from solutions-based businesses suggest a proactive effort to adapt to changing demands.
The company’s statement expresses a sense of stabilization and positive momentum, despite the net loss. The key to Loongson’s future success will likely depend on its ability to:
- Diversify its market focus: Expanding beyond the industrial control sector and capitalizing on opportunities in areas like e-government and other emerging markets.
- Improve profitability: Addressing the margin pressures and optimizing its cost structure to achieve sustainable profitability.
- Continue innovation: Investing in research and development to maintain a competitive edge in the chip design market.
The performance of Loongson is not only important for the company itself, but also serves as an indicator of the broader trends in China’s domestic chip industry, which is striving for greater self-reliance and technological independence. The company’s ability to overcome its current challenges will be closely watched by industry observers and policymakers alike.
References:
- IT之家. (2024, February 26). 龙芯中科 2024 年净亏损 6.24 亿元，工控类芯片营收大幅下降. Retrieved from [Insert IT Home Article URL Here – Since I don’t have access to the internet, I can’t provide the direct link. Please insert the actual URL from IT Home here.]
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