The semiconductor industry is experiencing a dynamic shift as companies adapt to emerging technologies and market demandsRecently, a major player in this sector, Xilinx Integration (688469.SH), released its performance forecast for 2024, showcasing a significant improvement in its financial outlookWith projected sales revenue expected to reach approximately 6.5 billion RMB, representing a year-on-year increase of 22.26%, the firm is not just recovering but is at the threshold of a revitalized growth phaseAlongside minimizing its net losses to around 969 million RMB—a reduction of nearly 50.5% compared to the previous year—the company marks 2024 as a milestone, having turned its annual gross profit margin positive for the first time at around 1.1%.

During a virtual meeting held on February 17, where the company's operational goals for 2025 were discussed, CEO Zhao Qi noted plans for moderate capital expenditures with an anticipated decline in depreciation pressureHe expressed optimism about the potential for high growth rates as the company capitalizes on its advancements in AI-grade products, hinting that profitability milestones are approaching.

The burgeoning AI sector is taking center stage in Xilinx Integration's strategy, which is deeply rooted in the evolution of the semiconductor industryThe company has diversified its operations across various domains, including automotive applications, consumer electronics, industrial control, and now, most notably, renewable energy and AI applicationsThe conversation surrounding AI is prevalent across the semiconductor landscape, and Zhao Qi emphasized its significance in driving future market growth.

AI is anticipated to revolutionize the semiconductor industry, with predictions suggesting that the global semiconductor market could see valuations exceeding one trillion USD by 2030, predominantly fueled by AI advancements and the rise of electric vehiclesAs AI computing costs decline, there will be an explosion of demand across different sectors, spanning from conventional computing systems to advanced sensor technologies and power components.

Xilinx Integration has been pioneering in this space for the past two years, focusing on the development of power chips, analog chips, and microcontroller units (MCUs). This proactive approach positions the company well to meet the rising demand stemming from advanced AI-driven power solutions, including those required for modern AI server technologies

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Their robust portfolio includes designs for first, second, and third-generation AI server power supply chips, affirming their strong industry foothold.

In the realm of AI applications, the company concentrates its efforts on two primary technological pathways: high-frequency power chips based on Gallium Nitride (GaN) and Silicon Carbide (SiC), along with BCD driver chips, and innovative analog power ICs epitomized by DrMOS technologiesThe former is poised for mass production across a comprehensive portfolio of chips, while the latter has begun making impactful inroads in targeted market sectors.

Zhao Qi also noted the rapid advancement of the DeepSeek technology, highlighting its role in accelerating China's transition into the AI commercialization eraThe commitment to deliver fully localized AI server power solutions aims to capture over 50% of the total value associated with AI server power systems, reinforcing the company's dedication to domestic innovation.

Moreover, Xilinx Integration is venturing into the AI endpoint applications space, furnishing high-performance power chips and various intelligent sensor chip solutions designed to bolster emerging sectors like roboticsThe company has already secured orders related to robotics chips, marking a significant step toward amplifying its impact within the robotics production ecosystem.

As the automotive landscape evolves, Xilinx Integration is strategically focusing on automotive chip production as another core aspect of its growth trajectoryFor 2024, the company's revenue from the automotive sector is projected to rise by approximately 41% year-on-yearThe company boasts an impressive capability, providing around 70% of automotive chip platforms across multiple vehicle categories, further augmenting its role in the automotive revolution.

With a current domestic supply rate for power semiconductors at around 35%, there remains considerable growth potential as other sectors lag in localization efforts

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Xilinx Integration intends to fill this gap by offering comprehensive solutions in control chips, analog ICs, sensor chips, communication chips, and security chips across various automotive domains.

In the domain of analog chips, the need for high-precision chips is surging, driven by the widespread adoption of sensor fusion technologies in smart driving systemsThe evolution of laser radar technologies, which serve as critical components in these systems, has placed Xilinx Integration at the forefront with their innovative driving chips based on VCSEL, MEMS, and BCD technologies.

Power chips are facing an increasing demand driven by energy management requirements within smart driving systemsThese trends indicate not just a rise in chip consumption but also an elevated need for technical integrationXilinx Integration is anticipated to leverage its technological advancements in power chip manufacturing to capture a larger market share.

Highlighting the necessity for MCU innovation, Zhao Qi stated, "With the shift towards centralized electronic architectures in smart driving systems, there is a growing demand for additional MCUs." The fusion of analog chips and MCUs for applications like motor control and automotive lighting is becoming increasingly significant, pushing the trends toward single-chip integrationThe company’s high-voltage analog technologies embedded in highly reliable control units align well with these market needs and are expected to become an essential driver of revenue growth.

Reflecting on past achievements, Zhao Qi noted that Xilinx Integration successfully met its revenue target of 5 billion RMB for the first five-year plan from 2018 to 2023. With ambitious plans laid out for the next three years, they aim to achieve a revenue target of 10 billion RMB by 2026. In addition, they anticipate breakthroughs in net profit by 2025, positioning the organization for a comprehensive turnaround by 2026, thereby entering a new phase marked by quality growth and profitability.

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