Canaan Technology lands on Nasdaq: the world's first blockchain stock is born

The prospectus shows that Canaan's total revenue in 2018 was RMB 2.7053 billion, up 106.8% from RMB 1.3081 billion in 2017. As of the first nine months of this year, Canaan's total revenue was RMB 950 million. Among them, the company's total revenue in the third quarter of this year increased by more than 2 times compared with the first half of the year.

Canaan said that the funds raised this time will be mainly used in the following five aspects: 1. Strengthen the company's leadership in supercomputing solutions and enhance the competitiveness of blockchain and AI products; 2. Continue to invest in energy-efficient chip design; 3. Continue to launch new AI products; 4. Launch an AI SaaS platform; 5. Continue to expand overseas business.

A gorgeous transformation from a mining machine giant to an AI chip

The prospectus shows that Canaan Chairman and CEO Zhang Nangeng and his team invented and delivered the first batch of cryptocurrency mining machines using ASIC technology as early as January 2013, which laid a solid foundation for the company to further carry out research and development involving AI chips.

Public information shows that in 2011, Zhang Nangeng, who was still a doctoral student at Beihang University, came into contact with Bitcoin for the first time. After a night of research, he believed that Bitcoin had a 1% chance of changing the world. He designed two FPGA mining machines and made the world's first ASIC mining machine in January 2013, leading the industry into the ASIC era.

Seven years later, Canaan has already become one of the world's largest mining machine manufacturers. The prospectus cited data from Frost & Sullivan, saying that as of June 30, 2019, Canaan was the world's second largest manufacturer of Bitcoin mining machines. During the same period, the Bitcoin mining machines sold by Canaan accounted for 21.9% of the total computing power of all Bitcoin mining machines sold worldwide.

In its prospectus, Canaan emphasized that the company has always focused on technology development, design and research, and is committed to the long-term development of the blockchain and AI industries.

In 2016, Canaan achieved a breakthrough in chip process technology to 16nm, and was also one of the top ten companies in China that mass-produced 16nm chips. This also, to a certain extent, prompted Zhang Nangeng and his team to decide to start research and development of edge AI chips.

In September 2018, Canaan launched its first-generation AI chip, K210, becoming the first company in the industry to provide and mass-produce commercial edge AI chips based on the RISC-V architecture. It has gradually been applied to different fields such as smart buildings, smart homes, smart energy consumption, and smart agriculture and forestry.

In Zhang Nangeng's view, whether it is blockchain or AI chips, the entire entrepreneurial process has actually been focused on doing things related to computing. "One improves the efficiency of social operations, and the other changes people's living scenes. The ultimate goal is to improve people's lives through intelligent computing."

Currently, Canaan has more than 300 employees with an average age of 32. Among them, the R&D team consists of 127 people, and more than 65% of the members have more than 7 years of experience. Canaan also emphasized in its prospectus that the company's core R&D team has worked with the founding team for more than 4 years.

The high technical capabilities and stability of the founding team and the R&D team have also brought considerable R&D results. As of September 30, 2019, Canaan has registered 69 patents in China, including 6 inventions, 50 utility model patents and 13 design patents. During the same period, Canaan has also registered 81 software copyrights and 30 IC layout design rights in China.

In addition, Canaan has established a high-performance computing department and an artificial intelligence business group, with a "AI+high-performance computing" dual-wheel drive operation model, aiming to lay the foundation for technology research and development and innovative business.

Canaan mentioned in its prospectus that it has mastered the entire IC design process and has experience in large-scale chip mass production. It has completed seven tape-outs for 28nm, 16nm and 7nm ASICs with a success rate of 100%. In 2017, 2018 and the six months ending September 30, 2019, a total of more than 150 million ASICs were produced.

Since the beginning of 2015, Canaan has established a partnership with TSMC, a world-renowned IC manufacturer, and was selected by TSMC as one of the first partners for 7nm ASIC. At the same time, the company also has in-depth cooperation with ASE, STATSChipPac and SPIL, among which SPIL is one of the world's largest IC packaging and testing service providers, providing IC packaging and testing services.

In September 2018, Canaan became the first company in the industry to deliver a commercial edge intelligent chip based on the RISC-V architecture and self-developed neural network accelerator. The company's first-generation artificial intelligence chip, K210, has two major functions: machine vision and machine hearing. It can seamlessly integrate different algorithms to handle various application scenarios, including smart home, smart energy consumption, smart retail and smart driving. It is widely regarded as a milestone in the development of hardware in the field of artificial intelligence edge computing.

Public information shows that Canaan has reached cooperation with upstream and downstream enterprises in the industry chain such as Baidu and Softcom. As an important member of Baidu's AI hardware ecosystem, Canaan provides Baidu with a customized development module PaddlePi-K210 based on Kanzhi K210, opening up the PaddlePaddle model device-side deployment solution. Specifically, developers do not need to change the hardware and can use the public version mold to achieve the sample stage.

In cooperation with iSoftStone, the contactless access control system developed by Canaan has been deployed in the iSoftStone headquarters building, which can perform identification and identity verification for nearly 50,000 people in the building 2,000 times per day per monitoring point on average.

In addition to the above-mentioned cooperation cases, Canaan's first-generation artificial intelligence chip "Kanzhi K210" has also covered fields such as smart buildings, smart homes, smart energy consumption, and smart agriculture and forestry, and has cooperated with Amazon AWS, the world's largest cloud computing company, to build a network that meets the needs on the cloud within a few minutes, allowing companies to focus more on the business itself. This also makes Canaan the first company in China to realize IC cloud computing.

It is worth noting that relevant departments have introduced a series of policies on blockchain and artificial intelligence, hoping to use blockchain as an important breakthrough for independent innovation of core technologies and accelerate the innovative development of blockchain technology and industry.

In addition, the "Guiding Opinions on Accelerating the Cultivation of New Models and New Business Forms of Shared Manufacturing to Promote the High-Quality Development of the Manufacturing Industry" issued by the Ministry of Industry and Information Technology on October 29 also proposed to promote the construction of new infrastructure. Strengthen the construction of new infrastructure such as 5G, artificial intelligence, industrial Internet, and Internet of Things, expand the coverage of high-speed, large-capacity, and low-latency networks, and encourage manufacturing companies to achieve the interconnection of people, machines, and things through intranet transformation and upgrading, and provide information network support for shared manufacturing.

It can be said that blockchain and artificial intelligence have the potential to impact every industry in the economy, and computing power is the key bottleneck to blockchain and artificial intelligence performance.

Therefore, for Canaan, whether it can achieve more breakthroughs in ASIC performance will also help it to further realize the integrated innovation of blockchain and AI to a certain extent.

Regarding future plans, Zhang Nangeng believes that 2019 is a critical node for Canaan, not only because Canaan successfully completed its IPO, but also because the gradual popularization of 5G will directly give rise to the explosion of large-connection, low-latency and low-power application scenarios.

"As a company focusing on the edge AI market, Canaan hopes to enable devices to have local computing capabilities through smart chips and provide computing services to more corporate customers."

In Zhang Nangeng's vision, the reason for choosing the research and development of edge AI chips is mainly based on two opportunities:

First, from a technical perspective, AI has had a revolutionary impact on traditional computing architectures. The popular GPUs and FPGAs are not computing architectures designed entirely for AI. Currently, the specialization of AI chips has become a trend, which is where Canaan's opportunity lies and is also an important reason why Canaan has been developing ASIC computing devices from the beginning.

Secondly, from a market perspective, the development of 5G will promote more application scenarios of device interconnection and promote the development of the edge market in the future. The edge AI market is still a blue ocean, and many products are not mature, which creates huge room for development.

In short, with the injection of more capital, the rapid development of 5G technology, the increase in application scenarios, and the support of government policies, the AI ​​field has become the most popular and fastest growing vertical industry in recent years, and naturally it also has huge market potential and opportunities.

Zhang Nangeng said that after Canaan successfully landed on Nasdaq, it hopes to use the continuously improving super computing power as corporate productivity to provide customers with AI competitiveness and help customers realize their self-worth in the intelligent world. "No matter which company it is, its ultimate goal is to create value and provide good services to users," said Zhang Nangeng.