With rapid growth in demand from downstream markets, computing power leader, Hygon Information, maintained high profits in Q3.

On the evening of October 17th, Hygon Information released their Q3 financial report. In the first three quarters of 2023, revenue was approximately 3.943 billion yuan, a year-on-year increase of 3.22%; net income attributable to shareholders was approximately 902 million yuan, a year-on-year increase of 38.27%. In Q3, revenue was 1.333 billion yuan, a year-on-year increase of 3.3%, and net income attributable to shareholders was 224 million yuan, a year-on-year increase of 27.23%.

From a cost perspective, Hygon Information's R&D investment in Q3 was 730 million yuan, a year-on-year increase of 48%. The main reason is that project implementation progress has accelerated, with many projects entering the validation stage. This has led to more technical service fees and verification testing material costs, causing investment efforts to continue to increase. The R&D investment accounted for 54.88% of the operating income in Q3, an increase of 16.7% compared to last year.

In their previous financial report, Hygon Information pointed out that as one of the few domestic integrated circuit design enterprises with the research and development capabilities of both high-end general-purpose processors (CPUs) and co-processors (DCUs), they have always focused on the research and development, design and sales of high-end processors used in servers, workstations, and other computing and storage devices. They have established a sound research and development environment and process for high-end processors, and these products have followed the improvement of generation-to-generation performance and richer functions.

Previously, Ping An Securities analyzed and pointed out that with the authorization of AMD's x86 and Zen architectures, Hygon Information gradually gained relevant chip design capabilities and launched related product combinations for servers and workstations.

In the institutional research conducted on September 20th, Hygon Information stated that DSA 2.0 has already been released and put into commercial use in fields such as big data processing, artificial intelligence, and business computing. The development of DSA 3.0 is progressing smoothly. The next generation CPU products of the company are Hygon 4 and Hygon 5.

CITIC Securities pointed out that during the AI era, there is a strong demand for computing power, and Hygon's launch of DSA 2.0 in Q3 of 2023 responded to market demand. Since September 2023, multiple large banks have successively issued announcements on Trust Industry servers, and the development of the Trust Industry is accelerating again after a brief slowdown in the first half of the year.

As one of the products with the highest market share in the domestic Trust Industry server CPU market, Hygon's CPU can effectively support millions of system software and application software based on the x86 instruction set. The company's next-generation CPU products, Hygon 4 and Hygon 5, are progressing smoothly according to the mid-year report, and the company's leading position in the Trust Industry CPU market is still secure.

As of the close of October 17th, Hygon Information rose more than 1.25% to 52.54 yuan and had a market capitalization of 122.1 billion yuan.