In a recent investor relations event, Loongson Technology made a clear response to the company's competitive relationship with Huawei. Loongson Technology emphasized that the transformation of its strategy from a policy-oriented market to an open market shows that the company and Huawei are not in direct competition. Loongson Technology compares itself to Intel and Huawei to IBM, pointing out that the roles and positioning of the two in the industry chain are different. Loongson Technology is committed to building an open ecosystem, while Huawei has shown unique advantages in specific vertical fields.
Strategic positioning and market performance
Loongson's strategic focus lies in the transformation from a policy market to an open market. The company believes that it is not in direct competition with Huawei, but can play complementary roles in their respective fields. Loongson's business focus is to build an open ecosystem and encourage more partners and users to join, thereby driving the development of the overall market. Huawei, on the other hand, focuses on specific vertical areas, such as communications and network infrastructure, and its deep cultivation and technology accumulation in these areas give it a significant advantage in these specific markets.
In the field of e-government office, Loongson's market share has reached about 30%. The company plans to further increase its market share by improving product cost performance and optimizing the industrial chain. Loongson Technology hopes to achieve a wider market coverage through technological innovation and market expansion.
Figure: Loongson Technology:Huawei is a Partner
Technical advantages and market challenges
Loongson Technology has obvious advantages in processor performance and design capabilities, which has been fully reflected in its more than 20 years of development. The company has also made significant progress in cost control. For example, the Loongson 3A6000 processor released by Loongson Technology in May 2024 is at the lowest price among the CPUs used in the PC field in the second level. This price strategy makes the whole machine enterprises more inclined to choose computers equipped with Loongson CPUs, which further promotes the market acceptance of Loongson products.
Despite this, Loongson Technology experienced a year-on-year decline in revenue in the first half of 2024, with operating income of 220 million yuan, a year-on-year decrease of 28.68%. In addition, gross profit margin also declined. In this regard, Loongson Technology said that the main reason for the decline in revenue was the temporary stagnation of procurement caused by internal management problems of important customers. The company remains optimistic about the prospects of security industrial control applications and e-government applications, and expects revenue to gradually return to growth as the market adjusts and new products are launched.
Open cooperation and market expansion
Loongson Technology adheres to the strategy of open cooperation and supports traditional and emerging machine enterprises as well as software companies that are interested in vertical development. The company has a strong influence in the grassroots market, and is committed to further increasing its market share in the field of e-government office through deep cultivation in the regional market.
The company also plans to promote technology sharing and resource integration by strengthening ties with partners to achieve a broader market layout. Loongson Technology believes that through technological innovation and market expansion, it can continue to maintain its leading position in the domestic CPU market and achieve greater breakthroughs in the open market in the future.
Future outlook
Overall, in the face of market competition and industry challenges, Loongson Technology has shown a clear strategic direction and firm confidence in development. The company not only continues to make efforts in technological innovation and product development, but also actively promotes market development and ecosystem construction. Loongson's long-term strategy is to promote the healthy development of the domestic CPU market through continuous technological innovation and partnership building.
With the acceleration of digital transformation and changes in market demand, Loongson Technology is expected to continue to lead the development of the domestic semiconductor industry in the future. The company will further consolidate its leading position in the domestic and foreign markets and contribute to the innovation and development of the global semiconductor industry by continuously optimizing product performance, improving cost performance and expanding market share.
