Q2 2026 Intchains Group Ltd Earnings Call
Speaker #1: Thank you for standing by. My name is Prilla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Intchains Group Limited first half 2026 earnings conference call.
Operator: Thank you for standing by. My name is Prila, and I will be your conference operator today. At this time, I would like to welcome everyone to the Intchains Group Limited H1 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the conference over to Alice Zhang with The Equity Group. Please go ahead.
Operator: Thank you for standing by. My name is Prila, and I will be your conference operator today. At this time, I would like to welcome everyone to the Intchains Group Limited H1 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the conference over to Alice Zhang with The Equity Group. Please go ahead.
Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press the star key followed by the number 1 on your telephone keypad.
Speaker #1: If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the conference over to Alice Zhang with the Equity Group.
Speaker #1: Please go ahead.
Speaker #2: Thank you, operator. Good evening, everyone. Welcome to Intchains' first half 2026 earnings conference call. Please be advised that the discussions on today's call will include forward-looking statements.
Alice Zhang: Thank you, operator. Good evening to everyone. Welcome to Intchains H1 2026 Earnings Conference Call. Please be advised that the discussions on today's call will include forward-looking statements. These statements involve known and unknown risks and uncertainties and are based on the company's current expectations and projections regarding future events that may impact its financial condition, operating results, and strategic direction. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the company cautions investors that actual results may differ materially from those anticipated results. Investors should review other factors that may affect its future results in the company's registration statement and other filings with the SEC.
Alice Zhang: Thank you, operator. Good evening to everyone. Welcome to Intchains H1 2026 Earnings Conference Call. Please be advised that the discussions on today's call will include forward-looking statements. These statements involve known and unknown risks and uncertainties and are based on the company's current expectations and projections regarding future events that may impact its financial condition, operating results, and strategic direction. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the company cautions investors that actual results may differ materially from those anticipated results. Investors should review other factors that may affect its future results in the company's registration statement and other filings with the SEC.
Speaker #2: These statements involve known and unknown risks and uncertainties and are based on the company's current expectations and projections regarding future events that may impact its financial condition, operating results, and strategic direction.
Speaker #2: Although the company believes that the expectations expressed in this forward-looking statement are reasonable, it cannot assure you that such expectations will turn out to be correct, and the company cautions investors that actual results may differ materially from those anticipated results.
Speaker #2: Investors should review other factors that may affect its future results in the company's registration statement and other filings with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, or changes in its expectations.
Alice Zhang: The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances or changes in its expectations, except as required by law. Please refer to the reconciliation of non-GAAP measures to comparable GAAP measures in the earnings press release. The webcast replay of this conference call will be available on the Intchains website at www.ir.intchains.com. It is my pleasure to introduce Intchains's CFO, Mr. Chaowei Yan, who will provide an overview of H1 2026 financial results and the company's business strategy and focus for the remainder of the year. Before opening the floor for questions, Charles, please go ahead.
Alice Zhang: The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances or changes in its expectations, except as required by law. Please refer to the reconciliation of non-GAAP measures to comparable GAAP measures in the earnings press release. The webcast replay of this conference call will be available on the Intchains website at www.ir.intchains.com. It is my pleasure to introduce Intchains's CFO, Mr. Chaowei Yan, who will provide an overview of H1 2026 financial results and the company's business strategy and focus for the remainder of the year. Before opening the floor for questions, Charles, please go ahead.
Speaker #2: Except as required by law. Please refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. The webcast replay of this conference call will be available on the Intchains website.
Speaker #2: At www.ir.inchains.com, it is my pleasure to introduce Inchains CFO, Mr. Charles Yen, who will provide an overview of first half 2026 financial results and the company's business strategy and focus for the remainder of the year.
Speaker #2: Before opening the floor for questions, Charles, please go ahead.
Speaker #3: Thank you, Alice, and welcome, everyone. Let me start with a quick look at our first half 2026 results. The period reflected continued cyclical softness in outgoing demand, which was also impacted by the PRC mining machine sales restrictions announced in February.
Chaowei Yan: Thank you, Alice, and welcome everyone. Let me start with a quick look at our H1 2026 results. The period reflected continued cyclical softness in outward demand, which was also impacted by the PRC mining machine sales restrictions announced in February. Revenue was RMB 11.1 million, and total operating expenses were RMB 42 million. With a basic and diluted net loss per ordinary share of RMB 1.22. We ended the period with RMB 461 million in cash and cash equivalents, deposits, and government securities. A balance sheet that has allowed us to fund our next generation chip program entirely from internal resources. Now turning into the remainder of 2026. Our progress on new product development and where we are taking the business from here.
Chaowei Yan: Thank you, Alice, and welcome everyone. Let me start with a quick look at our H1 2026 results. The period reflected continued cyclical softness in outward demand, which was also impacted by the PRC mining machine sales restrictions announced in February. Revenue was RMB 11.1 million, and total operating expenses were RMB 42 million. With a basic and diluted net loss per ordinary share of RMB 1.22. We ended the period with RMB 461 million in cash and cash equivalents, deposits, and government securities. A balance sheet that has allowed us to fund our next generation chip program entirely from internal resources. Now turning into the remainder of 2026. Our progress on new product development and where we are taking the business from here.
Speaker #3: Revenue was RMB 11.1 million, and total operating expenses were RMB 42 million, with a basic and diluted net loss per ordinary share of RMB 1.22.
Speaker #3: We ended the period with RMB 461 million in cash and cash equivalents, deposits, and government securities. Our balance sheet has allowed us to fund our next-generation chip program entirely from internal resources.
Speaker #3: Now, turning to the remainder of 2026—our progress on new product development and where we are taking the business from here. We entered this cycle with a deliberate choice.
Chaowei Yan: We entered this cycle with a deliberate choice, keep funding our next generation mining ASIC development through a weaker demand environment so that we will be ready with new products when the market turns. That decision is now paying off. In July, we successfully completed the tape-out of our new next generation mining ASIC, a major technical milestone that keeps us on track for commercial launch in Q4 2026. This chip is architected specifically to optimize performance balancing efficiency, reliability, and supply availability using a mature process. It is designed to improve unit economics and returns on invested capital for retail and professional miners. The successful tape-out transitions the ASIC project from design completion to the start of the manufacturing process and sets the stage for silicon validation, followed by mass production and official commercial launch.
Chaowei Yan: We entered this cycle with a deliberate choice, keep funding our next generation mining ASIC development through a weaker demand environment so that we will be ready with new products when the market turns. That decision is now paying off. In July, we successfully completed the tape-out of our new next generation mining ASIC, a major technical milestone that keeps us on track for commercial launch in Q4 2026. This chip is architected specifically to optimize performance balancing efficiency, reliability, and supply availability using a mature process. It is designed to improve unit economics and returns on invested capital for retail and professional miners. The successful tape-out transitions the ASIC project from design completion to the start of the manufacturing process and sets the stage for silicon validation, followed by mass production and official commercial launch.
Speaker #3: We will keep funding our next-generation mining asset development through a weaker demand environment, so that we will be ready with new products when the market turns.
Speaker #3: And that decision is now paying off. In July, we successfully completed the tape-out of our new next-generation mining ASIC, a major technical milestone that keeps us on track for commercial launch in Q4 2026.
Speaker #3: This chip is architected specifically to optimize performance, balancing efficiency, reliability, and supply availability using a mature process. It is designed to improve unit economics and returns on invested capital for retail and professional miners.
Speaker #3: The successful tape-out transitions the ASIC project from design completion to the start of the manufacturing process, and sets the stage for silicon validation, followed by mass production and official commercial launch.
Speaker #3: With the capital- and R&D-intensive phase of this ASIC chip development now complete, the company has initiated engineering sample production and laboratory validation, including performance, reliability, and thermal testing against internal benchmarks.
Chaowei Yan: With a capital and R&D intensive phase of this ASIC chip development now complete, the company has initiated engineering sample production and a laboratory validation, including performance, reliability, and thermal testing against the internal benchmarks. Subject to successful validation, Intchains expects to commence initial production ramp and system-level integration in advance of our planned commercial launch targeted for Q4. Once launched through the sales of our Goldshell Miner series, we believe it will broaden our addressable market across retail and professional miners, enhance the competitiveness of our hardware portfolio, and unlock new revenue streams through future system and service offerings. Looking into the H2, we believe we are moving quickly to capture the opportunities ahead. Our new mining ASIC is expected to begin contributing modest revenue in H2 2026, building a far more meaningful impact in fiscal 2027 as commercialization accelerates.
Chaowei Yan: With a capital and R&D intensive phase of this ASIC chip development now complete, the company has initiated engineering sample production and a laboratory validation, including performance, reliability, and thermal testing against the internal benchmarks. Subject to successful validation, Intchains expects to commence initial production ramp and system-level integration in advance of our planned commercial launch targeted for Q4. Once launched through the sales of our Goldshell Miner series, we believe it will broaden our addressable market across retail and professional miners, enhance the competitiveness of our hardware portfolio, and unlock new revenue streams through future system and service offerings. Looking into the H2, we believe we are moving quickly to capture the opportunities ahead. Our new mining ASIC is expected to begin contributing modest revenue in H2 2026, building a far more meaningful impact in fiscal 2027 as commercialization accelerates.
Speaker #3: Subjected to successful validation in Intchains, we expect to commence initial production ramp and the system-level integration in advance of a planned commercial launch targeted for Q4.
Speaker #3: Once launched through the sales of our GoShield Miner series, we believe it will broaden our addressable market across retail and professional miners, enhance the competitiveness of our hardware portfolio, and unlock new revenue streams through future system and service offerings.
Speaker #3: Looking into the second half, we believe we are moving quickly to capture the opportunities ahead. Our new mining ASIC is expected to begin contributing modest revenue in the second half of 2026.
Speaker #3: We expect to build a far more meaningful impact in fiscal 2027 as commercialization accelerates. Longer term, we believe that this platform further strengthens our position as a leading active supplier of purpose-built mining ASIC systems.
Chaowei Yan: Longer term, we believe that this platform further strengthens our position as a leading active supplier of purpose-built mining ASIC systems, driving superior operational efficiency for our customers and advancing a more sustainable approach to proof of work infrastructure. It is a core part of our strategy to build a more resilient, diversified revenue base. Beyond this new project, we are also in the early stages of evaluating new growth opportunities in artificial intelligence, including potential acquisitions that would extend our core competencies, in custom ASIC design and hardware systems integration into AI-enabled computing applications. Our goal is to reduce reliance on cryptocurrency market cycles over time and to position Intchains in a higher value computing market adjacent to our existing hardware expertise. This work is still in early stages, and we look forward to share more details as our plans develop.
Chaowei Yan: Longer term, we believe that this platform further strengthens our position as a leading active supplier of purpose-built mining ASIC systems, driving superior operational efficiency for our customers and advancing a more sustainable approach to proof of work infrastructure. It is a core part of our strategy to build a more resilient, diversified revenue base. Beyond this new project, we are also in the early stages of evaluating new growth opportunities in artificial intelligence, including potential acquisitions that would extend our core competencies, in custom ASIC design and hardware systems integration into AI-enabled computing applications. Our goal is to reduce reliance on cryptocurrency market cycles over time and to position Intchains in a higher value computing market adjacent to our existing hardware expertise. This work is still in early stages, and we look forward to share more details as our plans develop.
Speaker #3: Driving superior operational efficiency for our customers and advancing a more sustainable approach to proof-of-work infrastructure. It's a core part of our strategy to build a more resilient, diversified revenue base.
Speaker #3: Beyond this new project, we are also in the early stages of evaluating new growth opportunities in artificial intelligence, including potential acquisitions that would extend our core competencies in custom ASIC design and hardware systems integration into AI-enabled computing applications.
Speaker #3: Our goal is to reduce reliance on cryptocurrency market cycles over time, and to position Intchains in a higher value computing market adjacent to our existing hardware expertise.
Speaker #3: This work is still in the early stages, and we look forward to sharing more details as our plans develop. On the cost side, we continue to make progress on our cost optimization efforts.
Chaowei Yan: On the cost side, we continued to make progress on our cost optimization efforts. As of 30 June 2026, we had realized approximately RMB23.1 million in annualized labor cost savings through our organizational restructuring, the divesture of our non-core chip-related business, and expanded use of AI-enabled tools across our business operations. We expect to continue these cost discipline initiatives throughout the remainder of the year. On our ETH Treasury holdings as of 30 June 2026, the fair value of our cryptocurrency assets, excluding stable coins such as USDC and USDT, was RMB98.9 million, including approximately 9,176 ETH. As of 20 August 2026, the company's total units of ETH staked were 4,556, with 3,556 ETH deposited through our Goldshell staking platform pending validation activation, and 1,000 ETH staked on FalconX platform.
Chaowei Yan: On the cost side, we continued to make progress on our cost optimization efforts. As of 30 June 2026, we had realized approximately RMB 23.1 million in annualized labor cost savings through our organizational restructuring, the divesture of our non-core chip-related business, and expanded use of AI-enabled tools across our business operations. We expect to continue these cost discipline initiatives throughout the remainder of the year. On our ETH Treasury holdings as of 30 June 2026, the fair value of our cryptocurrency assets, excluding stable coins such as USDC and USDT, was RMB98.9 million, including approximately 9,176 ETH. As of 20 August 2026, the company's total units of ETH staked were 4,556, with 3,556 ETH deposited through our Goldshell staking platform pending validation activation, and 1,000 ETH staked on FalconX platform.
Speaker #3: As of June 30, 2026, we had realized approximately RMB 23.1 million in annualized labor cost savings through our organizational restructuring, the diversity of our non-core chip-related business, and expanded use of AI-enabled tools across our business operations.
Speaker #3: We expect to continue this cost discipline initiatives throughout the remainder of 2020 remainder of the year. Our on our east treasury holdings as of June 30, 2026, the fair value of our cryptocurrency assets excluding stable coins such as USDC and USDT was 98.9 million RMB, including approximately 9,176 ETH.
Speaker #3: As of August 20, 2026, the company's total units of ETH staked were 4,556, with 3,556 ETH deposited through our GoldShield staking platform pending validation activation.
Speaker #3: And 1,000 ETH staked on the FalconX platform. Going forward, we expect to maintain a prudent ETH treasury and staking position, preserving our existing treasury holdings and continuing to generate staking yields.
Chaowei Yan: Going forward, we expect to maintain a prudent ETH treasury and a staking position, preserving our existing treasury holdings and continue generating staking yields, while prioritizing capital allocation toward our next-generation ASIC program and the new AI initiatives over additional ETH accumulation. We also announced today that our board of directors had approved a share repurchase program, under which we may repurchase up to $15 million of our ADS over the next two years, funded from our existing cash balance. We believe that this program reflects our confidence in Intchains' long-term strategic direction and our commitment to creating value for shareholders. It is consistent with our disciplined approach to capital allocation, balancing returns to shareholders with continued investment in our next-generation ASIC and the new AI initiatives.
Chaowei Yan: Going forward, we expect to maintain a prudent ETH treasury and a staking position, preserving our existing treasury holdings and continue generating staking yields, while prioritizing capital allocation toward our next-generation ASIC program and the new AI initiatives over additional ETH accumulation. We also announced today that our board of directors had approved a share repurchase program, under which we may repurchase up to $15 million of our ADS over the next two years, funded from our existing cash balance. We believe that this program reflects our confidence in Intchains' long-term strategic direction and our commitment to creating value for shareholders. It is consistent with our disciplined approach to capital allocation, balancing returns to shareholders with continued investment in our next-generation ASIC and the new AI initiatives.
Speaker #3: While prioritizing capital allocation toward our next-generation ASIC program and the new AI initiatives over additional ETH accumulation, we also announced today that our Board of Directors has approved a share repurchase program.
Speaker #3: Under which we may repurchase up to $15 million of our ADS over the next two years, funded from our existing cash balance. We believe that this program reflects our confidence in Intchains' long-term strategic direction and our commitment to creating value for shareholders.
Speaker #3: And it's consistent with our disciplined approach to capital allocation, balancing returns to shareholders with continued investment in our next-generation ASIC and the new AI initiatives.
Speaker #3: Looking ahead to the second half of 2026, while we expect continued market headwinds, we will remain focused on disciplined execution: commercializing our new ASIC, prioritizing cost optimization, and advancing our evaluation of AI-related growth opportunities.
Chaowei Yan: Looking ahead to H2 2026, while we expect continued market headwinds, we will remain focused on disciplined execution, commercializing our new ASIC, prioritizing cost optimization, and advancing our evaluation of AI-related growth opportunities. We believe these initiatives will position Intchains for a more diversified and resilient business over the long term. With that, operator, let's open it up for questions.
Chaowei Yan: Looking ahead to H2 2026, while we expect continued market headwinds, we will remain focused on disciplined execution, commercializing our new ASIC, prioritizing cost optimization, and advancing our evaluation of AI-related growth opportunities. We believe these initiatives will position Intchains for a more diversified and resilient business over the long term. With that, operator, let's open it up for questions.
Speaker #3: We believe these initiatives will position Intchains for a more diversified and resilient business over the long term. With that, operator, let's open it up for questions.
Speaker #1: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press the star one on your telephone keypad to raise your hand and join the queue.
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Mark Palmer with StoneX. Please go ahead.
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Mark Palmer with StoneX. Please go ahead.
Speaker #1: If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Mark Palmer with Stonex.
Speaker #1: Please go ahead.
Speaker #2: Yes. Hello, good evening, and thank you for taking my question. You just announced the new share repurchase program, and also discussed ongoing R&D activities.
Mark Palmer: Yes. Hello, good evening, and thank you for taking my question. You announced the new share repurchase program, and also discussed ongoing R&D activities, as well as the potential for M&A, especially focused on AI, and AI-driven businesses. Can you talk a bit about what your capital allocation priorities are and, more broadly, what your capital allocation strategy looks like going forward? Thank you.
Mark Palmer: Yes. Hello, good evening, and thank you for taking my question. You announced the new share repurchase program, and also discussed ongoing R&D activities, as well as the potential for M&A, especially focused on AI, and AI-driven businesses. Can you talk a bit about what your capital allocation priorities are and, more broadly, what your capital allocation strategy looks like going forward? Thank you.
Speaker #2: As well as the potential for M&A, especially focused on AI and AI-driven businesses. Can you talk a bit about what your capital allocation priorities are, and more broadly, what your capital allocation strategy looks like going forward?
Speaker #2: Thank you.
Speaker #3: Thank you, Mark. Thank you for your question. Firstly, regarding the share repurchase program, we planned a $15 million share repurchase program.
Chaowei Yan: Thank you, Mark. Thank you for your question. Firstly, for the share repurchase program, we planned $15 million for the share repurchase program. For the R&D in current assets, we will handle this as usual. We will do the tape-out and buy the inventory and then sell them. The capital cost of the current business, it will remain the same with our prior projects. Finally, for the AI initiatives and M&A, it will depend on the project we engage. Currently, we have several projects to assess and every project have a different capital requirement. Currently, for the AI part, we cannot give an accurate estimation. Thank you.
Chaowei Yan: Thank you, Mark. Thank you for your question. Firstly, for the share repurchase program, we planned $15 million for the share repurchase program. For the R&D in current assets, we will handle this as usual. We will do the tape-out and buy the inventory and then sell them. The capital cost of the current business, it will remain the same with our prior projects. Finally, for the AI initiatives and M&A, it will depend on the project we engage. Currently, we have several projects to assess and every project have a different capital requirement. Currently, for the AI part, we cannot give an accurate estimation. Thank you.
Speaker #3: And for the R&D in current ASIC, we will handle this as usual. We will do the tape-out, buy the inventory, and then sell them.
Speaker #3: So the capital cost of the current business it will be remain the same with our prior projects. And finally, for the AI initiatives and M&A, it will depends on it will depends on the project we engaged.
Speaker #3: Currently, we have several projects to assess, and every project has different capital requirements. So, currently, for the AI part, we cannot give an accurate estimation.
Speaker #3: Thank you.
Speaker #2: Yes. And a follow-up question, please. Charles, you made reference to the fact that you're anticipating that there will be a pickup in the impact from the newly developed ASIC product in 2027.
Mark Palmer: Yes, and follow-up question, please. Charles, you made reference to the fact that you're anticipating that there will be a pickup in the impact from the newly developed ASIC product in 2027. Can you talk a bit about how you're currently thinking about 2027, particularly with regard to the diversification of revenue that you made reference to, reducing reliance on crypto cycles? Also, what should we be watching for over the next few quarters in terms of milestones or signs of your progress? Thank you.
Mark Palmer: Yes, and follow-up question, please. Charles, you made reference to the fact that you're anticipating that there will be a pickup in the impact from the newly developed ASIC product in 2027. Can you talk a bit about how you're currently thinking about 2027, particularly with regard to the diversification of revenue that you made reference to, reducing reliance on crypto cycles? Also, what should we be watching for over the next few quarters in terms of milestones or signs of your progress? Thank you.
Speaker #2: Can you talk a bit about how you're currently thinking about 2027, particularly with regard to the diversification of revenue that you made reference to, reducing reliance on crypto cycles, and also, what should we be watching for over the next few quarters in terms of milestones or signs of your progress?
Speaker #2: Thank you.
Speaker #3: Yes, yeah. Firstly, our next milestone for the product is the product launch. It will be happening in Q4 2026, and it will contribute some revenue for the second half.
Chaowei Yan: Yes. Firstly, our next milestone of the product is the product launch. It will be happening in Q4 2026. It will contribute some revenue for the second half, but it will not be very big. For 2027, the whole mass production will be on track. So in 2027, our expectation is the revenue will be better than the last cycle. By last cycle, I mean maybe 2025 and 2024. This is our business basics. In addition, for other revenue base, we will continue to stake ETH, and that will contribute meaningful revenue compared with this year and last year. Finally, the AI initiatives. If it has some meaningful process, it will also contribute additional revenue.
Chaowei Yan: Yes. Firstly, our next milestone of the product is the product launch. It will be happening in Q4 2026. It will contribute some revenue for the second half, but it will not be very big. For 2027, the whole mass production will be on track. So in 2027, our expectation is the revenue will be better than the last cycle. By last cycle, I mean maybe 2025 and 2024. This is our business basics. In addition, for other revenue base, we will continue to stake ETH, and that will contribute meaningful revenue compared with this year and last year. Finally, the AI initiatives. If it has some meaningful process, it will also contribute additional revenue.
Speaker #3: But it will not be very big. But for 2027, the whole product will be—yeah, the whole mass production will be on track.
Speaker #3: So in 2027, our expectation is the revenue will be better than the last cycle. By last cycle, I mean maybe 2025 and 2024.
Speaker #3: So and this is our this is our business basic. And in addition, for other revenue for other revenue-based we will continue to stake ETH and will contribute meaningful revenue compared with this year and last year.
Speaker #3: And finally, the AI initiatives, if the if it have some meaningful process, it will also contribute additional revenue. I think the I think the in current stage, I think the we cannot estimate the current figure of that part.
Chaowei Yan: I think in current stage, we cannot estimate the current figure of that part, but I believe that 2027 will be a good year or the best year among five years of the company. Yeah, thank you.
Chaowei Yan: I think in current stage, we cannot estimate the current figure of that part, but I believe that 2027 will be a good year or the best year among five years of the company. Yeah, thank you.
Speaker #3: But I believe that 2027 will be a good year, or the best year among the five years of the company. Yeah. Thank you.
Speaker #2: Thanks very much.
Mark Palmer: Thanks very much.
Mark Palmer: Thanks very much.
Speaker #3: Yeah.
Chaowei Yan: Yeah.
Chaowei Yan: Yeah.
Speaker #1: And your next question comes from the line of Matthew Galinko with Maxim Group. Please go ahead.
Operator: Your next question comes from the line of Matthew Galinko with Maxim Group. Please go ahead.
Operator: Your next question comes from the line of Matthew Galinko with Maxim Group. Please go ahead.
Speaker #4: Hey, thank you for taking my questions. Maybe, firstly, given the environment we've been in for crypto, can you discuss any changes you're seeing in competition in the ASIC design business?
Matthew Galinko: Hey, thanks for taking my questions. Maybe firstly, just given the environment we've been in for crypto, can you discuss any changes you're seeing in competitions in the ASIC design business?
Matthew Galinko: Hey, thanks for taking my questions. Maybe firstly, just given the environment we've been in for crypto, can you discuss any changes you're seeing in competitions in the ASIC design business?
Speaker #3: Yeah. Currently, what I can say now is that our new next-generation ASIC, the fundamental foundation of this new cryptocurrency, is very good.
Chaowei Yan: Yeah. Currently, what I can say now is that our new next-generation ASIC, the foundation of this new cryptocurrency is very good, and the competition of this new cryptocurrency is not intense. We may not be the first one entering to that area, but we believe that our product has a leading performance among all competitors. I think we are very confident on this new ASIC or new mining machine for this new coin and for 2027. On the other hand, I think the crypto environment currently, it has some soft demand issues. Now I think for the H2 and next year, the market will recover and together with our business and our revenue and the ETH price. Yeah. This is all our company's business. Yes, thank you.
Chaowei Yan: Yeah. Currently, what I can say now is that our new next-generation ASIC, the foundation of this new cryptocurrency is very good, and the competition of this new cryptocurrency is not intense. We may not be the first one entering to that area, but we believe that our product has a leading performance among all competitors. I think we are very confident on this new ASIC or new mining machine for this new coin and for 2027. On the other hand, I think the crypto environment currently, it has some soft demand issues. Now I think for the H2 and next year, the market will recover and together with our business and our revenue and the ETH price. Yeah. This is all our company's business. Yes, thank you.
Speaker #3: And the competition for this new cryptocurrency is not intense. We may not be the first ones to enter that area, but we believe that our product has leading performance among all competitors.
Speaker #3: And I think we are very confident on this new ASIC or new mining machine for the for this new coin and for 2027. And on the other hand, I think the crypto environment currently it have some it have some soft demand issues and now I think for the second half and next year, the market will recover.
Speaker #3: And together with our business and our revenue and the ETH price. Yeah. This is all our company this is all our company's business. Yes.
Speaker #3: Thank you.
Matthew Galinko: Great. I guess as a follow-up, to drill a little bit more into the capital allocation decisions, how do you view your ETH treasury holdings with respect to other investment opportunities, including M&A, additional ASIC development, if you see opportunities? Are treasury holdings potentially convertible into cash for M&A or other initiatives if it suits, or do you intend to hold that as a fixed asset and not really consider it as part of any kind of spend? Thank you.
Matthew Galinko: Great. I guess as a follow-up, to drill a little bit more into the capital allocation decisions, how do you view your ETH treasury holdings with respect to other investment opportunities, including M&A, additional ASIC development, if you see opportunities? Are treasury holdings potentially convertible into cash for M&A or other initiatives if it suits, or do you intend to hold that as a fixed asset and not really consider it as part of any kind of spend? Thank you.
Speaker #4: Great. And I guess, as a follow-up, could you drill a little bit more into the capital allocation decisions? How do you view your ETH treasury holdings with respect to other investment opportunities, including M&A?
Speaker #4: Additional ASIC development—if you see opportunities, is there a way treasury holdings are potentially convertible into cash for M&A or other initiatives if it suits? Or do you intend to hold that as a fixed asset and not really consider it as part of any kind of spend?
Speaker #4: Thank you.
Speaker #3: Yeah. Yes. I think we will not sell ETH, firstly. And, but we are using our own funds to buy ETH. So, if we did not generate—if we did not generate operating cash, it's difficult for us to pay more money on it.
Chaowei Yan: Yeah. Yes. I think we will not sell ETH, firstly, but we are using our own fund to buy ETH. So if we did not generate operating cash, it is difficult for us to pay more money on it. So our current strategy is to sell mining machine and obtain profit and use that profit to buy the ETH. So for the capital allocation, we will not further use current cash to buy ETH, but this is our current strategy. I cannot ensure if we will change in the future, but currently we are using this strategy. Our current cash we are using R&D, mining machine sales, current business and AI initiatives. Thank you.
Chaowei Yan: Yeah. Yes. I think we will not sell ETH, firstly, but we are using our own fund to buy ETH. So if we did not generate operating cash, it is difficult for us to pay more money on it. So our current strategy is to sell mining machine and obtain profit and use that profit to buy the ETH. So for the capital allocation, we will not further use current cash to buy ETH, but this is our current strategy. I cannot ensure if we will change in the future, but currently we are using this strategy. Our current cash we are using R&D, mining machine sales, current business and AI initiatives. Thank you.
Speaker #3: So our current strategy is to sell mining machine and obtain profit and use that profit to buy the ETH. So for the capital allocation, if we will not use the we will not further use current cash to buy ETH.
Speaker #3: But this is our current strategy. I cannot ensure if we will change in the future. But currently, we are using this strategy.
Speaker #3: Our current cash will be used in R&D, mining machine sales, current business, and AI initiatives. Thank you.
Speaker #4: Thank you. And maybe last question from me. In addition to the new machine that you're rolling out in Q4, which you expect to contribute in 2027, if we get a recovery in the crypto market, do you expect to have decent contribution from other products in your portfolio?
Matthew Galinko: Thank you. Maybe last question from me. In addition to the new machine that you are rolling out in Q4, and you expect to contribute to 2027, if we get a recovery in the crypto market, do you expect to have decent contribution from other products in your portfolio, or do you think that 2027 is going to be just predominantly driven by the new launch?
Matthew Galinko: Thank you. Maybe last question from me. In addition to the new machine that you are rolling out in Q4, and you expect to contribute to 2027, if we get a recovery in the crypto market, do you expect to have decent contribution from other products in your portfolio, or do you think that 2027 is going to be just predominantly driven by the new launch?
Speaker #4: Do you think that 2027 is going to be predominantly driven by the new launch?
Speaker #3: I think if the currently if the not currently cryptocurrency is in the bear market. So if the market did not recover, if the market did not recover, I think we can our main product is this new product our main revenue is will come from contributed by this new product.
Chaowei Yan: I think now currently cryptocurrency is in the bear market. If the market did not recover, I think our main revenue will come from contributed by this new product. But if the market recovered, all the price, the Dogecoin price, the IOST coin price recover, then we will have other contributions from this prior product line because we have finished the tape-out, so it is very quick for us to order more wafer from our fab. Thank you.
Chaowei Yan: I think now currently cryptocurrency is in the bear market. If the market did not recover, I think our main revenue will come from contributed by this new product. But if the market recovered, all the price, the Dogecoin price, the IOST coin price recover, then we will have other contributions from this prior product line because we have finished the tape-out, so it is very quick for us to order more wafer from our fab. Thank you.
Speaker #3: But if the market recovered, all the prices—the Dogecoin price, the Aleo coin price—recover, then we will have another contribution from these prior product lines.
Speaker #3: Because we have finished the tape-out, it's very quick for us to order more wafers from our fab. Yeah. Thank you.
Speaker #4: Great. Thank you.
Matthew Galinko: Great. Thank you.
Matthew Galinko: Great. Thank you.
Speaker #3: Thank you.
Chaowei Yan: Thank you.
Chaowei Yan: Thank you.
Speaker #1: I am showing no further questions at this time. I would like to turn it back to Charles Yan for closing remarks.
Operator: I am showing no further questions at this time. I would like to turn it back to Chaowei Yan for closing remarks.
Operator: I am showing no further questions at this time. I would like to turn it back to Chaowei Yan for closing remarks.
Speaker #3: Yeah. Thanks again to all of you for joining us. We are always open to a dialogue with investors. Please feel free to reach out to us or to our investor relations firm, The Equity Group, for any additional questions.
Chaowei Yan: Yeah. Thanks again to all of you for joining us. We are always open to a dialogue with investors. Please feel free to reach out to us or to our investor relation firm, The Equity Group, for any additional questions. We look forward to speaking with you all again on our next call. Thank you.
Chaowei Yan: Yeah. Thanks again to all of you for joining us. We are always open to a dialogue with investors. Please feel free to reach out to us or to our Investor Relation firm, The Equity Group, for any additional questions. We look forward to speaking with you all again on our next call. Thank you.
Speaker #3: We look forward to speaking with you all again on our next call. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
