Huizhou Desay SV Automotive Co., Ltd. Business Report FY ended Dec. 2022

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	Rate of Change (%)
Sales	14,932.91	9,569.43	56.05
Operating income	1,158.40	856.67	35.22
Ordinary income	1,157.39	860.72	34.47
Net income	1,171.37	831.84	40.82

New business

-The company announced that the company will develop and start to run a SiP (System in Package) business in 2022, expecting to start production in August. According to Desay SV, SIP is the integration of active and passive components, as well as functional chips such as MEMS (microelectromechanical systems), optical components, processors, and memories into a single standard package component to create a fully functional subsystem with multiple functions. Desay SV will continue to invest hundreds of millions of capital to build fully automated SIP (System-in-Package) production lines. Its annual production capacity is expected to exceed 1.5 million units within two years. (From a press release dated March 11, 2022)

Research and development trends

-The company announced the launch of the first-generation ICP (Intelligent Computing Platform) “Aurora”. This product is a volume production in-vehicle ICP with mainstream chips that deliver a large computing power of over 2,000TOPS. Its software integrates core functional domains such as intelligent cockpit, intelligent driving, and connected services, enables cross-domain convergence and meets the multi-layer needs of future E/E architectures, including high computing performance, high functional security, and continuous hardware upgradability. (From a press release dated April 29, 2022)

Exhibitions

-The company's European branch participated in the International Suppliers Fair (IZB) 2022 in Wolfsburg, Germany, exhibiting nearly 20 innovative technologies, products and solutions involved in the business sectors of intelligent cabin, intelligent driving and intelligent connectivity. At the IZB, Desay SV showcased a variety of products such as the 23.6-inch Mini LED Curved Duplex Display, the Rear View Camera with ultrasonic cleaning technology, the 5G V2X Intelligent Antenna integrated intelligent on-board communication product, and the ICP Aurora mass-produced in-vehicle intelligent computing platform. (From a Desay SV official WeChat account press release dated October 18, 2022)

Orders

-The company has been awarded the “R&D Contribution Award” by Dongfeng Passenger Vehicle Company (DFPV). In 2023, Desay SV will develop customized smart driving domain controllers for DFPV, assisting DFPV in creating more advanced smart driving solutions. (From a press release dated February 24, 2023)

-The company received orders for third-generation intelligent cockpits from Great Wall Motor, GAC Aion, Chery, and Li Auto.

-In the field of infotainment systems, the Company received new orders from FAW-VW, SAIC-WV, Great Wall Motor, Geely, GAC, Chery Automobile, and others. In the display module and system business, new customers such as Dongfeng Nissan and XPeng Motor were acquired, and in the LCD instrumentation business, the company received project confirmations from customers such as BYD, Geely Automobile, Great Wall Motor, and GAC Passenger Car.

-The Company supplies the XPeng Motor's P7 and P5 with its first high-computing-capacity autonomous driving controller platform.

New companies

-The company established an office in Toyota City, Japan. This move will strengthen local service capabilities in the country. Based on the current business needs and development prospects, Desay SV will enhance business cooperation for the continuous improvement of local market competitiveness. As of now, Desay SV has established R&D centers and branches in Singapore, Europe, Japan, and the United States. The company will continue to increase its investment in localizing R&D and manufacturing systems in foreign markets. (From a press release dated December 27, 2022)

-The company's European division, Desay SV Automotive Europe GmbH, has acquired all shares in Antenna Technology Center Europe ATC GmbH (ATC), a leading provider of antenna testing and service in the automotive industry. ATC was founded in 2008. Its range of services includes testing and analysis of antenna systems as well as support in technical development. Desay SV Automotive Europe GmbH expects to open a state-of-the-art shielded 3D antenna test chamber at the end of 2023. With this investment, it will provide customers with professional testing services through test technology covering the complete frequency band of automotive antennas. (From a press release dated October 5, 2022)

Strategic alliances

Changan
-The company signed a strategic cooperation agreement with Changan Automobile Co., Ltd. (Changan Automobile). The two companies will dive deeply into the domain controller field to build industry-leading central computer products, and promote the R&D and mass production of key components of central computers. Per the agreement, the two companies will work under the premise of building central computer R&D and capability, researching emerging intelligent driving technologies, and sharing resources. They plan to form a joint innovation team and integrate talents, technologies, and resources on each side. They aim to help facilitate theoretic research of innovative technologies, strengthen the patent portfolio, create prototypes, conduct tests and assessments, as well as bring products into mass production. (From a press release dated August 11, 2022)

MooVita
-The company signed a strategic partnership agreement with MooVita, an autonomous driving technology company in Singapore, to further develop a safer, more efficient, and carbon-neutral mode of transportation. MooVita and Desay SV will collaborate in the development of an AV (autonomous vehicle) Level-3 to Level 4+ full-stack software application residing in Desay SV's proven and enhanced high computing power firmware. This will involve a complete set of complex algorithms and operations-service capabilities, enabling vehicles to operate autonomously without much human intervention for urban driving conditions. The deployment of such autonomous driving core technologies is expected to be rolled out in the first half of 2023. (From multiple sources dated August 9, 2022)

Qualcomm
-The company announced that it has partnered with Qualcomm Technologies, Inc. to jointly develop Desay SV’s 4th-Generation Intelligent Cabin System based on the 4th-Generation Snapdragon Cockpit Platforms. Desay SV’s 4th-Generation Intelligent Cabin System supports advanced technologies such as multi-screen synergy, audio processing and augmented reality (AR) technology to provide users with an immersive and interactive. It addresses the computation, performance and functional safety needs for a certain zone or domain in intelligent vehicles. (From a press release dated January 5, 2022)

Business restructuring

-The company announced that Desay SV Automotive Europe GmbH opened its second production and logistics center. On an area of 2,700 square meters, the new plant is located at the Weimar-Legefeld site. After the preparations were completed in early January this year, the first six production lines at the new center went into operation. Plans call for a 3D antenna measurement room to be built in the future. (From a press release dated March 3, 2022)

Patents and Certifications

-The company‘s smart driving business unit has passed the ASPICE CL3 (Automotive SPICE Capability Level 3) certification. Desay SV’s smart driving business unit already passed the ASPICE CL2 certification in December 2021. (From a press release dated September 6, 2022)

-The company has achieved ISO/SAE 21434 certification for automotive network security. With constant focus on intelligent cockpits, intelligent driving, and intelligent connectivity, Desay SV builds systematic and complete management systems for network security, data security, functional security, expected functional security, and software upgrades through improving software technology, providing clients and partners with safer and more reliable products and solutions. (From a press release dated July 27, 2022)

-The company has joined the China Automotive Basic Software Ecosystem Committee (AUTOSEMO). AUTOSEMO was established by the China Association of Automobile Manufacturers (CAAM) in 2019. The mission of AUTOSEMO is to unite members of the automotive and software industries to forge basic software architecture standards and interface specifications dominated by local enterprises with independent intellectual property rights, develop China's automotive basic software, share knowledge and achievements, and promote China's automotive industry to accelerate the intelligent transformation. (From a press release dated July 13, 2022)

-The company‘s smart cabin domain controller has achieved Automotive SPICE Capability Level 3 certification. In 2021, this smart cabin domain controller already achieved Automotive SPICE Capability Level 2 certification. Desay SV will rely on its experience with Automotive SPICE and continue to introduce relevant quality standards. (From a press release dated July 12, 2022)

R&D Expenditure

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020
R&D expenses (CNY millions)	1,163.50	962.49	816.99
R&D expense as percent of Sales (%)	11.14	10.06	12.02
Number of R&D personnel	3,494	2,257	1,748
Proportion of R&D personnel (%)	44.49	42.25	40.69

-Established Technology Research and Development Center in 1992. Has R&D centers in China (Nanjing, Chengdu, Shanghai, Shenzhen, etc.), Singapore and Europe.

R&D Facilities

-The company broke ground on the second phase of its intelligent connected project in Huinan Industrial Park. Huinan Industrial Park is positioned as a comprehensive industrial park built on the newest concepts, involving an intelligent connected R&D center, a smart factory, stereoscopic warehouses, a national-level experiment center, and a testing site for autonomous vehicles. The park takes up 220,000 square meters of land with 500,000 square meters of floor space. The construction of the project started in 2018, with the first phase completed and put to work in 2021. The second phase of the project involves the construction of 80,700 square meters of facilities, including stereoscopic warehouses for electronic materials, storage for raw materials, system-in-package (SIP) shops for 100,000 vehicles, SMT (surface mount technology) and assembly shops for 300,000 vehicles, screen fitting and camera assembly shops for 1,000 vehicles, and power facility areas. The second phase of Huinan Industrial Park adheres to the concept of green and sustainable development, covering multiple links such as plan, design, construction, and operation. (From a press release dated June 9, 2022)

-In addition to the above, the company has a laboratory accredited by CNAS ISO/IEC17025. It is said to be one of the largest in China in terms of facility capacity and laboratory scale. It is capable of testing RF and electrical performance, mechanical and environmental reliability, and EMC tests, and can meet more than 90% of the automotive electronics test standards.