Intchains Group Ltd (NASDAQ: ICG)

Intchains Group Ltd (ICG) is a company based in the Cayman Islands, operating primarily through its subsidiaries in the People's Republic of China (PRC). The company specializes in the front-end and back-end of IC design, making it a provider of integrated solutions for high-performance computing ASIC chip products in the blockchain industry. With a fabless business model, Intchains focuses on the development of ASIC chips, which are then manufactured, packaged, and tested by world-class wafer foundry and OSAT partners.

Intchains' primary products include high-performance computing ASIC chip products, computing equipment incorporating its ASIC chips, and ancillary software and hardware. These products cater to the evolving needs of the blockchain industry, and Intchains has built a proprietary technology platform named "Xihe" Platform, which allows it to develop a wide range of ASIC chips with high efficiency and scalability. The company's ASIC chip products are designed for various blockchain algorithms, such as Blake2b, Blake2s, Eaglesong, Sha512MD160, and Cryptonight V4, among others. These chips are primarily used for mining alternative cryptocurrencies, and the company's rapid growth has been driven by the increase in the price of alternative cryptocurrencies.

Intchains operates in a relatively fragmented market, with many ASIC-related products providers focusing on different end applications and corresponding algorithms of the ASIC chips. However, the company believes that its competitive advantage lies in its established position as a leading fabless provider of high-performance computing ASIC chips for certain key blockchain algorithms, innovative technology platform, broad product portfolio, close and stable relationships with its major suppliers, and visionary and experienced management team.

Intchains' customer base primarily consists of distributors located in the PRC, with seven customers accounting for a significant portion of its revenue in 2023. The company is well-positioned to sell its ASIC chip products to other distributors in the PRC, as the demand for its products is primarily driven by their performance and the overall market condition of the cryptocurrency market, rather than specific distributors.

In terms of intellectual property, Intchains has a number of patents and patent applications related to its ASIC chip products and technology platform. The company takes steps to protect its intellectual property rights, including through confidentiality agreements and non-disclosure agreements with third parties.

As of December 31, 2023, Intchains had 133 full-time employees, with a breakdown by function as follows: research and development (97), sales and marketing (17), administration (64), and finance and accounting (11). The company provides regular training to its employees, including orientation training for new employees and continuing on-the-job training for existing employees.

Intchains does not maintain any insurance covering its properties, equipment, inventory, or employees, and it does not carry any business interruption or product liability insurance or any third-party liability insurance to cover claims in respect of personal injuries or any damages arising from accidents on its properties or in relation to its operations. The company is subject to PRC environmental laws and regulations, including the Environmental Protection Law of the PRC, and has implemented measures to ensure its compliance with all applicable requirements under PRC environmental laws and regulations.

Intchains is subject to various regulations and policies related to the IC industries and blockchain industries, including the Circular of the State Council on Printing and Distributing Policies for Encouraging the Development of the Software Industry and the Integrated Circuit Industry, the Notice on Issuing New Generation AI Development Plan, and the Guiding Opinions on Actively Promoting Supply Chain Innovation and Application. The company is also subject to PRC foreign exchange regulations, including the Administrative Regulations of the PRC on Foreign Exchange and the Notice on Administration of Foreign Exchange Involved in Offshore Investment, Financing and Round-Trip Investment Conducted by Domestic Residents Through Special Purpose Vehicles.

Intchains is subject to PRC foreign investment regulations, including the Foreign Investment Law of the People's Republic of China and the Special Administrative Measures for Access of Foreign Investment (2021 Edition). In terms of outbound investment, Intchains is subject to PRC outbound investment regulations, including the Measures for Administration of Overseas Investment and the Measures for Administration of Overseas Investment of Enterprises. The company is also subject to PRC regulations on import and export of goods, including the Foreign Trade Law of the PRC and the Customs Law of the PRC. Finally, Intchains is subject to PRC taxation regulations, including the Enterprise Income Tax Law of the PRC and the Regulation on Implementation of the Enterprise Income Tax Law of the PRC.