Intchains Group Limited American Depositary Shares 2026 H1 Earnings Call

Please go ahead. Thank you, operator.

Good evening to 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. 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.

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' CFO, Mr. Chaowei Yan, 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 before opening the floor for questions.

Charles, please go ahead. 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. Revenue was RMB 11.1 million, and the 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. Our balance sheet 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. We entered this cycle with a deliberate choice.

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, 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. This chip is architected specifically to optimize performance, balancing efficiency, reliability, and supply availability using a mature process, and 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.

With our capital and the 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 internal benchmarks. Subject to successful validation, Intchains expects to commence initial production ramp and system-level integration in advance of a 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 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 H2 2026, building 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, 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.

On the cost side, we continued to make progress on our cost optimization efforts. As of June 30, 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 June 30, 2026, the fair value of our cryptocurrency assets, excluding stablecoins such as USDC and USDT, was RMB 98.9 million, including approximately 9,176 ETH. As of August 20, 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.

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 new AI initiatives.

Looking ahead to 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. 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.