Intchains Group Ltd (ICG) 2026 Q2 法說會逐字稿

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 Instruction) Thank you.

I would now like to turn the conference over to Alice Zhang with Equity Group. Please go ahead.

Thank you, operator. Good evening to everyone. Welcome to Intchains's first half 2026 earnings conference call.

Please be advised that the discussions on today's call will include forward-looking statements. These statements involve non 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 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.

Chaowei, 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 RMB11.1 million and the total operating expenses were RMB42 million, with a basic and diluted net loss per ordinary share of RMB1.22. We ended the period with RMB461 million in cash and cash equivalents, deposits and government securities. 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. We entered this cycle with our 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 take-out of our new next-generation mining asset. 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 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 the thermal testing against the internal benchmarks. Subjected to successful validation, in-change expect to commerce initial production ramp and system level integration in advance of a planned commercial launch targeted for Q4. Once launched through the sales of our go-show miner series, we believe it will broaden our addressable market across retired 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 assets 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 asset systems, 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.

Beyond this new project, we are also in the early stage 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 market cycles overtime 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 RMB23.1 million in annualized labor cost savings through our organizational restructuring, the divestiture of our non-core chip-related business and expanded use of AI-enabled tools across our business operations. We expect to continue these cost disciplined 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 USDP, was RMB98.9 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 gold shield staking platform pending validation activation and 1,000 ETH staked on FalconX platform.

Going forward, we expect to maintain a prudent ETH treasury and staking position. Preserving our existing treasury holdings and continue generating staking yields, while prioritizing capital allocation toward our next generation asset program and the new AI initiatives over additional ease 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, and it's consistent with our disciplined approach to capital allocation, balancing returns to shareholders with continued investment in our next-generation asset and the 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 asset, prioritizing cost optimization and advancing our evaluation of AI-related growth opportunities. We believe these initiatives will position ancient for a more diversified and resilient business over the long-term.

With that, operator, let's open it up for questions.

(Operator Instructions) Mark Palmer, StoneX.

Yes, hello, good evening, and thank you for taking my question. Just 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.

Thank you, Mark. Thank you for your question. And firstly, for the share repurchase program, we planned $15 million for the share repurchase program. And for the R&D or R&D in current asset, we will handle this as usual we will do the take-out and buy the inventory and then sell them. 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 depend on -- it all depends on the project we engaged. Currently, we have several projects to assess, and every project have different capital requirements. So currently for the AI part, we cannot give accurate estimation. Thank you.

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.

And also, what should we be watching for over the next few quarters in terms of milestones or signs of your progress? Thank you.

Yeah. Yes, firstly, our next milestone of the product is the product launch, it will be happening in Q4 2026 and it will contribute some revenue for the second half, but it will not be very big, but for the 2027, the whole product will be the whole mass production will be on track. So in 2027, our expectation is the revenue will be better than the last cycle I mean maybe 2025 and 2024. So and this is our business basics and in addition for other revenue base, we will continue to stay at ease and will contribute meaningful revenue compared with this year and last year.

And finally, the AI initiatives, if it have some meaningful process, it will also contribute additional revenue. I think in current stage. I think we cannot estimate the apparent figure of that part, but I believe the 2027 will be a good year or the best year among five years of the company.

Thanks very much.

Matthew Galinko, Maxim Group.

Hey, thanks for taking my questions. Maybe firstly, can you just given the environment we've been in for crypto, can you discuss any changes you're seeing in competition in the ASIC design business?

Yeah, currently, what I can say now is that our new next-generation asset, the foundation of this new cryptocurrency is very good, and the competition of this new cryptocurrency is not intense. We may not the first one entering into that area, but we believe that our products have a leading performance among all competitors. And I think we are very confident on this new asset or new mining machine for this new coin and for 2027. And on the other hand, I think the crypto environment currently has some soft demand issues.

And now I think for the second-half and next year, the market will recover and together with our business and our revenue and the ease price. Yes, this is all our company this is all our company's business. Yes, thank you.

Great. And 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, is the ETH Treasury Holdings potentially convertible into no cash for M&A or other initiatives, if it suits or you, intent to hold down so fixed out and not really considered as part of the any kind of spend. Thank you.

Yes, I think we will not sell ETH firstly, but we using our own fund 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. So our current strategy is to sell money 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. As well, I cannot ensure if we will change in the future, but currently we are using this strategy. Our current cash were used in R&D, money machine sales, current business and AI initiatives. Thank you.

Thank you. And maybe last question for me. In addition to the new machine that you're rolling out in Q4 and you expect to contribute to '27. Do you expect any, if we get a recovery in the crypto market, do you expect to have decent contribution from other products in your portfolio? Do you think that '27 is going to be just predominantly driven by the new launch?

I think if the currently and now currently cryptocurrency is in the bear market. So if the market did not recover, I think we can our main product is this new product our main revenue will come from contributed by this new product. But if the market recovers, all the price, the Dogecoin price, the LEO coin price recover, then we will have other contributions from these prior product line because we have finished at the PayPal, so it's very quick for us to order more waiver from our from our file. Yeah. Thank you.

Great. Thank you.

Thank you.

And I'm showing no further questions at this time. I would like to turn it back to Chaowei Yan for closing remarks.

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.

Ladies and gentlemen, this concludes today's conference call.

Thank you all for joining. You may now disconnect.