Analysis of Gross Margin and Cost Control Capabilities of Iluvatar CoreX

Based on the collected data, I will conduct a detailed analysis for you.

Based on public financial data, Iluvatar CoreX’s gross margin has shown the following trends [1][2]:

Period	Gross Margin	Remarks
2022	59.4%	Initial product stage
2023	49.5%	Decreased by approximately 10 percentage points
2024	49.1%	Basically flat
H1 2025	50.1%	Slight rebound

The 50.1% gross margin in H1 2025 [1] indicates that the company still maintains relatively healthy overall profitability.

• Training GPU Products (TianGai Series):
  In H1 2025, the gross margin dropped to 32%, a year-on-year decrease of over 20 percentage points. The company explained that this was due to active price cuts to accelerate inventory sales of TianGai Gen 1 [2]
• Inference Products (ZhiKai Series):
  The average selling price decreased from RMB 11,400 to approximately RMB 9,200, reflecting obvious price competition pressure [3]
• AI Computing Power Solutions:
  The gross margin increased from 25.9% in 2023 to 31.7% in 2024, and further rose to 45.7% in H1 2025, showing a clear improving trend [3]

Enterprise	Business Characteristics	Gross Margin Level
Iluvatar CoreX	General-Purpose GPU	50.1% (H1 2025)
Loongson Technology	CPU + Informatization Chips	65.45% (Informatization Chips) [4]
Hygon Information	CPU + DCU	Good profitability, net profit margin of 22% [4]
Edge AI Chip Industry	Overall	54.4% (H1 2025) [5]
Moore Threads/Muxi	Domestic GPU	Approximately 50% [2]

• Iluvatar CoreX’s 50.1% gross margin
  ranks in the upper-mid tier of the domestic GPU industry
  [1][2]
• It is slightly lower than the 65.45% of Loongson Technology’s informatization chips, but higher than some domestic peers still in the “technology verification” phase [1]
• It is basically at the same level as “Four Little Dragons of Domestic GPUs” such as Moore Threads and Muxi [2]

1. R&D Investment Conversion Efficiency:
   Cumulative R&D investment from 2022 to 2024 exceeded RMB 1.8 billion, and the R&D expense ratio dropped from 241.1% to 143.2%, showing an optimizing trend [2][3]
2. Improved Gross Margin of Solutions Business:
   The gross margin of AI computing power solutions increased from 25.9% to 45.7%, indicating improved cost control capabilities [3]
3. Optimized Revenue Structure:
   The revenue share from the top five customers dropped from 94.2% to 38.6%, and customer diversification helps reduce bargaining dependence on a single customer [1]

1. Gross Margin Pressure on Training Products:
   Although the active price-cut strategy accelerated inventory digestion, it has a short-term impact on profitability [2]
2. Economies of Scale Not Yet Realized:
   As a company in the early stage of commercialization, pressure from fixed cost allocation still exists [3]
3. Sustained Loss Status:
   The net loss ratio dropped from 292.3% in 2022 to 165.4% in 2024, but the company remains in a loss position [3]

, mainly reflected in:

1. Technology Premium Capability:
   The company stated that this level “is significantly higher than many domestic peers still in the ‘technology verification’ phase, strongly proving that its products have real technological premium and customer recognition” [1]
2. Improving Cost Control:
   The net loss ratio continues to narrow, and the gross margin of the solutions business has increased significantly
3. Improved R&D Investment Efficiency:
   The expense ratio is gradually decreasing, and the input-output ratio is tending to optimize

the company still faces challenges such as price-cut pressure on training products and insufficient economies of scale. With the launch of new products such as TianGai Gen 4 and TianGai Gen 5 in 2026, and the continuous optimization of customer structure, cost control capabilities are expected to further improve.

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[1] Sohu Finance - Iluvatar CoreX Officially Lists on HKEX, Opens 31% Higher (https://q.stock.sohu.com/cn/news.html?textId=965851286)

[2] Sina Finance - Iluvatar CoreX Raises HK$3.7 Billion (https://finance.sina.com.cn/roll/2026-01-08/doc-inhfqpsp5356648.shtml)

[3] Securities Times - Iluvatar CoreX Discloses 10-Year Chip Development Journey: 10 Rounds of Financing, 50,000 Units Shipped (https://www.stcn.com/article/detail/3555048.html)

[4] Securities Times - Domestic AI Chips: Gearing Up and Catching Up (https://www.stcn.com/article/detail/3322468.html)

[5] JW Insights - Analysis of the Edge AI Chip Track in H1 2025 (https://jiweipreview.laoyaoba.com/html/news/newsdetail?news_id=958161)