Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2022 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-39127 |
Entity Registrant Name | Canaan Inc. |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | 28 Ayer Rajah Crescent #06-08 |
Entity Address, Country | SG |
Entity Address, Postal Zip Code | S139959 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
ICFR Auditor Attestation Flag | false |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Central Index Key | 0001780652 |
Amendment Flag | false |
Auditor Name | KPMG Huazhen LLP |
Auditor Firm ID | 1186 |
Auditor Location | Beijing, China |
Class A ordinary shares | |
Document Information [Line Items] | |
Title of each class | Class A ordinary shares, par value US$0.00000005 per share* |
Name of each exchange on which registered | NASDAQ |
Entity Common Stock, Shares Outstanding | 2,492,514,048 |
No Trading Symbol Flag | true |
Class B Ordinary Shares | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 311,624,444 |
ADR | |
Document Information [Line Items] | |
Title of each class | American Depositary Shares, each representing 15Class A ordinary share |
Trading Symbol | CAN |
Name of each exchange on which registered | NASDAQ |
Business Contact | |
Document Information [Line Items] | |
Entity Address, Address Line One | 28 Ayer Rajah Crescent #06-08 |
Entity Address, Country | SG |
Entity Address, Postal Zip Code | S139959 |
Contact Personnel Name | James Jin Cheng, Chief Financial Officer |
City Area Code | +65 |
Local Phone Number | 6305 6618 |
Contact Personnel Email Address | IR@canaan-creative.com |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Current assets: | |||
Cash | ¥ 707,261 | $ 102,543 | ¥ 2,684,342 |
Restricted cash | 0 | 0 | 47,362 |
Accounts receivable, net | 367 | ||
Inventories | 1,473,990 | 213,708 | 812,363 |
Prepayments and other current assets | 1,689,079 | 244,893 | 1,729,027 |
Total current assets | 3,870,330 | 561,144 | 5,273,461 |
Non-current assets: | |||
Cryptocurrency | 87,273 | 12,653 | 20,310 |
Property, equipment and software, net | 597,988 | 86,700 | 185,566 |
Right-of-use assets | 29,600 | 4,292 | 30,920 |
Deferred tax assets | 151,410 | 21,952 | 99,044 |
Other non-current assets | 17,437 | 2,528 | 2,956 |
Non-current financial investment | 20,000 | 2,900 | 20,000 |
Total non-current assets | 903,708 | 131,025 | 358,796 |
Total assets | 4,774,038 | 692,169 | 5,632,257 |
Current liabilities: | |||
Accounts payable | 116,333 | 16,867 | 143,441 |
Contract liabilities | 4,613 | 669 | 1,340,731 |
Income tax payable | 50,340 | 7,299 | 148,719 |
Accrued liabilities and other current liabilities | 336,705 | 48,814 | 437,394 |
Lease liabilities, current | 16,118 | 2,337 | 14,819 |
Total current liabilities | 524,109 | 75,986 | 2,085,104 |
Non-current liabilities: | |||
Lease liabilities, non-current | 10,039 | 1,456 | 16,292 |
Warrant liability | 66,347 | ||
Other non-current liabilities | 4,163 | 604 | 5,824 |
Total liabilities | 538,311 | 78,046 | 2,173,567 |
Contingencies (Note 15) | |||
Shareholders' equity: | |||
Ordinary shares (US$0.00000005 par value; 1,000,000,000,000 shares authorized; 2,804,138,492 shares issued, 2,577,386,552 and 2,496,001,757 shares outstanding as of December 31, 2021 and 2022, respectively) | 1 | 1 | |
Subscriptions receivable from shareholders | (1) | (1) | |
Treasury stocks (US$0.00000005 par value; 226,751,940 and 308,136,735 shares as of December 31, 2021 and 2022, respectively) | (380,538) | (55,173) | (231,281) |
Additional paid-in capital | 3,298,531 | 478,242 | 2,891,134 |
Statutory reserves | 102,586 | 14,874 | 97,420 |
Accumulated other comprehensive loss | (4,844) | (702) | (101,925) |
Retained earnings | 1,219,992 | 176,882 | 803,342 |
Total shareholders' equity | 4,235,727 | 614,123 | 3,458,690 |
Total liabilities and shareholders' equity | ¥ 4,774,038 | $ 692,169 | ¥ 5,632,257 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value | $ 0.00 | $ 0.00 |
Ordinary shares, shares authorized | 1,000,000,000,000 | 1,000,000,000,000 |
Ordinary shares, shares issued | 2,804,138,492 | 2,804,138,492 |
Common stock shares outstanding | 2,496,001,757 | 2,577,386,552 |
Treasury stocks, par value | $ 0.00 | $ 0.00 |
Treasury stock, shares | 308,136,735 | 226,751,940 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Revenues | ||||
Mining revenue | ¥ 218,639 | $ 31,700 | ¥ 21,688 | |
Leases revenue | 7,556 | ¥ 18,963 | ||
Other revenues | 705 | 102 | 347 | 901 |
Total Revenues | 4,378,907 | 634,882 | 4,986,706 | 447,686 |
Cost of revenues | (2,831,107) | (410,472) | (2,135,961) | (409,922) |
Gross profit | 1,547,800 | 224,410 | 2,850,745 | 37,764 |
Operating expenses: | ||||
Research and development expenses | (546,642) | (79,256) | (332,846) | (140,041) |
Sales and marketing expenses | (62,966) | (9,129) | (100,467) | (19,980) |
General and administrative expenses | (580,523) | (84,168) | (589,107) | (131,624) |
Impairment on cryptocurrency | (52,959) | (7,678) | ||
Total operating expenses | (1,243,090) | (180,231) | (1,022,420) | (291,645) |
Income (loss) from operations | 304,710 | 44,179 | 1,828,325 | (253,881) |
Interest income | 15,938 | 2,311 | 7,310 | 3,153 |
Change in fair value of warrant liability | 24,598 | 3,566 | 190,178 | 0 |
Investment income | 0 | 277 | 5,844 | |
Interest expense | (3,587) | |||
Foreign exchange gains, net | 242,957 | 35,225 | 17,890 | 2,419 |
Other income, net | 22,156 | 3,212 | 6,410 | 30,958 |
Income (loss) before income tax expense | 610,359 | 88,493 | 2,050,390 | (215,094) |
Income tax expense | (124,002) | (17,979) | (50,108) | 0 |
Net income (loss) | 486,357 | 70,514 | 2,000,282 | (215,094) |
Foreign currency translation adjustment, net of nil tax | 97,081 | 14,075 | (22,145) | (24,238) |
Total comprehensive income (loss) | ¥ 583,438 | $ 84,589 | ¥ 1,978,137 | ¥ (239,332) |
Weighted average number of shares used in per Class A and Class B ordinary share calculation: | ||||
- Basic | shares | 2,560,106,403 | 2,560,106,403 | 2,521,667,815 | 2,345,703,779 |
- Diluted | shares | 2,577,892,069 | 2,577,892,069 | 2,576,157,247 | 2,345,703,779 |
Net earnings (loss) per Class A and Class B ordinary share (cent per share) | ||||
- Basic | (per share) | ¥ 19 | $ 2.75 | ¥ 79.32 | ¥ (9.17) |
- Diluted | (per share) | ¥ 18.87 | $ 2.74 | ¥ 77.65 | ¥ (9.17) |
Share-based compensation expenses were included in: | ||||
Share-based compensation expenses | ¥ 407,397 | $ 59,067 | ¥ 491,461 | ¥ 2,950 |
Cost of revenues | ||||
Share-based compensation expenses were included in: | ||||
Share-based compensation expenses | 990 | 144 | 269 | |
Research and development expenses | ||||
Share-based compensation expenses were included in: | ||||
Share-based compensation expenses | 66,065 | 9,579 | 99,173 | 652 |
Sales and marketing expenses | ||||
Share-based compensation expenses were included in: | ||||
Share-based compensation expenses | 16,263 | 2,358 | 8,240 | 41 |
General and administrative expenses | ||||
Share-based compensation expenses were included in: | ||||
Share-based compensation expenses | 324,079 | 46,987 | 383,779 | 2,257 |
Product | ||||
Revenues | ||||
Revenues | ¥ 4,159,563 | $ 603,080 | 4,956,891 | 427,522 |
Maintenance service revenue | ||||
Revenues | ||||
Revenues | ¥ 224 | ¥ 300 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Foreign currency translation adjustment, tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands | Ordinary Shares CNY (¥) shares | Subscription Receivables From Shareholders CNY (¥) | Treasury Stock CNY (¥) shares | Additional Paid-in Capital CNY (¥) | Statutory Reserves CNY (¥) | Accumulated Other Comprehensive Loss CNY (¥) | Retained Earnings (Accumulated Deficit) CNY (¥) | CNY (¥) shares | USD ($) shares |
Beginning Balance at Dec. 31, 2019 | ¥ 1 | ¥ (1) | ¥ 1,631,609 | ¥ 97,307 | ¥ (55,542) | ¥ (980,579) | ¥ 692,795 | ||
Beginning Balance (in shares) at Dec. 31, 2019 | shares | 2,350,123,270 | 22,098,952 | |||||||
Share repurchased | shares | (25,799,190) | 25,799,190 | |||||||
Share Repurchase | ¥ (23,915) | (23,915) | |||||||
Share-based compensation expense | 2,950 | 2,950 | |||||||
Foreign currency translation | (24,238) | (24,238) | |||||||
Vesting of restricted share units and restricted shares | 60 | 60 | |||||||
Vesting of restricted share units and restricted shares (in shares) | shares | 4,002,052 | (4,002,052) | |||||||
Profit appropriations to statutory reserves | 0 | ||||||||
Net income | (215,094) | (215,094) | |||||||
Ending Balance at Dec. 31, 2020 | ¥ 1 | (1) | ¥ (23,915) | 1,634,619 | 97,307 | (79,780) | (1,195,673) | 432,558 | |
Ending Balance (in shares) at Dec. 31, 2020 | shares | 2,328,326,132 | 43,896,090 | |||||||
Share repurchased | shares | (34,683,225) | 34,683,225 | |||||||
Share Repurchase | ¥ (103,543) | (103,543) | |||||||
Share-based compensation expense | 491,461 | 491,461 | |||||||
Foreign currency translation | (22,145) | (22,145) | |||||||
Vesting of restricted share units and restricted shares | 86 | 86 | |||||||
Vesting of restricted share units and restricted shares (in shares) | shares | 101,574,270 | (101,574,270) | |||||||
Profit appropriations to statutory reserves | 113 | (113) | |||||||
Repurchase of vested employee restricted share units for tax withholding | ¥ (150,705) | (150,705) | |||||||
Repurchase of vested employee restricted share units for tax withholding(Shares) | shares | (33,255,495) | 33,255,495 | |||||||
Resale of vested employee restricted share units for tax withholding | ¥ 46,882 | (1,154) | 45,728 | ||||||
Resale of vested employee restricted share units for tax withholding (in Shares) | shares | 13,043,895 | (13,043,895) | |||||||
New issuance of ordinary shares and warrants | 764,968 | 764,968 | |||||||
New issuance of ordinary shares and warrants(Shares) | shares | 202,380,975 | 70,833,345 | |||||||
Issuance of ordinary shares as a reserve for share-based compensation awards | shares | 158,701,950 | ||||||||
Net income | 2,000,282 | 2,000,282 | |||||||
Ending Balance at Dec. 31, 2021 | ¥ 1 | (1) | ¥ (231,281) | 2,891,134 | 97,420 | (101,925) | 803,342 | ¥ 3,458,690 | |
Ending Balance (in shares) at Dec. 31, 2021 | shares | 2,577,386,552 | 226,751,940 | 2,577,386,552 | 2,577,386,552 | |||||
Share repurchased | shares | (154,614,975) | 154,614,975 | |||||||
Share Repurchase | ¥ (253,079) | ¥ (253,079) | |||||||
Share-based compensation expense | 407,397 | 407,397 | |||||||
Foreign currency translation | 97,081 | 97,081 | $ 14,075 | ||||||
Vesting of restricted share units and restricted shares (in shares) | shares | 53,018,580 | (53,018,580) | |||||||
Profit appropriations to statutory reserves | 5,166 | (5,166) | |||||||
Repurchase of vested employee restricted share units for tax withholding | ¥ (31,097) | (31,097) | |||||||
Repurchase of vested employee restricted share units for tax withholding(Shares) | shares | (17,102,175) | 17,102,175 | |||||||
Resale of vested employee restricted share units for tax withholding | ¥ 134,919 | (64,541) | 70,378 | ||||||
Resale of vested employee restricted share units for tax withholding (in Shares) | shares | 37,313,775 | (37,313,775) | |||||||
Net income | 486,357 | 486,357 | 70,514 | ||||||
Ending Balance at Dec. 31, 2022 | ¥ 1 | ¥ (1) | ¥ (380,538) | ¥ 3,298,531 | ¥ 102,586 | ¥ (4,844) | ¥ 1,219,992 | ¥ 4,235,727 | $ 614,123 |
Ending Balance (in shares) at Dec. 31, 2022 | shares | 2,496,001,757 | 308,136,735 | 2,496,001,757 | 2,496,001,757 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Cash flows from operating activities | ||||
Net income (loss) | ¥ 486,357 | $ 70,514 | ¥ 2,000,282 | ¥ (215,094) |
Adjustments for: | ||||
Revenue recognized on acceptance of cryptocurrency | (238,596) | (34,593) | (21,688) | |
Cost recognized on payment of cryptocurrency | 56,877 | 8,246 | ||
Realised gain on sale of cryptocurrency | 1,167 | 169 | ||
Depreciation and amortization of property, equipment and software | 226,419 | 32,828 | 11,009 | 11,852 |
Depreciation of operating lease assets | 3,118 | 19,389 | ||
Foreign exchange gain | (13,490) | (1,956) | (9,668) | (14,094) |
Provision of allowance for doubtful receivables | 90 | 13 | 911 | 4,849 |
Deferred income tax benefits | (52,366) | (7,592) | (99,044) | |
Loss on disposal of property, equipment and software | 272 | 39 | 47 | 96 |
Share-based compensation expense | 407,397 | 59,067 | 491,461 | 2,950 |
Change in fair value of warrant liability | (24,598) | (3,566) | (190,178) | 0 |
Investment income | 0 | (277) | (5,844) | |
Reduction in the carrying amount of the right-of-use assets | 15,701 | 2,276 | 17,584 | 13,432 |
Interest of lease liabilities | 1,342 | 195 | 1,613 | 1,938 |
Impairment charge to non-current financial investment | 0 | 25 | 2,475 | |
Impairment loss of cryptocurrency | 52,959 | 7,678 | 1,061 | |
Write-down of inventories | 467,271 | 67,748 | 50,714 | 44,916 |
Write-downs of prepayments | 86,216 | 12,500 | 0 | |
Provision for reserve for inventory purchase commitments | 75,847 | 10,997 | ||
Changes in assets and liabilities: | ||||
Accounts receivable | 367 | 53 | 6,761 | (4,499) |
Inventories | (1,559,148) | (226,055) | (787,554) | (93,760) |
Prepayments and other current assets | 26,647 | 3,863 | (1,413,497) | (99,127) |
Other non-current assets | (14,090) | (2,043) | (426) | 2,720 |
Prepaid interest expense | 246 | (149) | ||
Accounts payable | (95,181) | (13,800) | 106,034 | (61,643) |
Notes payable | (13,963) | (13,499) | ||
Contract liabilities | (1,386,068) | (200,961) | 910,343 | 422,100 |
Income tax payable | (98,482) | (14,279) | 148,719 | |
Accrued liabilities and other current liabilities | (97,270) | (14,102) | 247,940 | 29,591 |
Other non-current liabilities | (1,661) | (241) | (2,196) | 8,020 |
Lease liabilities | (20,677) | (2,998) | (20,527) | (14,322) |
Net cash provided by (used in) operating activities | (1,696,698) | (246,000) | 1,438,850 | 42,297 |
Cash flows from investing activities: | ||||
Payment for short-term investments | (1,334,077) | |||
Proceeds from disposal of short-term investments | 62,663 | 1,288,540 | ||
Purchase of property, equipment and software | (95,129) | (13,792) | (37,708) | (2,176) |
Proceeds from disposal of property, equipment and software | 160 | 637 | ||
Proceeds from disposal of cryptocurrency | 64,806 | 9,396 | ||
Payment for non-current financial investments | (20,000) | (2,500) | ||
Net cash provided by (used in) investing activities | (30,323) | (4,396) | 5,115 | (49,576) |
Cash flows from financing activities: | ||||
Payment for repurchase of ordinary shares | (234,307) | (33,971) | (103,543) | (23,915) |
Prepayment under share repurchase agreement | (573) | (16,146) | ||
Repurchase of warrants | (44,282) | (6,420) | ||
Payment for cost of issuance | (5,705) | (6,879) | ||
Proceeds from borrowings | 152,000 | |||
Repayment of borrowings | (35,000) | (217,000) | ||
Proceeds from resale of treasury stock | 70,378 | 10,204 | 45,728 | |
Repurchase for tax withholdings on vesting of restricted share units | (157,295) | (22,804) | (24,508) | |
Proceeds from issuance of ordinary shares and warrants | 1,029,455 | |||
Net cash provided by (used in) financing activities | (365,506) | (52,991) | 905,854 | (111,940) |
Net increase (decrease) in cash and restricted cash | (2,092,527) | (303,387) | 2,349,819 | (119,219) |
Effect of exchange rate changes on cash and restricted cash | 68,084 | 9,870 | (13,919) | (9,823) |
Cash and restricted cash at the beginning of year | 2,731,704 | 396,060 | 395,804 | 524,846 |
Cash and restricted cash at the end of year | 707,261 | 102,543 | 2,731,704 | 395,804 |
Cash | 707,261 | 2,684,342 | 391,310 | |
Restricted cash | 0 | 47,362 | 4,494 | |
Total cash and restricted cash shown in the statement of cash flows | 707,261 | 2,731,704 | 395,804 | |
Supplemental disclosure of cash flow information: | ||||
Cash paid for interest | 246 | 3,736 | ||
Cash paid for income tax | 316,338 | 45,865 | 433 | |
Supplemental disclosure of non-cash investing and financing activities: | ||||
Transfer from inventory to operating lease assets | 15,169 | 135,276 | ||
Transfer from operating lease assets to inventory | 12,051 | ¥ 115,887 | ||
Mining equipment transfer from inventory to property, equipment and software | 485,514 | 70,393 | 146,881 | |
Purchases of property, plant and equipment in accrued liabilities and other current liabilities | 44,310 | 6,424 | ||
Accrued tax withholdings on vesting of restricted share units | (31,097) | (4,509) | 126,198 | |
Revenue recognized on acceptance of cryptocurrency | 238,596 | 34,593 | ¥ 21,688 | |
Cost recognized on payment of cryptocurrency | ¥ 56,877 | $ 8,246 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Principal Activities | |
Organization and Principal Activities | 1. Organization and principal activities Canaan Inc., an exempted company with limited liability incorporated in the Cayman Islands, through wholly-owned subsidiaries (collectively referred to as the “Company”), is principally engaged in integrated circuit (the “IC”) design and sale and lease of final mining equipment by integrating its IC products for Bitcoin mining and related components in the People’s Republic of China (the “PRC”), Singapore and other countries and regions. As of December 31, 2022, the Company’s principal subsidiaries are as follows: Equity Date of Place of interest Name of subsidiaries incorporation incorporation held Principal activities Canaan Creative (HK) Holdings Limited February 22, 2018 Hong Kong Special Administrative Region 100 % Research and development of ICs Hangzhou Canaan Intelligence Information Technology Co., Ltd. April 9, 2013 Hangzhou, China 100 % Research and development of ICs Canaan Creative Co., Ltd. April 1, 2013 Beijing, China 100 % Research and development of ICs Langfang Creative Technology Co., Ltd. May 15, 2014 Langfang, China 100 % Assembly of mining equipment and spare parts Canaan Convey Co., Ltd. November 2, 2017 Beijing, China 100 % International distribution of mining equipment and spare parts Zhejiang Avalon Technology Co., Ltd. December 5, 2017 Hangzhou, China 100 % Distribution of mining equipment and spare parts Canaan Bright Sight Co., Ltd. December 24, 2018 Beijing, China 100 % International distribution of AI products Canaan Creative (SH) Co., Ltd. January 27, 2021 Shanghai, China 100 % Research and development of ICs Canaan Creative International PTE. Ltd March 9, 2021 Singapore 100 % Mining business Canaan Creative Global Pte. Ltd. September 18, 2021 Singapore 100 % International headquarters, research and development of Canaan U.S. Inc. February 1, 2022 United States 100 % International distribution of |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of significant accounting policies | |
Summary of significant accounting policies | 2. Summary of significant accounting policies (a) Basis of preparation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below. (b) Use of estimates The preparation of the Company’s consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from such estimates. The Company believes that accounting estimation of variable consideration for revenue recognition, warrant liability, valuation of deferred tax assets, write-down for inventories and prepayments, provision for reserve for inventory purchase commitments, valuation and recognition of share-based compensation reflect significant judgments and estimates used in the preparation of its consolidated financial statements. Management bases the estimates on historical experience and on various other assumptions as discussed elsewhere to the consolidated financial statements that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could materially differ from these estimates. (c) Consolidation The Company’s consolidated financial statements include the financial statements of Canaan Inc. and its subsidiaries. All transactions and balances among Canaan Inc. and its subsidiaries have been eliminated upon consolidation. Subsidiaries are those entities in which Canaan Inc. directly or indirectly, controls more than one half of the voting powers; or has the power to appoint or remove the majority of the members of the Board of Directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. (d) Functional currency and foreign currency translation The Company uses Renminbi (“RMB”) as its reporting currency. The functional currency of Canaan Inc. and its subsidiaries incorporated outside of the PRC is the United States dollar (“US$”), while the functional currency of the PRC entities in the Company is RMB as determined based on the criteria of Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters Transactions denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates prevailing on the transaction dates. Financial assets and liabilities denominated in other than the functional currency are re-measured at the balance sheet date exchange rate. The resulting exchange differences are included in the consolidated statements of comprehensive income (loss) as foreign exchange related gains or loss. The financial statements of the Company are translated from the functional currency to the reporting currency, RMB. Assets and liabilities of Canaan Inc. and its subsidiaries incorporated outside of PRC are translated into RMB using the applicable exchange rates at the balance sheet date, income and expense items are translated at average exchange rates prevailing during the fiscal year. Translation adjustments arising from these are reported as foreign currency translation adjustments and are shown as a separate component of shareholders’ equity on the consolidated financial statement. (e) Convenience translation The United States dollar (“US$”) amounts disclosed in the accompanying financial statements are presented solely for the convenience of the readers. Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the rate of US$1.00=RMB6.8972 on December 30, 2022, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2022, or at any other rate. (f) Warrant Liability The freestanding warrants to purchase American Depositary Share (“ADSs”) at a future date were determined to be freestanding instruments that were accounted for as a liability. At initial recognition, the Company recorded the warrant liability on the consolidated balance sheets at its estimated fair value. The proceeds from issuance of ordinary shares and warrants are firstly allocated to warrant liability based on its fair value. The residual method is used to allocate the proceeds to shareholders’ equity. The warrant liability is subject to remeasurement at each reporting period and the Company adjusted the carrying value of the warrant liability to fair value at the end of each reporting period utilizing the binominal option pricing model, with changes in estimated fair value included in the change in fair value of warrant liability on the consolidated statement of comprehensive income (loss). (g) Fair value of financial instruments Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value include: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Observable, market-based inputs, other than quoted prices, for the assets or liabilities either directly or indirectly. Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Company’s financial instruments consist principally of cash and restricted cash, short-term investments, non-current financial investments, accounts receivable, accounts payable, short-term debts, notes payable and other liabilities. As of December 31, 2021 and 2022, the carrying values of cash and restricted cash, accounts receivable, accounts payable and other liabilities approximated to their fair values reported in the consolidated balance sheets due to the short term nature of these instruments. On a recurring basis, the Company measures its warrant liability at fair value. The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: Balance at As of December 31, 2021 Level 1 Level 2 Level 3 fair value Liabilities Warrant liability — — 66,347 66,347 The Company values its investments in wealth management products based on quoted prices of similar products provided by banks at the end of each period, and accordingly, the Company classifies the valuation techniques that use these inputs as Level 2. The warrants are accounted for as a liability and remeasured to fair value at the end of each reporting period utilizing the binomial option pricing model, which involves significant assumptions including the risk-free interest rate, the expected volatility, expected dividend yield and expected term (Note 11). (h) Cash Cash includes cash on hand and demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal or use. As of December 31, 2021 2022 RMB denominated bank deposits with financial institutions in the PRC 1,167,445 77,373 US dollar denominated bank deposits with financial institutions in the PRC 1,447,336 430,006 US dollar denominated bank deposits with overseas financial institutions 29,498 183,409 Others denominated bank deposits with overseas financial institutions 317 16,406 RMB denominated bank deposits with overseas financial institutions — 56 Others denominated bank deposits with financial institutions in the PRC 39,746 11 Total 2,684,342 707,261 The bank deposits, including restricted cash, with financial institutions in the mainland of the PRC , Hong Kong, United States, Singapore and Kahzakhstan are insured by the government authorities up to RMB500, HKD500, USD250, SGD75 and KZT15,000 per bank, respectively. The bank deposits including term deposits and restricted cash are insured by the government authorities with amounts up to RMB11,579 and RMB20,248 as of December 31, 2021 and 2022, respectively. The Company has not experienced any losses in uninsured bank deposits and does not believe that it is exposed to any significant risks on cash held in bank accounts. To limit exposure to credit risk, the Company primarily places bank deposits with large financial institutions in the PRC mainland, Hong Kong, United States, Singapore and Kahzakhstan with acceptable credit rating. On March 10, 2023, Signature bank was closed by the California Department of Financial Protection and Innovation. On March 12, 2023, New York State Department of Financial Services took possession of Signature Bank and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. As of December 31, 2022, the Company held cash deposits US$1.1 million at Signature Bank. All these cash deposits have been transferred to another bank subsequent to the receivership by the end of March 2023. (i) Restricted cash Restricted cash includes cash that are not readily available for the Company’s normal disbursements. Restricted cash are primarily related to cash deposits with banks and financial institutions subject to legal restrictions (note 4). (j) Short-term investments Short-term investments include investments in wealth management products issued by certain banks which are redeemable by the Company at any time. The wealth management products are unsecured with variable interest rates. The Company measures the short-term investments at fair value and fair value is estimated based on quoted prices of similar products provided by banks at the end of each period. The change in fair value is recorded as investment income in the amount of RMB5,844, RMB277 and nil in the consolidated statements of comprehensive income (loss) for the years ended December 31, 2020, 2021 and 2022, respectively. (k) Accounts receivable Accounts receivable are presented net of allowance for doubtful accounts. The Company uses specific identification in providing for bad debts when facts and circumstances indicate that collection is doubtful and based on factors listed in the following paragraph. If the financial conditions of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance may be required. The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts on general basis taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the customers as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted. (l) Inventories Inventories, consisting of finished goods, work in process, raw materials and goods in transit, which are purchased from contractual manufacturers and component suppliers. Inventories are stated at the lower of cost and net realizable value. Cost of inventory is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving and obsolete inventory, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. The Company considers all data available, including future demand and subsequent changes in product prices that may provide additional information about the valuation of inventories at the balance sheet date. (m) Cryptocurrency Cryptocurrency is, by its nature, identifiable non-monetary assets that lack physical substance. Future economic benefit attributable to cryptocurrency is expected to flow to the Company because cryptocurrency can be exchanged to standard currencies on public trading platforms. Furthermore, the cost of the Company’s cryptocurrency assets can be measured reliably because cryptocurrency earned from mining activities can be measured with reference to the spot price to standard currencies on the date when they are earned. The Company accounts for the cryptocurrency received from mining as intangible assets with indefinite useful life in its consolidated balance sheets because, at the time of assessment, there is no foreseeable limit to the period over which such assets are expected to generate cash flows. The Company further adopts the cost model to account for its cryptocurrency and reviews its useful life and impairment at each reporting date in accordance with ASC 350 Intangibles—Goodwill and Other. The Company accounts for cryptocurrency at cost, instead of revaluing cryptocurrency at their fair value on each accounting reference date, because the latter model is subject to inherent and substantial volatility in the value of cryptocurrency from time to time. The Company accounts for cryptocurrency return liability at fair value, whereas accounts for the corresponding cryptocurrency at cost subject to impairment because the Company is the accounting owner of those cryptocurrency. As of December 31, 2021 and 2022, cryptocurrency return liability of RMB2,500 and nil are recorded in accounts payable, respectively. Cost is calculated using the weighted average cost method. Gains or losses arising from the disposal of cryptocurrency are determined as the difference between the net disposal proceeds and the carrying amount of the cryptocurrency and are recognized in profit or loss on the date of disposal. The impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The recoverable amount of cryptocurrencies is based on the fair value less costs of disposal. The fair value of the cryptocurrencies is determined by using the quoted price on the cryptocurrencies platform website well recognized by the block chain users. During the year ended December 31, 2022, the Company recognized impairment loss (n) Operating lease assets Operating lease assets consist of lease contracts for mining equipment for Bitcoin mining with customers, which are reclassified from inventories at the beginning of lease period. Operating lease assets are recorded at cost less accumulated depreciation and impairment losses. Depreciation is provided using a straight-line method over the estimated economic lives which is generally 18 months. Depreciation expenses are included in costs of revenues. The Company monitors accounting estimates relating to the depreciation period. Changes made to estimates are reflected in depreciation expense on a prospective basis. As of December 31, 2021 and 2022, the Company did not have any operating lease assets . (o) Property, equipment and software Property, equipment and software are stated at historical cost less accumulated depreciation, amortization and impairment loss, if any. Depreciation and amortization is calculated using the straight-line method over the shorter of their estimated useful lives of these assets or the term of the related leases. The estimated useful lives are as follows: Leasehold improvements the shorter of their useful lives and the lease terms Computers and electronic equipment 3 Mechanical equipment 5 years Mining equipment 1.5 years Motor vehicles 5 years Software 3 years Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property, equipment and software is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statements of comprehensive income (loss). Construction in progress represents assets under construction. Construction in progress is transferred to property, equipment and software and depreciation or amortization commences when an asset is ready for its intended use. (p) Non-current financial investment The Company’s non-current financial investment include an equity investment without readily determinable fair value, and over which the Company has neither significant influence nor control through investments in common stock or in-substance common stock, and is measured and recorded using a measurement alternative that measures the non-current financial investment at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. The carrying value of the Company’s non-current financial investment measured under cost minus impairment were RMB20,000 and RMB20,000 as of December 31, 2021 and 2022. During the year ended December 31, 2021 and 2022, the Company recognized impairment charge of RMB25 and nil recorded in other income, net. (q) Impairment of long-lived assets For other long-lived assets including property, equipment and software, the Company evaluates for impairment whenever events or changes (triggering events) indicate that the carrying amount of an asset may no longer be recoverable. The Company assesses the recoverability of the long-lived assets by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to receive from use of the assets and their eventual disposition. Such assets are considered to be impaired if the sum of the expected undiscounted cash flows is less than the carrying amount of the assets. The impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. (r) Contract liabilities Cash proceeds received from customers before product delivery is recognized as contract liabilities and is recognized as revenues when revenue recognition criteria are met. The prepayments received from customers as of December 31, 2021 and 2022 was RMB1,340,731 and RMB4,613, respectively. The revenue recognized during the years ended December 31, 2020, 2021 and 2022 for the beginning balance of contract liability was RMB8,008, RMB424,426 and RMB1,323,344, respectively. (s) Revenue from contracts with customers (ASC 606) The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. Products revenue The Company generates revenue primarily from the sale of mining equipment directly to a customer, such as a business or individual engaged in Bitcoin mining activities. As the Bitcoin price fluctuates, the Company may adjust the selling price of mining equipment on a weekly basis, as customers are only willing to pay for machines based on their ability to recover their investment through mining Bitcoin over a relatively short period of time. The Company’s sales arrangements usually require a full prepayment before the delivery of products. The Company started to offer credit sales to certain significant, long-standing customers in the PRC from 2018 to September 2020. The payment terms under credit sales generally consist of 50% down payment and 50% subsequent payments over a period of 90 to 180 days. With the adoption of a more dynamic pricing strategy for credit sales from 2018 to September 2020, the Company accepted a lower amount of consideration (as compared to fixed and promised consideration that is set out in the sales contracts) from its credit sales customers if the price of Bitcoin decreases in the post-sale period; hence providing implicit price concession to these customers and the ultimate amount of price concessions provided to these credit sales customers is highly dependent on the changes of Bitcoin prices. Revenues from product sales are recorded at the sales price (transaction price), which includes an estimation of variable consideration which primarily results from implicit price concessions on credit sales. The amount of variable consideration is included in the transaction price to the extent it is not constrained and that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the estimates. If actual results in the future vary from estimates, the Company will adjust these estimates, which would affect revenue and earnings in the period when such changes are known. With respect to the determination of variable consideration resulting from the amount of implicit price concession, since the Bitcoin market price is volatile and unpredictable and changes of Bitcoin price, will greatly affect the implicit price concessions to be provided by the Company to its credit sales customers, the Company historically has not been able to overcome the constraint on variable consideration at the time of product sale or at subsequent period-end dates until the Company has knowledge about the resolution of the uncertainty through payment by the customer. The Company uses all the subsequent information to the date of issuance of the financial statements to adjust the estimated variable consideration for the periods presented, representing updated information on the best estimate of the amount of transaction price that is probable of being received and therefore not constrained as of period-end. The Company will continue to monitor and evaluate historical data and other factors in determining the total transaction price (including implicit price concessions) that can be recognized for product sales on credit. During the years ended December 31, 2020, 2021 and 2022, the Company recognized price concessions provided to its customers in the amounts of RMB11,455, nil and nil, respectively. During the year ended December 31, 2022, the adjustment to the previously estimated variable considerations was nil (years ended December 31, 2020 and 2021: RMB14,685 and nil). The Company did not provide price concessions to customers in 2022 and 2021. The Company recognizes products revenue at a point in time based on management’s evaluation of when the control of the products has been passed to customers. The transfer of control is considered complete when products have been picked up by or shipped to the Company’s customers. The Company offers a standard product warranty of 360 days that the product will operate under normal use. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenues. The reserves established are regularly monitored based upon historical experience and any actual claims charged against the reserve. The amount of total warranty costs incurred was RMB764, RMB28,826 and RMB12,742 for the years ended December 31, 2020, 2021 and 2022, respectively. Mining revenue The Company performs mining activities with its own mining equipment to earn cryptocurrency reward. The Company recognizes revenue when it earns the cryptocurrency as a result of its mining activity. The amount of revenue recognized is measured with reference to the spot price of the cryptocurrency to standard currencies on the date when it is earned. Maintenance services revenue The Company also generates a small portion of revenue from its maintenance services under separate contracts. Revenue from the maintenance service to the customer is recognized when the related services have been rendered to the customers. (t) Revenue from lease arrangements as lessor (ASC 842, Lease) From July 2019, the Company started to generate revenue from the leases of mining equipment for Bitcoin mining to its customers. The leases cannot generally be extended or terminated at the customer’s discretion. However, upon the mutual agreement of the parties, the leases can be early terminated after three months. Rental charges are computed based on a time rate of machine’s type and rental period. The leases of mining equipment meet the classification of operating leases, and revenues from operating leases are recognized on a straight-line basis over the contract terms. The Company ceased leasing mining equipment in the second quarter of 2021. (u) Value-added-tax (“VAT”) recoverable and surcharges Value added tax recoverable represent amounts paid by the Company for purchases. The surcharges (i.e., Urban construction and maintenance tax, educational surtax, local educational surtax), vary from 6% to 12% of the value-added-tax paid depending on the taxpayer’s location. (v) Cost of revenues Amounts recorded as cost of revenues relate to direct expenses incurred to generate revenue. Such costs are recorded as incurred. Cost of revenues primarily consists of product costs, including costs of raw material, contractual manufacturers for production, labor costs, shipping and handling costs, manufacturing and depreciation, warehousing costs, inventories write-downs, prepayments write-downs, provision for reserve for inventory purchase commitments and tax surcharges. (w) Research and development expenses Research and development expenses consist primarily of salary and welfare for research and development personnel, consulting and contractor expenses, testing and tooling materials and other expenses in associated with research and development personnel. The Company recognizes research and development expenses as expense when incurred. (x) Sales and marketing expenses Sales and marketing expenses consist primarily of salary and welfare for sales and marketing personnel, promotion and marketing expenses and other expenses in associated with sales and marketing personnel. Advertising expense is expensed as incurred and included in selling and marketing expenses. The advertising expenses were RMB3,701, RMB4,461 and RMB6,771 for the years ended December 31, 2020, 2021 and 2022, respectively. (y) General and administrative expenses General and administrative expenses consist primarily of salary and welfare for general and administrative personnel, rental expenses and depreciation in associated with general and administrative personnel, allowance for doubtful receivables, entertainment expense, general office expense and professional service fees. (z) Government grants Government grants generally consist of financial subsidies received from local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. The eligibility to receive such benefits and amount of financial subsidy to be granted are determined at the discretion of the relevant government authorities. Government grants are recognized when there are reasonable assurances that the Group will comply with the conditions attach to them and the grants will be received. Government grants for the purpose of giving immediate financial support to the Group with no future related costs or obligation are recognized in the Group’s consolidated statements of comprehensive income when the grants become receivable. RMB32,499, RMB5,699 and RMB19,226 were recognized in other income, net for the years ended December 31, 2020, 2021, and 2022, respectively. There were no significant commitment or contingencies for the government subsidies received for the years ended December 31, 2020, 2021 and 2022. (aa) Lease arrangement as lessee The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liability, and operating lease liability, non-current in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which it calculates based on the credit quality of the Company and by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of each lease. The Company has elected not to recognize right-of-use assets or lease liabilities for leases with an initial term of 12 months or less and the Company recognizes lease expense for these leases on a straight-line basis over the lease terms. (ab) Employee social security and welfare benefits Employees of the Company in the PRC are entitled to staff welfare benefits including pension, work-related injury benefits, maternity insurance, medical insurance, unemployment benefit and housing fund plans through a PRC government-mandated defined contribution plan. The Company is required to contribute to the plan based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The PRC government is responsible for the medical benefits and the pension liability to be paid to these employees and the Company’s obligations are limited to the amounts contributed and no legal obligation beyond the contributions made. Employee social security and welfare benefits included as expenses in the consolidated statements of comprehensive income (loss) amounted to RMB14,919, RMB27,740 and RMB47,154 for the years ended December 31, 2020, 2021 and 2022, respectively. (ac) Income taxes The Company accounts for income taxes under the liability method. Under the liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and income tax bases of assets and liabilities and are measured using the tax income rates that will be in effect when the differences are expected to reverse. A valuation allowance is recorded if it is more likely than not that some portion or all deferred income tax asset will not be realized in the foreseeable future. The Company evaluates its uncertain tax positions using the provisions of ASC 740-10, |
Risks and Concentration
Risks and Concentration | 12 Months Ended |
Dec. 31, 2022 | |
Risks and Concentration | |
Risks and Concentration | 3. Risks and concentration (a) Concentration of credit risk Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, restricted cash, and accounts receivable. The Company places its cash and restricted cash with financial institutions with high credit ratings and quality. The Company conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers. Accounts receivable are unsecured and are derived from revenue earned through customers. The risk with respect to accounts receivable is mitigated by credit evaluations performed on them. As of December 31, 2021 and 2022, accounts receivable were RMB367 and nil, respectively. Accounts receivable concentration of credit risk is as below: As of December 31, 2021 2022 Customer A 52 % — Customers which contributed more than 10% of total revenue are as below: For the Years Ended December 31, 2020 2021 2022 Customer B * * 33 % Customer C * 18 % 22 % Customer D * * 16 % * Less than 10% (b) Supplier concentration For the year ended December 31, 2020, the Company’s purchases of its integrated circuits mainly from two suppliers. For the year ended December 31, 2021, the Company’s purchases substantially all its integrated circuits from one supplier. For the year ended December 31, 2022, the Company’s purchases substantially all its integrated circuits from three suppliers. Although only a limited number of manufacturers for such integrated circuits are available, management believes that they could change their suppliers within these manufacturers which provided integrated circuits on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would affect operating results adversely. |
Restricted cash
Restricted cash | 12 Months Ended |
Dec. 31, 2022 | |
Restricted cash | |
Restricted Cash | 4. Restricted cash In December 2021, cash balance of RMB47,362 was temporarily restricted by a bank from access to the bank account during the restriction period. The restriction was subsequently released in April 2022. No cash balance was restricted as of December 31, 2022. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2022 | |
Inventories | |
Inventories | 5. Inventories Inventories consist of the following: As of December 31, 2021 2022 Raw materials 429,208 789,134 Work in process 78,354 261,436 Finished goods 304,801 423,420 Total 812,363 1,473,990 During the year ended December 31, 2021 and 2022, the Company recognized inventories write-down of RMB50,714 and RMB467,271 in cost of revenues, respectively. For the years ended December 31, 2020, 2021 and 2022, at the beginning of lease period, the inventories reclassified to operating lease assets were RMB135,276, RMB15,169 and nil, respectively. At the end of lease period, the operating lease assets with net book value of RMB115,887, RMB12,051 and nil were reclassified to inventories for the years ended December 31, 2020, 2021 and 2022, respectively. Depreciation expense of operating lease assets of RMB19,389, RMB3,118 and nil was recorded in the cost of revenues for the year ended December 31, 2020, 2021 and 2022, respectively . The Company ceased the asset lease business in 2021 as a result of the restriction of mining activities in the PRC. |
Prepayments and Other Assets
Prepayments and Other Assets | 12 Months Ended |
Dec. 31, 2022 | |
Prepayments and Other Assets | |
Prepayments and Other Assets | 6. Prepayments and other assets The current and non-current portions of prepayments and other assets consist of the following: As of December 31, 2021 2022 Prepayments and other current assets Prepayments to vendors (Note a) 1,427,820 1,105,194 VAT recoverable 260,571 396,701 Prepayment for repurchase of ordinary shares 15,901 24 VAT refund for export sales (Note b) 14,041 107,549 Deferred charges — 42,943 Deposits 1,494 23,183 Others (Note c) 9,200 13,485 1,729,027 1,689,079 Other non-current assets Long-term rental and other deposits 2,956 17,046 Prepayments for purchase of software — 391 2,956 17,437 Note a: Prepayments to vendors mainly represent prepayments made to third-party suppliers for foundry services. The Company also records a write-down for the prepayment to third-party suppliers when the Company believes that the net realizable value (being the estimated selling price of final products, less the costs of completion and selling expenses) is less than carrying amount. For the years ended December 31, 2021 and 2022, the Company recorded write-downs of nil and RMB 86,216 for the prepayment to third-party suppliers in cost of revenues. As of December 31, 2021 and 2022, the Company’s purchase obligation to third-party suppliers for foundry service was RMB 917,346 and RMB 465,709 , respectively (Note 10 (a)). Note b: Canaan Convey Co., Ltd. is entitled to VAT refund for its export sales. Note c: During the years ended December 31, 2020, 2021 and 2022, the Company recorded provision of allowance for other receivables of RMB 4,849 , RMB 911 and RMB 90 , respectively. |
Cryptocurrency
Cryptocurrency | 12 Months Ended |
Dec. 31, 2022 | |
Crypto Currency [Abstract] | |
Cryptocurrency | 7. Cryptocurrency As of December 31 2021 2022 Gross carrying amount 21,371 104,997 Less: Impairment of cryptocurrency (1,061) (17,724) Net 20,310 87,273 Additional information about cryptocurrency consists of the following: For the years ended December 31, 2021 2022 Beginning balance — 20,310 Revenue recognized on acceptance of cryptocurrency 21,688 238,596 Cost of revenues recognized on payment of cryptocurrency — (56,877) Proceeds from disposal of cryptocurrency — (64,806) Realized loss on disposal of cryptocurrency — (1,167) Impairment of cryptocurrency (1,061) (52,959) Foreign currency translation adjustment (317) 4,176 Ending balance 20,310 87,273 |
Property, Equipment and Softwar
Property, Equipment and Software | 12 Months Ended |
Dec. 31, 2022 | |
Property, Equipment and Software | |
Property, Equipment and Software | 8. Property, equipment and software Property, equipment and software consist of the following: As of December 31, 2021 2022 Cost: Mining equipment 146,881 720,666 Computers and electronic equipment 27,492 69,698 Leasehold improvements 21,412 33,466 Mechanical equipment 7,694 855 Software 5,438 16,437 Construction in progress 665 — Motor vehicles 470 541 Total cost 210,052 841,663 Less: Accumulated depreciation and amortization (24,486) (243,675) Property, equipment and software, net 185,566 597,988 Depreciation and amortization expenses recognized for the years ended December 31, 2020, 2021 and 2022 are summarized as follows: For the Years Ended December 31, 2020 2021 2022 General and administrative expenses 7,680 6,439 11,954 Research and development expenses 3,874 2,826 6,047 Cost of revenues 217 1,715 208,362 Sales and marketing expenses 81 29 56 Total 11,852 11,009 226,419 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 9. Leases The Company leases facilities under non-cancellable operating leases expiring on different dates. The terms of substantially all these leases are three years or less. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. All the Company’s leases qualify as operating leases. Variable lease cost and short-term leases (lease terms less than 12 months) are recognized as incurred. (a) The components of lease expenses were as follows: For the Years Ended December 31, 2020 2021 2022 Lease cost: Reduction in the carrying amount of ROU assets 13,432 17,584 15,701 Interest of lease liabilities 1,938 1,613 1,342 Expenses for short-term lease within 12 months 505 443 1,506 Total lease cost 15,875 19,640 18,549 (b) Supplemental cash flow information related to leases was as follows: For the Years Ended December 31, 2020 2021 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 14,322 20,739 20,507 Right-of-use assets obtained in exchange for lease obligations: Operating leases 5,516 36,672 16,704 Lease liability settled through termination of lease: Operating leases 427 2,590 2,493 (c) Supplemental balance sheet information related to leases was as follows: As of December 31, 2020 2021 2022 Weighted-average remaining lease term Operating leases 1.3 year 2.4 year 1.9 year Weighted-average discount rate Operating lease 6.73% per annum 5.17% per annum 4.58% per annum (d) Maturities of lease liabilities were as follows: Years Ending December 31, As of December 31, 2022 2023 16,934 2024 8,762 2025 and thereafter 1,486 Total undiscounted lease payments 27,182 Less: imputed interest (1,025) Total lease liabilities 26,157 Amounts due within 12 months 16,118 Non-current lease liability 10,039 |
Accrued Liabilities and Other L
Accrued Liabilities and Other Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities and Other Liabilities | |
Accrued Liabilities and Other Liabilities | 10. Accrued liabilities and other liabilities As of December 31, 2021 2022 Accrued liabilities and other current liabilities Salary and welfare payable 118,712 144,473 Provision for reserve for inventory purchase commitments (Note a) — 75,847 Other tax payables 19,128 56,116 Customer refund 10,738 29,432 Warranty reserve (Note b) 18,026 11,953 Refund from depository bank – current 2,013 2,199 VAT payable 128,939 748 VAT received from customers related to contract liabilities 2,427 135 Withholding tax payables due to restricted share units (Note c) 126,198 — Rental deposits. 2,120 — Others 9,093 15,802 Total 437,394 336,705 Other non-current liabilities Refund from depository bank – non-current 5,824 4,163 Note a: The Company entered into several contracts to purchase foundry service. These contracts represent firm purchase commitments which are evaluated for potential losses. As of December 31, 2021 and 2022, the Company’s purchase obligation to third-party suppliers for foundry service was RMB917,346 and RMB465,709, respectively. In connection with the preparation of the Company’s consolidated financial statements for the year ended December 31, 2022, the Company assessed the loss contingency under the foundry service contracts taking into account the estimated selling price of mining equipment. The provision was determined by applying a methodology similar to that used in the lower of cost or net realizable value with respect to inventory, using estimates of the costs to convert raw materials into final products in order to determine net realizable value. For the year ended December 31, 2022, a provision of RMB75,847 has been recognized in cost of revenues for the Company’s inventory purchase commitments under foundry service contracts as a result of the decline in the estimated selling price of mining equipment based on the most recent subsequent selling price. No such provision was made during the year ended December 31, 2021. Note b: For mining equipment, the Company provides its customers for 360 days warranty, subject to certain conditions, such as normal use. The Company provides for the estimated costs of warranties at the time revenue is recognized. Factors that affect the Company’s warranty obligation include product defect rates and costs of repair or replacement. Movement of provision for warranty is as follows: For the year ended December 31, 2021 2022 Accrued warranty—beginning of year — 18,026 Accrual for warranties issued during the year 28,826 12,742 Warranty claims paid (10,800) (7,843) Warranty expired — (10,972) Accrued warranty—end of year 18,026 11,953 Note c: Upon vesting of the restricted share units, the Company withholds the shares to cover the statutory withholding requirement. As of December 31 2021, RMB126,198 was withheld on behalf of the employee and was subsequently remitted to the tax authority in January 2022. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2022 | |
Warrants | |
Warrants | 11. Warrants In connection with the issuance of ordinary shares (Note 12) in May 2021, the Company also issued warrants to the investors, which entitle the investors to purchase up to an aggregate of 4,047,620 ADS (representing 60,714,300 Class A ordinary Shares) at $16.38 per ADS (representing $1.09 Class A ordinary share). Also, the Company issued warrants to two placement agents, which entitle them to purchase up to an aggregate of 674,603 ADSs (representing 10,119,045 Class A ordinary shares) at $15.75 per ADS (representing $1.05 Class A ordinary share). The warrants are accounted for as a liability and remeasured to fair value at the end of each reporting period utilizing the binomial option pricing model, which involves significant assumptions including the risk-free interest rate, the expected volatility, expected dividend yield and expected term, the Company classifies the valuation techniques that use these inputs as Level 3. Fair Value at Fair Value at June 23, 2022 December 31, 2021 (remeasurement date) Risk Free Rate 0.37%-0.81 % 2.32%-2.63 % Volatility 131.47%-127.93 % 126.66%-140.39 % Expected dividend yield 0 % 0 % Expected term 2.3 years-3 years 1.9 years-2.1 years On June 23, 2022, the Company entered into separate warrant repurchase agreements with all warrant holders. The Company paid US$6.6 million (equivalent to RMB44.3 million, US$1.4 per ADS) to repurchase the outstanding warrants of 4,722,223 ADSs (representing 70,833,345 Class A ordinary shares), upon which the warrant liability was extinguished. The Company recognized the change in fair value of the warrant liability in RMB190,178 and RMB24,598 for the years ended December 31, 2021 and 2022, respectively. The change in fair value of warrant liability was recognized in the consolidated statements of comprehensive income (loss) in respective periods. Movement of warrant liability is as follows: For the years ended December 31, 2021 2022 Beginning balance — 66,347 Issuance of warrant 258,782 — Change in fair value of warrant liability (190,178) (24,598) Repurchase of warrant liability — (44,282) Foreign currency translation adjustment (2,257) 2,533 Ending balance 66,347 — |
Ordinary shares
Ordinary shares | 12 Months Ended |
Dec. 31, 2022 | |
Ordinary shares | |
Ordinary shares | 12. Ordinary shares The Company’s authorized share capital is designated into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to fifteen votes. In addition, certain matters including those related to the change of control of the Company require an additional approval by the holders of a majority of Class A ordinary shares voting as a separate class. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Class B ordinary shares will be automatically converted into the same number of Class A ordinary shares under certain circumstances, including any transfer of Class B ordinary shares by the holder thereof to any person or entity which is not an affiliate of such holder. As of January 1, 2020, the authorized ordinary shares are 1,000,000,000,000, of which 2,372,222,222 shares were issued and 2,350,123,270 shares were outstanding. These outstanding shares consist of (1) 1,993,498,826 Class A ordinary shares and (2) 356,624,444 Class B ordinary shares, which were held by the Chairman and CEO of the Company. Effective November 25, 2020, the Board of Directors approved conversion of 45,000,000 Class B ordinary shares into 45,000,000 Class A ordinary shares. On May 3, 2021, the Company issued 13,492,065 ADSs (202,380,975 Class A ordinary shares) to certain institutional investors for RMB1,029,455, net of issuance cost. The Company also issued to the investors warrants to purchase up to an aggregate of 4,047,620 ADSs (60,714,300 Class A ordinary shares). Also, the Company issued warrants to two placement agents, which entitles them to purchase up to an aggregate of 674,603 ADSs (10,119,045 Class A ordinary shares). The Company classified the warrants as warrant liability and the fair value of the warrant liability was RMB258,782 as of the issuance date, the residual proceeds of RMB770,673 was allocated to the Company’s ordinary shares. On June 23, 2022, the Company repurchased the warrants and the warrant liability was extinguished (Note 11). As of December 31, 2022, the authorized ordinary shares are 1,000,000,000,000, of which 2,804,138,492 shares were issued and 2,496,001,757 shares were outstanding. These outstanding shares consist of (1) 2,184,377,313 Class A ordinary shares and (2) 311,624,444 Class B ordinary shares, which were held by the Chairman and CEO of the Company. |
Treasury Stock
Treasury Stock | 12 Months Ended |
Dec. 31, 2022 | |
Ordinary shares | |
Treasury stock | 13. Treasury stocks 2018 Equity Incentive Plan In April 2018, the Company established a trust to hold 51,624,000 of the Company’s issued ordinary shares. These ordinary shares were contributed by the Co-Founders and employees and held in a trust (the “Trust”) for the benefit of the employees who are under the 2018 Equity Incentive Plan (Note 14). The ordinary shares issued to the Trust are accounted for as treasury stocks of the Company and presented as such for all periods presented. The Trust does not hold any other assets or liabilities as of December 31, 2021 and 2022, nor earn any income nor incur any expenses for the years ended December 31, 2020, 2021 and 2022. As of January 1, 2020, 22,098,952 issued ordinary shares are accounted as treasury stocks. In 2020, 4,002,052 restricted share units were transferred from treasury stock to ordinary shares. For the year ended December 31, 2021, 5,757,945 restricted share units that have been vested were transferred from treasury stock to ordinary shares under the 2018 Incentive Plan (Note 14). As of December 31, 2021 and 2022, 12,338,955 and 12,338,955 issued ordinary shares are accounted as treasury stocks. Amended 2018 Plan In April 2021, the Board of Directors of the Company amended the 2018 Plan (the “Amended 2018 Plan”) (Note 14). In May and September 2021, the Company issued 94,927,065 Class A ordinary shares and 63,774,885 Class A ordinary shares, which were then reserved under the Amended 2018 Plan. For the year ended December 31, 2021, 95,816,325 restricted share units that have been vested were transferred from treasury stock to ordinary shares under the Amended 2018 Plan. Under the Amended 2018 Plan, the Company withholds the shares issued to the employees to meet the income tax withholding requirement upon the vesting of the Restricted share units. For the year ended December 31, 2021, the Company withheld 33,255,495 Class A ordinary shares for RMB150,705 and sold 13,043,895 Class A ordinary shares for RMB45,728. For the year ended December 31, 2022, the Company withheld 17,102,175 Class A ordinary shares for RMB31,097 and sold 37,313,775 Class A ordinary shares for RMB134,919. The Company did not retire any of the repurchased Class A ordinary shares. As of December 31, 2022 and 2021, 9,867,045 and 83,097,225 issued ordinary shares are accounted as treasury stocks. For the year ended December 31, 2022, 53,018,580 restricted share units were transferred from treasury stock to ordinary shares upon vesting under the Amended 2018 Plan. Share Repurchase Program Effective September 9, 2020, the Board of Directors approved a share repurchase program to repurchase in the open market up to US$10 million worth of its outstanding (i) ADS each representing 15 Class A ordinary shares, and/or (ii) Class A ordinary shares over the next 12 months starting from September 22, 2020 depending on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with Canaan’s working capital requirements and general business conditions, the relevant rules under United States securities laws and regulations, and the relevant stock exchange rules. During the year ended December 31, 2020, total of 1,719,946 outstanding ADSs (25,799,190 shares) were repurchased but have not been retired with a total consideration of RMB23,915, which is shown as treasury stock (Note 2(af)). Effective September 19, 2021, the Board of Directors approved a share repurchase program to repurchase in the open market up to US$20 million worth of its outstanding (i) American Depositary Share (“ADS”) each representing 15 Class A ordinary shares, and or (ii) Class A ordinary shares over the next 12 months starting from September 20, 2021 depending on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with Canaan’s working capital requirements and general business conditions, the relevant rules under United States securities laws and regulations, and the relevant stock exchange rules. During the year ended December 31, 2021, total of 2,312,215 outstanding ADSs (34,683,225 shares) were repurchased but have not been retired with a total consideration of RMB103,543, which is shown as treasury stock (Note 2(af)). Effective March 16, 2022, the Board of Directors approved a share repurchase program to repurchase in the open market up to US$100 million worth of its outstanding (i) American depositary shares, each representing 15 Class A ordinary shares, and/or (ii) Class A ordinary shares over the next 24 months starting from March 16, 2022 depending on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with Canaan’s working capital requirements and general business conditions, the relevant rules under United States securities laws and regulations, and the relevant stock exchange rules. During the year ended December 31, 2022, total of 10,307,665 outstanding ADSs (154,614,975 shares) were repurchased but have not been retired with a total consideration of RMB253,079, which is shown as treasury stock (Note 2(af)). As of December 31, 2022, a total of 215,097,390 repurchased ordinary shares are accounted as treasury stocks. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Compensation | |
Share-Based Compensation | 14. Share-based compensation In April 2021, the Board of Directors of the Company amended the 2018 Plan. Under the Amended 2018 Plan, in April 2021 and on every January 1 thereafter during which the 2018 Plan remains in effect, the maximum aggregate number of Class A ordinary shares which may be subject to awards under the 2018 Plan will be automatically increased by 15.0% of the total number of Class A ordinary shares issued and outstanding on December 31 of the preceding calendar year, if and whenever the unallocated Class A ordinary shares which may be issuable under the 2018 Plan account for less than 3% of the then total issued and outstanding Class A ordinary shares. In May and September 2021, the Company issued 94,927,065 Class A ordinary shares and 63,774,885 Class A ordinary shares, which were then reserved under the Amended 2018 Plan. In 2022, the Company granted 62,410,200 RSUs to Company’s employees under the Amended 2018 Plan. (a) Restricted share units The following table summarizes the RSUs activity for the years ended December 31, 2020, 2021 and 2022: Number of Weighted average shares grant date fair value RMB Outstanding as of December 31, 2019 15,733,334 1.51 Forfeited (2,691,282) 1.51 Vested (4,002,052) 1.51 Outstanding as of December 31, 2020 9,040,000 1.51 Granted 236,768,940 3.74 Forfeited (6,991,000) 3.10 Vested (101,574,270) 2.15 Outstanding as of December 31, 2021 137,243,670 4.81 Granted 62,410,200 1.63 Forfeited (22,844,235) 2.11 Vested (53,018,580) 4.36 Outstanding as of December 31, 2022 123,791,055 3.90 In 2022, the Company granted 62,410,200 RSUs to the Company’s employees under the Amended 2018 Plan. The Company used closing price of ordinary share to determine the fair value of the RSUs. Compensation expense related to RSUs with service conditions is recognized over the requisite service period, which is generally the vesting term of up to five years. As of December 31, 2022, there was RMB346,568 unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of 31.65 months. (b) Share options The following table summarizes the share options for the years ended December 31, 2020, 2021 and 2022: Weighted-Average Weighted per Share Average Number of Exercise Remaining Aggregate shares Price Contractual Term Intrinsic Value RMB Years RMB Outstanding as of December 31, 2019 and 2020 — — — — Granted 114,000,000 4.90 — — Outstanding as of December 31, 2021 114,000,000 4.90 9.10 — Outstanding as of December 31, 2022 114,000,000 4.90 8.12 — Expected to vest as of December 31, 2022 114,000,000 4.90 8.12 — Exercisable as of December 31, 2022 42,000,000 4.90 8.12 — The aggregate intrinsic value as of December 31, 2022 in the table above represents the difference between the fair value of the Company’s ordinary share on December 31, 2022 and the exercise price. The fair values of the share options granted by the Company to employees for the year ended December 31, 2021 are as follows: For the Year Ended December 31, 2021 Weighted average grant date fair value of option per share 6.63 Aggregate grant date fair value of options 465,553 For the year ended December 31, 2022, no new share options were granted. As of December 31, 2022, there was RMB145,063 unrecognized compensation expense related to share options, which is expected to be recognized over a weighted-average period of 23.32 months. The assumptions used to estimate the fair values of the share options granted were as follows: For the Year Ended December 31, 2021 Risk-free rate of return (1) 1.25% to 1.85 % Dividend yield (2) 0 % Expected volatility (3) 136.91% to 142.01 % Expected term (4) 10 years Exercise multiple (5) 2.80 Fair value of ordinary share US$ 3.78 to US$17.51 1) The risk-free rate of return was estimated based on the yield of US Strip Bond with a maturity life equal to the remaining maturity life of the Company’s options as of the valuation date. 2) Dividend yield is zero as the Company has never declared or paid any cash dividends on its shares, and the Company does not anticipate any dividend payments in the foreseeable future. 3) The expected volatility was estimated based on the historical volatility of comparable peer public companies and the Company with a time horizon close to the contract life of the Company’s options. 4) Expected term is the contract life of the option. 5) The expected exercise multiple was estimated as the average ratio of the stock price to the exercise price of when employees would decide to voluntarily exercise their vested options. As the Company did not have sufficient information of past employee exercise history, it has considered the statistics by making reference to a widely-accepted academic research publication. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 15. Income Taxes (a) Cayman Islands Under the current tax laws of Cayman Islands, the Company is not subject to income, corporation or capital gains tax, and no withholding tax is imposed upon the payment of dividends. (b) Hong Kong, Singapore and United States The Company’s subsidiaries incorporated in Hong Kong, Singapore and United States are subject to profits or income tax rates of 16.5%, 17.0% and 21.0%, respectively, on their estimated assessable profits for the years ended December 31, 2020, 2021 and 2022. Dividends income received from subsidiaries in mainland China are not subject to Hong Kong, Singapore and United States profits or income tax. (c) PRC Enterprise Income Tax (“EIT”) On March 16, 2007, the National People’s Congress of the PRC enacted an Enterprise Income Tax Law (“EIT Law”), under which Foreign Investment Enterprises (“FIEs”) and domestic companies would be subject to EIT at a uniform rate of 25%. The EIT law became effective on January 1, 2008. Canaan Creative Co., Ltd. (“Canaan Creative”) obtained its High and New Technology Enterprises (“HNTE”) certificate with a valid period of three years in 2019. Therefore, Canaan Creative is eligible to enjoy a preferential tax rate of 15% from 2019 to 2021 to the extent it has taxable income under the EIT Law, as long as it maintains the HNTE qualification and duly conducts relevant EIT filing procedures with the relevant tax authority. In October 2022, Canaan Creative received approval from the tax authority on the renewal of its HNTE status which entitled it to the preferential income tax rate of 15% effective retroactively from 2022 to 2024. Hangzhou Canaan Intelligence Information Technology Co., Ltd. (“Hangzhou Canaan”) obtained its HNTE certificate with a valid period of three years in 2019, and therefore is eligible to enjoy a preferential tax rate of 15% from 2019 to 2021 to the extent it has taxable income under the EIT Law, as long as it maintains the HNTE qualification and duly conducts relevant EIT filing procedures with the relevant tax authority. In addition, in accordance with Caishui (2012) No. 27 issued by the State Tax Bureau on April 20, 2012, Hangzhou Canaan is qualified as an integrated circuit enterprise and enjoying a 5-year tax holiday (two year full exemption followed by three year half reduction) beginning from 2016 after utilizing all prior years tax losses. Therefore, Hangzhou Canaan is eligible to enjoy a preferential tax rate of 0% from 2016 to 2017 and 12.5% from 2018 to 2020. Thereafter, Hangzhou Canaan did not renew its HNTE certificate or integrated circuit enterprise qualification. Canaan Creative (SH) Co., Ltd. (“Canaan Creative (SH)”) obtained its High and New Technology Enterprises (“HNTE”) certificate with a valid period of three years in 2022. Therefore, Canaan Creative is eligible to enjoy a preferential tax rate of 15% from 2022 to 2024 to the extent it has taxable income under the EIT Law, as long as it maintains the HNTE qualification and duly conducts relevant EIT filing procedures with the relevant tax authority. The Company’s other PRC subsidiaries are subject to the statutory income tax rate of 25%. (d) The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The implementing Rules of the EIT Law merely define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” The EIT Law also imposes a withholding income tax of 10% on dividends distributed by a FIE to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. The Cayman Islands, where the Company incorporated, does not have such tax treaty with China. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% if the immediate holding company in Hong Kong owns directly at least 25% of the shares of the FIE and could be recognized as a Beneficial Owner of the dividend from PRC tax perspective. As of December 31, 2022, the aggregated amount of undistributed earnings of the Company entities located in the PRC that are available for distribution to the Company were RMB1,628,165. The Company plans to indefinitely reinvested undistributed earnings earned from its PRC subsidiaries in its operations in the PRC. Therefore, no withholding income tax for undistributed earnings of its subsidiaries were provided as of December 31, 2022. A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: For the Years Ended December 31, 2020 2021 2022 PRC statutory income tax rates (25.0) % 25.0 % 25.0 % Permanent book-tax difference (4.5) % 1.4 % (2.4) % Share-based compensation 0.2 % 3.4 % 5.5 % Super deduction of R&D expense (5.7) % (2.6) % (14.0) % Others 1.0 % 0.6 % 6.1 % Different tax rates in other jurisdictions 2.0 % (2.2) % 2.0 % Effect of tax holiday 4.4 % (7.8) % (16.9) % Change in valuation allowance 23.1 % (14.0) % 12.6 % Total 0.0 % 2.4 % 20.3 % Effects of tax holidays entitled by the PRC subsidiaries (9,553) 160,246 103,195 Effects of tax holidays entitled by the PRC subsidiaries on basic income (loss) per Class A and Class B ordinary share (RMB cent per share) (0.41) 6.35 4.03 Composition of income tax expense The current and deferred portions of income tax expense included in the consolidated statements of comprehensive income (loss) are as follows: For the Years Ended December 31, 2020 2021 2022 Current income tax expense — 149,152 217,856 Deferred income tax benefits — (99,044) (93,854) Income tax expense — 50,108 124,002 Deferred tax assets and liabilities Deferred taxes were measured using the enacted tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences that give rise to the deferred tax asset balances as of December 31, 2021 and 2022 are as follows: As of December 31, 2021 2022 Deferred tax assets Tax losses carried forward 102,239 71,668 Write-down of inventories 10,771 108,229 Property, equipment and software — 34,905 Share-based compensation — 30,835 Allowance for doubtful accounts 1,314 1,416 Warranty reserve 2,704 967 Subtotal 117,028 248,020 Less: Valuation allowance (17,984) (96,610) Deferred tax assets 99,044 151,410 As of December 31, 2021 and 2022, the Company had tax loss carry-forwards of approximately RMB437,187 and RMB373,683 which mainly arose from its offshore subsidiaries and to a less extent from its PRC subsidiaries. Most of the PRC subsidiaries are qualified as HNTE or technology small and medium enterprise (“SMEs”), the carryforwards period for net operating losses under the EIT Law is changed from five years to ten years. The net operating loss carryforwards by the PRC mainland companies will expire in varying amounts between 2030 and 2033. PRC mainland companies tax losses of RMB1,581, RMB17,173, nil and RMB3,804 will expire, if unused, by 2030, 2031, 2032 and 2033, respectively. Other than the expiration, there are no other limitations or restrictions upon the Company’s ability to use these operating loss carryforwards. Valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. Valuation allowance was provided for tax loss carry-forward because it was more likely than not that such deferred tax assets will not be realized due to lack of profitable history to support the Company’s estimate of its future taxable income. If events occur in the future that allow the Company to realize part or all its deferred income tax, an adjustment to the valuation allowances will result in a decrease in tax expense when those events occur. As of December 31, 2021 and 2022, valuation allowances of RMB17,984 and RMB96,610 were provided because it was more likely than not that the Company will not be able to utilize certain tax loss carry-forwards and other deferred tax assets generated by its subsidiaries. If events occur in the future that allow the Company to realize more of its deferred tax assets than the presently recorded amount, an adjustment to the valuation allowances will increase income when those events occur. Movement of valuation allowance is as follows: For the Years Ended December 31, 2020 2021 2022 Beginning balance 254,039 304,790 17,984 Additions (decreases) during the year 50,751 (286,806) 78,626 Ending balance 304,790 17,984 96,610 The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2021 and 2022, the Company did not have any significant unrecognized uncertain tax positions. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | 16. Related party transactions For the years ended December 31, 2020, 2021 and 2022, the related party transactions are as follows: For the Years Ended December 31, 2020 2021 2022 Transaction amount with related parties Disposal of motor vehicles 637 — — 637 — — As of December 31, 2021 and 2022, there are no related party balances. |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Basic and Diluted Earnings (Loss) Per Share | |
Basic and Diluted Earnings (Loss) Per Share | 17. Basic and diluted earnings (loss) per share Basic and diluted earnings (loss) per share have been calculated in accordance with ASC 260 on computation of earnings (loss) per share for the years ended December 31, 2020, 2021 and 2022 as follows: For the Years Ended December 31, 2020 2021 2022 Basic earnings (loss) per share calculation Numerator: Net income (loss) (215,094) 2,000,282 486,357 Denominator: Weighted-average ordinary shares outstanding 2,345,703,779 2,521,667,815 2,560,106,403 Basic earnings (loss) per Class A and Class B ordinary share (RMB cent per share) (9.17) 79.32 19.00 For the Years Ended December 31, 2020 2021 2022 Diluted earnings (loss) per share calculation Numerator: Net income (loss) (215,094) 2,000,282 486,357 Denominator: Weighted-average ordinary shares outstanding 2,345,703,779 2,521,667,815 2,560,106,403 Add: weighted-average RSUs — 54,489,432 17,785,666 Weighted-average number of shares used in calculating diluted earnings (loss) per Class A and Class B ordinary share 2,345,703,779 2,576,157,247 2,577,892,069 Diluted earnings (loss) per Class A and Class B ordinary share (RMB cent per share) (9.17) 77.65 18.87 The potentially dilutive securities that have not been included in the calculation of diluted net loss per share as their inclusion would be anti- dilutive are as follows: For the Year Ended December 31, 2020 2021 2022 Weighted-average RSUs 10,710,636 — — Share options — 114,000,000 114,000,000 Warrants — 70,833,345 — |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Contingencies | |
Contingencies | 18. Contingencies On March 4, 2020, a putative class action was filed in the United States District Court of Oregon (the “Federal Action”) against the Company, certain officers and directors of the Company, among others. The complaint alleges that the Form F-1 registration statement, initially filed with the Securities and Exchange Commission on October 28, 2019 (File No. 333-234356), contained material misstatements and omissions in violation of federal securities laws. On March 6, 2020, another putative class action, making substantially similar allegations, was filed in New York County Supreme Court (the “State Action”) against the Company and certain officers and directors of the Company. On June 1, 2020, the Company filed a motion to stay all proceedings in the State Action pending adjudication of the Federal Action, which was granted on July 21, 2020. Subsequently, the Federal Action was transferred to the U.S. District Court for the Southern District of New York (the “Court”) on September 2, 2020. On October 7, 2020, lead plaintiffs in the Federal Action filed an amended complaint asserting claims under Section 11 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act for that the registration statement failed to disclose three alleged related party transactions. On December 7, 2020, the Company filed a motion to dismiss the amended complaint in the Federal Action. On July 8, 2021, the Court dismissed the first amended complaint but allowed plaintiffs to file a second amended complaint by August 6, 2021. On August 6, 2021, plaintiffs filed a letter motion for leave to file a second amended complaint. On August 27, 2021, the Company filed a letter response to oppose plaintiffs’ August 6, 2021 letter motion and to seek a final judgment dismissing the Federal Action to be entered. On March 31, 2022, plaintiffs’ motion for leave to file a second amended complaint has been denied as futile, and plaintiffs’ claims were dismissed with prejudice, and the Court closed the motion. On April 15, 2021, a new putative class action was filed in the United States District Court for the Southern District of New York against the Company and certain officers of the Company. The complaint alleges that the Company’s press release issued in February 2021 about increased visibility into revenue and the size and quality of orders the Company was receiving were materially false and misleading. Plaintiff claims that the truth about the Company’s revenue was revealed in April 2021, when the Company announced its latest financial results. On December 14, 2021, the Court so-ordered this stipulation. On February 7, 2022, lead plaintiffs filed an amended complaint asserting the same claims under Sections 10(b) and 20(a) of the Exchange Act against the same set of defendants. The amended complaint alleges the Company’s November 30, 2020 and February 10, 2021 press releases and the April 9, 2021 interview of the Company’s chief executive officer in an article published by Decrypt contained false and misleading statements regarding the pre-sale orders the Company had received and the Company’s ability to secure sufficient chip supply to meet the increasing demand for mining machines. On April 8, 2022, Canaan filed a motion to dismiss the amended complaint, which has been fully briefed as of July 7, 2022. As of the date of this annual report, the Court issued an order granting Canaan’s motion to dismiss the case in its entirety. The Court granted lead plaintiffs leave to further amend their amended complaint, the deadline of which is April 26, 2023. The management of the Company believes that there are defenses to one or more of the claims asserted in the lawsuits. The management of the Company has engaged counsel with the intention to vigorously defend these lawsuits. At the date of issue of the consolidated financial statements, the Company is unable to predict the outcome of these lawsuits, or reasonably estimate a range of possible losses, if any, given the early stage of these lawsuits. Therefore, no contingent liabilities have been recorded by the Company as of December 31, 2022 in respect of these lawsuits. Also, the Company is and, from time to time, may in the future become, involved in other legal proceedings in the ordinary course of business. The Company currently believes that the outcome of any of these existing legal proceedings, either individually or in the aggregate, will not have a material impact on the operating results, financial condition or cash flows of the Company. With respect to existing legal proceedings, the Company has either determined that the existence of a material loss is not reasonably possible or that it is unable to estimate a reasonably possible loss or range of loss. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings. |
Condensed Financial Information
Condensed Financial Information of the Parent Company | 12 Months Ended |
Dec. 31, 2022 | |
Condensed financial information of the parent company | |
Condensed financial information of the parent company | 19. Condensed financial information of the parent company Rules 12-04(a) and 4-08(e)(3) of Regulation S-X require condensed financial information as to the financial position, cash flows and results of operations of a parent company as of and for the same periods for which the audited consolidated financial statements have been presented when the restricted net assets of the consolidated and unconsolidated subsidiaries together exceed 25% of consolidated net assets as of the end of the most recently completed fiscal year. The following condensed financial statements of the Parent Company have been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the Parent Company used the equity method to account for its investment in its subsidiaries. Such investment is presented on the separate condensed balance sheets of the Parent Company as “Receivables from subsidiaries”. The Parent Company, its subsidiaries were included in the consolidated financial statements whereby the inter-company balances and transactions were eliminated upon consolidation. The Parent Company’s share of income (loss) from its subsidiaries is reported as “share of income (loss) from subsidiaries” in the condensed financial statements. The Parent Company is a Cayman Islands company and, therefore, is not subject to income taxes for all years presented. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. As of December 31, 2021 and 2022, there were no material commitments or contingencies, significant provisions for long-term obligations or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any. For the purpose of the Company’s stand-alone financial statements, its investments in subsidiaries were reported using the equity method of accounting. The Company’s share of income (loss) from its subsidiaries was reported as a share of income (loss) of subsidiaries in the accompanying parent company only financial statements. Ordinarily, under the equity method, an investor in an equity method investee would cease to recognize its share of the losses of an investee once the carrying value of the investment has been reduced to nil absent an undertaking by the investor to provide continuing support and fund losses. For the purpose of the parent only financial information, the Company has continued to reflect its share, based on its proportionate interest, of the losses of its subsidiaries regardless of the carrying value of the investment even though the Company is not obligated to provide continuing support or fund losses. Condensed Financial Information of the Parent Company CONDENSED BALANCE SHEETS As of December 31, 2021 2022 US$ RMB RMB (Note 2(e)) ASSETS Current assets: Cash 30,860 39,573 5,738 Prepayment for repurchase of ordinary shares — 1,251 181 Total current assets 30,860 40,824 5,919 Non-current assets: Investments in and receivables from subsidiaries 3,502,014 4,201,822 609,208 Total assets 3,532,874 4,242,646 615,127 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Refund from depository bank – current 2,013 2,199 319 Other payable — 557 81 Non-current liabilities: Refund from depository bank – non-current 5,824 4,163 604 Warrant liability 66,347 — — Total liabilities 74,184 6,919 1,004 Shareholders’ equity: Ordinary shares 1 1 — Subscriptions receivable from shareholders (1) (1) — Treasury stocks (231,281) (380,538) (55,173) Additional paid-in capital 2,891,134 3,298,531 478,242 Statutory reserves 97,420 102,586 14,874 Accumulated other comprehensive loss (101,925) (4,844) (702) Retained earnings 803,342 1,219,992 176,882 Total shareholders’ equity 3,458,690 4,235,727 614,123 Total liabilities and shareholders’ equity 3,532,874 4,242,646 615,127 CONDENSED STATEMENTS OF COMPREHENSIVE LOSS For the year ended December 31, 2020 2021 2022 US$ RMB RMB RMB (Note 2(e)) Operating expenses: Research and development expenses (652) — — — Sales and marketing expenses (41) — — — General and administrative expenses (2,277) (6,668) (20,968) (3,040) Loss from operations (2,970) (6,668) (20,968) (3,040) Interest income — 1 7 1 Other income, net 2,425 2,037 2,122 308 Change in fair value of warrant liability — 190,178 24,598 3,566 Share of income (losses) from subsidiaries (214,549) 2,306,195 416,058 60,323 Net income (loss) (215,094) 2,491,743 421,817 61,158 Foreign currency translation adjustment, net of nil tax (24,238) (22,145) 97,081 14,075 Total comprehensive income (loss) (239,332) 2,469,598 518,898 75,233 CONDENSED STATEMENTS OF CASH FLOWS For the year ended December 31, 2020 2021 2022 US$ RMB RMB RMB (Note 2(e)) Cash flows from operating activities Receipt of refund from depository bank 13,285 — — — Other cash used in operating activities (1) (6,462) (21,439) (3,108) Net cash provided by (used in) operating activities 13,284 (6,462) (21,439) (3,108) Cash flows from investing activities Decrease (increase) in receivables from subsidiaries 28,451 (871,194) 305,529 44,298 Net cash provided by (used in) investing activities 28,451 (871,194) 305,529 44,298 Cash flows from financing activities Repurchase of warrants — — (44,282) (6,420) Payment for repurchase of ordinary shares (23,915) (103,543) (234,307) (33,970) Prepayment under share repurchase agreement (16,146) (573) — — Payment for cost of issuance — (519) — — Proceeds from issuance of ordinary shares and warrants — 1,029,455 — — Net cash provided by (used in) financing activities (40,061) 924,820 (278,589) (40,390) Net increase in cash 1,674 47,164 5,501 799 Effect of exchange rate changes on cash (1,541) (16,451) 3,212 466 Cash, beginning of year 14 147 30,860 4,474 Cash, end of year 147 30,860 39,573 5,739 |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of significant accounting policies | |
Basis of preparation | (a) Basis of preparation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below. |
Use of estimates | (b) Use of estimates The preparation of the Company’s consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from such estimates. The Company believes that accounting estimation of variable consideration for revenue recognition, warrant liability, valuation of deferred tax assets, write-down for inventories and prepayments, provision for reserve for inventory purchase commitments, valuation and recognition of share-based compensation reflect significant judgments and estimates used in the preparation of its consolidated financial statements. Management bases the estimates on historical experience and on various other assumptions as discussed elsewhere to the consolidated financial statements that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could materially differ from these estimates. |
Consolidation | (c) Consolidation The Company’s consolidated financial statements include the financial statements of Canaan Inc. and its subsidiaries. All transactions and balances among Canaan Inc. and its subsidiaries have been eliminated upon consolidation. Subsidiaries are those entities in which Canaan Inc. directly or indirectly, controls more than one half of the voting powers; or has the power to appoint or remove the majority of the members of the Board of Directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. |
Functional currency and foreign currency translation | (d) Functional currency and foreign currency translation The Company uses Renminbi (“RMB”) as its reporting currency. The functional currency of Canaan Inc. and its subsidiaries incorporated outside of the PRC is the United States dollar (“US$”), while the functional currency of the PRC entities in the Company is RMB as determined based on the criteria of Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters Transactions denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates prevailing on the transaction dates. Financial assets and liabilities denominated in other than the functional currency are re-measured at the balance sheet date exchange rate. The resulting exchange differences are included in the consolidated statements of comprehensive income (loss) as foreign exchange related gains or loss. The financial statements of the Company are translated from the functional currency to the reporting currency, RMB. Assets and liabilities of Canaan Inc. and its subsidiaries incorporated outside of PRC are translated into RMB using the applicable exchange rates at the balance sheet date, income and expense items are translated at average exchange rates prevailing during the fiscal year. Translation adjustments arising from these are reported as foreign currency translation adjustments and are shown as a separate component of shareholders’ equity on the consolidated financial statement. |
Convenience translation | (e) Convenience translation The United States dollar (“US$”) amounts disclosed in the accompanying financial statements are presented solely for the convenience of the readers. Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the rate of US$1.00=RMB6.8972 on December 30, 2022, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2022, or at any other rate. |
Warrant Liability | (f) Warrant Liability The freestanding warrants to purchase American Depositary Share (“ADSs”) at a future date were determined to be freestanding instruments that were accounted for as a liability. At initial recognition, the Company recorded the warrant liability on the consolidated balance sheets at its estimated fair value. The proceeds from issuance of ordinary shares and warrants are firstly allocated to warrant liability based on its fair value. The residual method is used to allocate the proceeds to shareholders’ equity. The warrant liability is subject to remeasurement at each reporting period and the Company adjusted the carrying value of the warrant liability to fair value at the end of each reporting period utilizing the binominal option pricing model, with changes in estimated fair value included in the change in fair value of warrant liability on the consolidated statement of comprehensive income (loss). |
Fair value of financial instruments | (g) Fair value of financial instruments Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value include: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Observable, market-based inputs, other than quoted prices, for the assets or liabilities either directly or indirectly. Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Company’s financial instruments consist principally of cash and restricted cash, short-term investments, non-current financial investments, accounts receivable, accounts payable, short-term debts, notes payable and other liabilities. As of December 31, 2021 and 2022, the carrying values of cash and restricted cash, accounts receivable, accounts payable and other liabilities approximated to their fair values reported in the consolidated balance sheets due to the short term nature of these instruments. On a recurring basis, the Company measures its warrant liability at fair value. The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: Balance at As of December 31, 2021 Level 1 Level 2 Level 3 fair value Liabilities Warrant liability — — 66,347 66,347 The Company values its investments in wealth management products based on quoted prices of similar products provided by banks at the end of each period, and accordingly, the Company classifies the valuation techniques that use these inputs as Level 2. The warrants are accounted for as a liability and remeasured to fair value at the end of each reporting period utilizing the binomial option pricing model, which involves significant assumptions including the risk-free interest rate, the expected volatility, expected dividend yield and expected term (Note 11). |
Cash and cash equivalents | (h) Cash Cash includes cash on hand and demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal or use. As of December 31, 2021 2022 RMB denominated bank deposits with financial institutions in the PRC 1,167,445 77,373 US dollar denominated bank deposits with financial institutions in the PRC 1,447,336 430,006 US dollar denominated bank deposits with overseas financial institutions 29,498 183,409 Others denominated bank deposits with overseas financial institutions 317 16,406 RMB denominated bank deposits with overseas financial institutions — 56 Others denominated bank deposits with financial institutions in the PRC 39,746 11 Total 2,684,342 707,261 The bank deposits, including restricted cash, with financial institutions in the mainland of the PRC , Hong Kong, United States, Singapore and Kahzakhstan are insured by the government authorities up to RMB500, HKD500, USD250, SGD75 and KZT15,000 per bank, respectively. The bank deposits including term deposits and restricted cash are insured by the government authorities with amounts up to RMB11,579 and RMB20,248 as of December 31, 2021 and 2022, respectively. The Company has not experienced any losses in uninsured bank deposits and does not believe that it is exposed to any significant risks on cash held in bank accounts. To limit exposure to credit risk, the Company primarily places bank deposits with large financial institutions in the PRC mainland, Hong Kong, United States, Singapore and Kahzakhstan with acceptable credit rating. On March 10, 2023, Signature bank was closed by the California Department of Financial Protection and Innovation. On March 12, 2023, New York State Department of Financial Services took possession of Signature Bank and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. As of December 31, 2022, the Company held cash deposits US$1.1 million at Signature Bank. All these cash deposits have been transferred to another bank subsequent to the receivership by the end of March 2023. |
Restricted cash | (i) Restricted cash Restricted cash includes cash that are not readily available for the Company’s normal disbursements. Restricted cash are primarily related to cash deposits with banks and financial institutions subject to legal restrictions (note 4). |
Short-term investments | (j) Short-term investments Short-term investments include investments in wealth management products issued by certain banks which are redeemable by the Company at any time. The wealth management products are unsecured with variable interest rates. The Company measures the short-term investments at fair value and fair value is estimated based on quoted prices of similar products provided by banks at the end of each period. The change in fair value is recorded as investment income in the amount of RMB5,844, RMB277 and nil in the consolidated statements of comprehensive income (loss) for the years ended December 31, 2020, 2021 and 2022, respectively. |
Accounts receivable | (k) Accounts receivable Accounts receivable are presented net of allowance for doubtful accounts. The Company uses specific identification in providing for bad debts when facts and circumstances indicate that collection is doubtful and based on factors listed in the following paragraph. If the financial conditions of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance may be required. The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts on general basis taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the customers as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted. |
Inventories | (l) Inventories Inventories, consisting of finished goods, work in process, raw materials and goods in transit, which are purchased from contractual manufacturers and component suppliers. Inventories are stated at the lower of cost and net realizable value. Cost of inventory is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving and obsolete inventory, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. The Company considers all data available, including future demand and subsequent changes in product prices that may provide additional information about the valuation of inventories at the balance sheet date. |
Cryptocurrency | (m) Cryptocurrency Cryptocurrency is, by its nature, identifiable non-monetary assets that lack physical substance. Future economic benefit attributable to cryptocurrency is expected to flow to the Company because cryptocurrency can be exchanged to standard currencies on public trading platforms. Furthermore, the cost of the Company’s cryptocurrency assets can be measured reliably because cryptocurrency earned from mining activities can be measured with reference to the spot price to standard currencies on the date when they are earned. The Company accounts for the cryptocurrency received from mining as intangible assets with indefinite useful life in its consolidated balance sheets because, at the time of assessment, there is no foreseeable limit to the period over which such assets are expected to generate cash flows. The Company further adopts the cost model to account for its cryptocurrency and reviews its useful life and impairment at each reporting date in accordance with ASC 350 Intangibles—Goodwill and Other. The Company accounts for cryptocurrency at cost, instead of revaluing cryptocurrency at their fair value on each accounting reference date, because the latter model is subject to inherent and substantial volatility in the value of cryptocurrency from time to time. The Company accounts for cryptocurrency return liability at fair value, whereas accounts for the corresponding cryptocurrency at cost subject to impairment because the Company is the accounting owner of those cryptocurrency. As of December 31, 2021 and 2022, cryptocurrency return liability of RMB2,500 and nil are recorded in accounts payable, respectively. Cost is calculated using the weighted average cost method. Gains or losses arising from the disposal of cryptocurrency are determined as the difference between the net disposal proceeds and the carrying amount of the cryptocurrency and are recognized in profit or loss on the date of disposal. The impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The recoverable amount of cryptocurrencies is based on the fair value less costs of disposal. The fair value of the cryptocurrencies is determined by using the quoted price on the cryptocurrencies platform website well recognized by the block chain users. During the year ended December 31, 2022, the Company recognized impairment loss |
Operating lease assets | (n) Operating lease assets Operating lease assets consist of lease contracts for mining equipment for Bitcoin mining with customers, which are reclassified from inventories at the beginning of lease period. Operating lease assets are recorded at cost less accumulated depreciation and impairment losses. Depreciation is provided using a straight-line method over the estimated economic lives which is generally 18 months. Depreciation expenses are included in costs of revenues. The Company monitors accounting estimates relating to the depreciation period. Changes made to estimates are reflected in depreciation expense on a prospective basis. As of December 31, 2021 and 2022, the Company did not have any operating lease assets . |
Property, equipment and software | (o) Property, equipment and software Property, equipment and software are stated at historical cost less accumulated depreciation, amortization and impairment loss, if any. Depreciation and amortization is calculated using the straight-line method over the shorter of their estimated useful lives of these assets or the term of the related leases. The estimated useful lives are as follows: Leasehold improvements the shorter of their useful lives and the lease terms Computers and electronic equipment 3 Mechanical equipment 5 years Mining equipment 1.5 years Motor vehicles 5 years Software 3 years Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property, equipment and software is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statements of comprehensive income (loss). Construction in progress represents assets under construction. Construction in progress is transferred to property, equipment and software and depreciation or amortization commences when an asset is ready for its intended use. |
Non-Current financial Investment | (p) Non-current financial investment The Company’s non-current financial investment include an equity investment without readily determinable fair value, and over which the Company has neither significant influence nor control through investments in common stock or in-substance common stock, and is measured and recorded using a measurement alternative that measures the non-current financial investment at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. The carrying value of the Company’s non-current financial investment measured under cost minus impairment were RMB20,000 and RMB20,000 as of December 31, 2021 and 2022. During the year ended December 31, 2021 and 2022, the Company recognized impairment charge of RMB25 and nil recorded in other income, net. |
Impairment of long-lived assets | (q) Impairment of long-lived assets For other long-lived assets including property, equipment and software, the Company evaluates for impairment whenever events or changes (triggering events) indicate that the carrying amount of an asset may no longer be recoverable. The Company assesses the recoverability of the long-lived assets by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to receive from use of the assets and their eventual disposition. Such assets are considered to be impaired if the sum of the expected undiscounted cash flows is less than the carrying amount of the assets. The impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. |
Contract liabilities | (r) Contract liabilities Cash proceeds received from customers before product delivery is recognized as contract liabilities and is recognized as revenues when revenue recognition criteria are met. The prepayments received from customers as of December 31, 2021 and 2022 was RMB1,340,731 and RMB4,613, respectively. The revenue recognized during the years ended December 31, 2020, 2021 and 2022 for the beginning balance of contract liability was RMB8,008, RMB424,426 and RMB1,323,344, respectively. |
Revenue from contracts with customers (ASC 606) | (s) Revenue from contracts with customers (ASC 606) The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. Products revenue The Company generates revenue primarily from the sale of mining equipment directly to a customer, such as a business or individual engaged in Bitcoin mining activities. As the Bitcoin price fluctuates, the Company may adjust the selling price of mining equipment on a weekly basis, as customers are only willing to pay for machines based on their ability to recover their investment through mining Bitcoin over a relatively short period of time. The Company’s sales arrangements usually require a full prepayment before the delivery of products. The Company started to offer credit sales to certain significant, long-standing customers in the PRC from 2018 to September 2020. The payment terms under credit sales generally consist of 50% down payment and 50% subsequent payments over a period of 90 to 180 days. With the adoption of a more dynamic pricing strategy for credit sales from 2018 to September 2020, the Company accepted a lower amount of consideration (as compared to fixed and promised consideration that is set out in the sales contracts) from its credit sales customers if the price of Bitcoin decreases in the post-sale period; hence providing implicit price concession to these customers and the ultimate amount of price concessions provided to these credit sales customers is highly dependent on the changes of Bitcoin prices. Revenues from product sales are recorded at the sales price (transaction price), which includes an estimation of variable consideration which primarily results from implicit price concessions on credit sales. The amount of variable consideration is included in the transaction price to the extent it is not constrained and that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the estimates. If actual results in the future vary from estimates, the Company will adjust these estimates, which would affect revenue and earnings in the period when such changes are known. With respect to the determination of variable consideration resulting from the amount of implicit price concession, since the Bitcoin market price is volatile and unpredictable and changes of Bitcoin price, will greatly affect the implicit price concessions to be provided by the Company to its credit sales customers, the Company historically has not been able to overcome the constraint on variable consideration at the time of product sale or at subsequent period-end dates until the Company has knowledge about the resolution of the uncertainty through payment by the customer. The Company uses all the subsequent information to the date of issuance of the financial statements to adjust the estimated variable consideration for the periods presented, representing updated information on the best estimate of the amount of transaction price that is probable of being received and therefore not constrained as of period-end. The Company will continue to monitor and evaluate historical data and other factors in determining the total transaction price (including implicit price concessions) that can be recognized for product sales on credit. During the years ended December 31, 2020, 2021 and 2022, the Company recognized price concessions provided to its customers in the amounts of RMB11,455, nil and nil, respectively. During the year ended December 31, 2022, the adjustment to the previously estimated variable considerations was nil (years ended December 31, 2020 and 2021: RMB14,685 and nil). The Company did not provide price concessions to customers in 2022 and 2021. The Company recognizes products revenue at a point in time based on management’s evaluation of when the control of the products has been passed to customers. The transfer of control is considered complete when products have been picked up by or shipped to the Company’s customers. The Company offers a standard product warranty of 360 days that the product will operate under normal use. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenues. The reserves established are regularly monitored based upon historical experience and any actual claims charged against the reserve. The amount of total warranty costs incurred was RMB764, RMB28,826 and RMB12,742 for the years ended December 31, 2020, 2021 and 2022, respectively. Mining revenue The Company performs mining activities with its own mining equipment to earn cryptocurrency reward. The Company recognizes revenue when it earns the cryptocurrency as a result of its mining activity. The amount of revenue recognized is measured with reference to the spot price of the cryptocurrency to standard currencies on the date when it is earned. Maintenance services revenue The Company also generates a small portion of revenue from its maintenance services under separate contracts. Revenue from the maintenance service to the customer is recognized when the related services have been rendered to the customers. |
Revenue from lease arrangements as lessor (ASC 842, Lease) | (t) Revenue from lease arrangements as lessor (ASC 842, Lease) From July 2019, the Company started to generate revenue from the leases of mining equipment for Bitcoin mining to its customers. The leases cannot generally be extended or terminated at the customer’s discretion. However, upon the mutual agreement of the parties, the leases can be early terminated after three months. Rental charges are computed based on a time rate of machine’s type and rental period. The leases of mining equipment meet the classification of operating leases, and revenues from operating leases are recognized on a straight-line basis over the contract terms. The Company ceased leasing mining equipment in the second quarter of 2021. |
Value-added-tax ("VAT") recoverable and surcharges | (u) Value-added-tax (“VAT”) recoverable and surcharges Value added tax recoverable represent amounts paid by the Company for purchases. The surcharges (i.e., Urban construction and maintenance tax, educational surtax, local educational surtax), vary from 6% to 12% of the value-added-tax paid depending on the taxpayer’s location. |
Cost of revenues | (v) Cost of revenues Amounts recorded as cost of revenues relate to direct expenses incurred to generate revenue. Such costs are recorded as incurred. Cost of revenues primarily consists of product costs, including costs of raw material, contractual manufacturers for production, labor costs, shipping and handling costs, manufacturing and depreciation, warehousing costs, inventories write-downs, prepayments write-downs, provision for reserve for inventory purchase commitments and tax surcharges. |
Research and development expenses | (w) Research and development expenses Research and development expenses consist primarily of salary and welfare for research and development personnel, consulting and contractor expenses, testing and tooling materials and other expenses in associated with research and development personnel. The Company recognizes research and development expenses as expense when incurred. |
Sales and marketing expenses | (x) Sales and marketing expenses Sales and marketing expenses consist primarily of salary and welfare for sales and marketing personnel, promotion and marketing expenses and other expenses in associated with sales and marketing personnel. Advertising expense is expensed as incurred and included in selling and marketing expenses. The advertising expenses were RMB3,701, RMB4,461 and RMB6,771 for the years ended December 31, 2020, 2021 and 2022, respectively. |
General and administrative expenses | (y) General and administrative expenses General and administrative expenses consist primarily of salary and welfare for general and administrative personnel, rental expenses and depreciation in associated with general and administrative personnel, allowance for doubtful receivables, entertainment expense, general office expense and professional service fees. |
Government grants | (z) Government grants Government grants generally consist of financial subsidies received from local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. The eligibility to receive such benefits and amount of financial subsidy to be granted are determined at the discretion of the relevant government authorities. Government grants are recognized when there are reasonable assurances that the Group will comply with the conditions attach to them and the grants will be received. Government grants for the purpose of giving immediate financial support to the Group with no future related costs or obligation are recognized in the Group’s consolidated statements of comprehensive income when the grants become receivable. RMB32,499, RMB5,699 and RMB19,226 were recognized in other income, net for the years ended December 31, 2020, 2021, and 2022, respectively. There were no significant commitment or contingencies for the government subsidies received for the years ended December 31, 2020, 2021 and 2022. |
Lease arrangement as lessee | (aa) Lease arrangement as lessee The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liability, and operating lease liability, non-current in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which it calculates based on the credit quality of the Company and by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of each lease. The Company has elected not to recognize right-of-use assets or lease liabilities for leases with an initial term of 12 months or less and the Company recognizes lease expense for these leases on a straight-line basis over the lease terms. |
Employee social security and welfare benefits | (ab) Employee social security and welfare benefits Employees of the Company in the PRC are entitled to staff welfare benefits including pension, work-related injury benefits, maternity insurance, medical insurance, unemployment benefit and housing fund plans through a PRC government-mandated defined contribution plan. The Company is required to contribute to the plan based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The PRC government is responsible for the medical benefits and the pension liability to be paid to these employees and the Company’s obligations are limited to the amounts contributed and no legal obligation beyond the contributions made. Employee social security and welfare benefits included as expenses in the consolidated statements of comprehensive income (loss) amounted to RMB14,919, RMB27,740 and RMB47,154 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Income taxes | (ac) Income taxes The Company accounts for income taxes under the liability method. Under the liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and income tax bases of assets and liabilities and are measured using the tax income rates that will be in effect when the differences are expected to reverse. A valuation allowance is recorded if it is more likely than not that some portion or all deferred income tax asset will not be realized in the foreseeable future. The Company evaluates its uncertain tax positions using the provisions of ASC 740-10, Income Taxes |
Share-based compensation | (ad) Share-based compensation The Company grants restricted shares and share options to eligible employees and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Employees’ share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at the grant date if no vesting conditions are required; or b) for share-based awards granted with only service conditions, using the graded vesting method, over the vesting period; or c) for share-based awards with service conditions, using the graded vesting method, net of estimated pre-vesting forfeitures, over the vesting period. If the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation expense relating to those awards are reversed as occurred. A change in any of the terms or conditions of share-based awards is accounted for as a modification of the awards. The Company calculates incremental compensation expense of a modification as the excess of the fair value of the modified awards over the fair value of the original awards immediately before its terms are modified at the modification date. For vested awards, the Company recognizes incremental compensation cost in the period when the modification occurs. For awards not being fully vested, the Company recognizes the sum of the incremental compensation expense and the remaining unrecognized compensation expense for the original awards over the remaining requisite service period after modification. Share-based compensation in relation to the restricted shares is measured based on the fair market value of the Company’s ordinary shares at the grant date of the award. Share-based compensation in relation to the share options is estimated using the Binomial Model. The determination of the fair value of share options is affected by the share price of the Company’s ordinary shares as well as the assumptions regarding a number of complex and subjective variables, including the expected share price volatility, risk-free interest rate, exercise multiple and expected dividend yield. The fair value of these share options was determined by management with the assistance from an independent valuation firm. |
Statutory reserves | (ae) Statutory reserves The Company’s subsidiaries incorporated in the PRC are required on an annual basis to make appropriations of retained earnings set at certain percentage of after-tax profit determined in accordance with PRC accounting standards and regulations (“PRC GAAP”). Appropriation to the statutory general reserve should be at least 10% of the after tax net income determined in accordance with the legal requirements in the PRC until the reserve is equal to 50% of the entities’ registered capital. The Company is not required to make appropriation to other reserve funds and the Company does not have any intentions to make appropriations to any other reserve funds. The general reserve fund can only be used for specific purposes, such as offsetting the accumulated losses, enterprise expansion or increasing the registered capital. Appropriations to the general reserve funds are classified in the consolidated balance sheets as statutory reserves. There are no legal requirements in the PRC to fund these reserves by transfer of cash to restricted accounts, and the Company has not done so. Relevant laws and regulations permit payments of dividends by the PRC subsidiaries and affiliated companies only out of their retained earnings, if any, as determined in accordance with respective accounting standards and regulations. Accordingly, the above balances are not allowed to be transferred to Canaan Inc. in terms of cash dividends, loans or advances. The Company has made nil, RMB113 and RMB5,166 appropriations to statutory reserve for the years ended December 31, 2020, 2021 and 2022, respectively. |
Repurchase of share | (af) Repurchase of share The Company accounts for treasury stock using the cost method. Under the cost method, when the Company’s shares are acquired for purposes other than retirement, the costs of the acquired stock will be shown separately as a deduction from the total of capital stock. |
Earnings (loss) per share | (ag) Earnings (loss) per share Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalents shares outstanding during the period. Dilutive equivalent shares are excluded from the computation of diluted earnings (loss) per share if their effects would be anti- dilutive. ordinary share equivalents consist of the ordinary shares issuable in connection with the Company’s ordinary shares issuable upon the conversion of the share-based awards, using the treasury stock method. |
Comprehensive income (loss) | (ah) Comprehensive income (loss) Comprehensive income (loss) is defined as the change in shareholders’ equity of the Company during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive income (loss) is reported in the consolidated statements of comprehensive income (loss). Accumulated other comprehensive loss of the Company include the foreign currency translation adjustments. |
Segment reporting | (ai) Segment reporting Operating segments are defined as components of an enterprise engaging in businesses activities for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision makers in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews consolidated results including revenue, gross profit and operating profit at a consolidated level only. The Company does not distinguish between markets for the purpose of making decisions about resources allocation and performance assessment. Hence, the Company has only one operating segment and one reportable segment. Long-lived assets consist of cryptocurrency, property, equipment and software, net, right-of-use assets and other non-current assets. As of December 31, 2022, the long-lived assets, net of RMB173,505 were located in Central Asia and RMB349,688 were located in the United States. The remaining long-lived assets were mainly located the in PRC. The Company’s revenue segregated by geographic region is disclosed below. The geographical region of revenue generated is based on the location at which the goods delivered or the services were provided: For the Years Ended December 31, Geographic region 2020 2021 2022 Indonesia — — 1,446,347 Malaysia — — 802,063 United States of America 3,528 312,722 631,243 Australia 114 361,377 405,808 Kazakhstan 47,792 711,596 386,768 Cyprus — 633,322 243,500 Hong Kong Special Administrative Region 12,301 87,971 149,488 Canada 162 402,489 122,799 Mainland China 379,418 1,779,923 122,770 Laos — — 32,660 Thailand 31 289,013 18,644 Sweden 8 152,127 6,285 Other countries or regions 4,332 256,166 10,532 Total 447,686 4,986,706 4,378,907 |
Recently issued accounting pronouncements | (aj) Recently issued accounting pronouncements i. New and amended standards adopted by the Company: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions and amending and clarify existing guidance. The guidance is effective for public business entities for annual reporting periods, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The standard is effective for the Company for fiscal years beginning after 15 December 2021, and interim periods within fiscal years beginning after 15 December 2022. Early adoption is permitted. The Company adopted this guidance on January 1, 2022 and it did not have a material effect on the Company’s consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This update is effective for annual periods beginning after December 15, 2021, and early application is permitted. This guidance should be applied either prospectively to all transactions that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or retrospectively to those transactions. The Company adopted ASU 2021-10 during 2022 using the retrospective approach. See Note 2(z) for related disclosure. ii. New and amended standards not yet adopted by the Company: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 was further amended in November 2018 by ASU 2018-19 and in November 2019 by ASU 2019-10. This guidance requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability. The guidance is effective for public companies for annual reporting periods, and interim periods within those years beginning after December 15, 2019. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As the Company is an “emerging growth company” and elects to apply for the new and revised accounting standards for the fiscal year beginning after December 15, 2022. The Company does not expect the adoption of ASU No. 2016-13 to have a material effect on its consolidated financial statements. In August 2020, the FASB issued Accounting Standards Update 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The amendments in this Update are effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted this guidance on January 1, 2023 and it did not have a material effect on the Company’s consolidated financial statements. |
Organization and Principal Ac_2
Organization and Principal Activities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Principal Activities | |
Schedule of subsidiaries | As of December 31, 2022, the Company’s principal subsidiaries are as follows: Equity Date of Place of interest Name of subsidiaries incorporation incorporation held Principal activities Canaan Creative (HK) Holdings Limited February 22, 2018 Hong Kong Special Administrative Region 100 % Research and development of ICs Hangzhou Canaan Intelligence Information Technology Co., Ltd. April 9, 2013 Hangzhou, China 100 % Research and development of ICs Canaan Creative Co., Ltd. April 1, 2013 Beijing, China 100 % Research and development of ICs Langfang Creative Technology Co., Ltd. May 15, 2014 Langfang, China 100 % Assembly of mining equipment and spare parts Canaan Convey Co., Ltd. November 2, 2017 Beijing, China 100 % International distribution of mining equipment and spare parts Zhejiang Avalon Technology Co., Ltd. December 5, 2017 Hangzhou, China 100 % Distribution of mining equipment and spare parts Canaan Bright Sight Co., Ltd. December 24, 2018 Beijing, China 100 % International distribution of AI products Canaan Creative (SH) Co., Ltd. January 27, 2021 Shanghai, China 100 % Research and development of ICs Canaan Creative International PTE. Ltd March 9, 2021 Singapore 100 % Mining business Canaan Creative Global Pte. Ltd. September 18, 2021 Singapore 100 % International headquarters, research and development of Canaan U.S. Inc. February 1, 2022 United States 100 % International distribution of |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of significant accounting policies | |
Summary of assets and liabilities measured at fair value on a recurring basis | The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: Balance at As of December 31, 2021 Level 1 Level 2 Level 3 fair value Liabilities Warrant liability — — 66,347 66,347 |
Summary of cash and cash equivalents | Cash includes cash on hand and demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal or use. As of December 31, 2021 2022 RMB denominated bank deposits with financial institutions in the PRC 1,167,445 77,373 US dollar denominated bank deposits with financial institutions in the PRC 1,447,336 430,006 US dollar denominated bank deposits with overseas financial institutions 29,498 183,409 Others denominated bank deposits with overseas financial institutions 317 16,406 RMB denominated bank deposits with overseas financial institutions — 56 Others denominated bank deposits with financial institutions in the PRC 39,746 11 Total 2,684,342 707,261 |
Schedule of estimated useful lives | The estimated useful lives are as follows: Leasehold improvements the shorter of their useful lives and the lease terms Computers and electronic equipment 3 Mechanical equipment 5 years Mining equipment 1.5 years Motor vehicles 5 years Software 3 years |
Summary of revenue segregated by geographic region | The geographical region of revenue generated is based on the location at which the goods delivered or the services were provided: For the Years Ended December 31, Geographic region 2020 2021 2022 Indonesia — — 1,446,347 Malaysia — — 802,063 United States of America 3,528 312,722 631,243 Australia 114 361,377 405,808 Kazakhstan 47,792 711,596 386,768 Cyprus — 633,322 243,500 Hong Kong Special Administrative Region 12,301 87,971 149,488 Canada 162 402,489 122,799 Mainland China 379,418 1,779,923 122,770 Laos — — 32,660 Thailand 31 289,013 18,644 Sweden 8 152,127 6,285 Other countries or regions 4,332 256,166 10,532 Total 447,686 4,986,706 4,378,907 |
Risks and Concentration (Tables
Risks and Concentration (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Risks and Concentration | |
Summary of accounts receivable concentration of credit risk and customers contribution of total revenue | Accounts receivable concentration of credit risk is as below: As of December 31, 2021 2022 Customer A 52 % — Customers which contributed more than 10% of total revenue are as below: For the Years Ended December 31, 2020 2021 2022 Customer B * * 33 % Customer C * 18 % 22 % Customer D * * 16 % * Less than 10% |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventories | |
Schedule of inventories | Inventories consist of the following: As of December 31, 2021 2022 Raw materials 429,208 789,134 Work in process 78,354 261,436 Finished goods 304,801 423,420 Total 812,363 1,473,990 |
Prepayments and Other Assets (T
Prepayments and Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepayments and Other Assets | |
Summary of prepayments and other assets | The current and non-current portions of prepayments and other assets consist of the following: As of December 31, 2021 2022 Prepayments and other current assets Prepayments to vendors (Note a) 1,427,820 1,105,194 VAT recoverable 260,571 396,701 Prepayment for repurchase of ordinary shares 15,901 24 VAT refund for export sales (Note b) 14,041 107,549 Deferred charges — 42,943 Deposits 1,494 23,183 Others (Note c) 9,200 13,485 1,729,027 1,689,079 Other non-current assets Long-term rental and other deposits 2,956 17,046 Prepayments for purchase of software — 391 2,956 17,437 |
Cryptocurrency (Tables)
Cryptocurrency (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Crypto Currency [Abstract] | |
Schedule of cryptocurrency | As of December 31 2021 2022 Gross carrying amount 21,371 104,997 Less: Impairment of cryptocurrency (1,061) (17,724) Net 20,310 87,273 |
Schedule of additional information about cryptocurrency | For the years ended December 31, 2021 2022 Beginning balance — 20,310 Revenue recognized on acceptance of cryptocurrency 21,688 238,596 Cost of revenues recognized on payment of cryptocurrency — (56,877) Proceeds from disposal of cryptocurrency — (64,806) Realized loss on disposal of cryptocurrency — (1,167) Impairment of cryptocurrency (1,061) (52,959) Foreign currency translation adjustment (317) 4,176 Ending balance 20,310 87,273 |
Property, Equipment and Softw_2
Property, Equipment and Software (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Equipment and Software | |
Schedule of property, equipment and software | Property, equipment and software consist of the following: As of December 31, 2021 2022 Cost: Mining equipment 146,881 720,666 Computers and electronic equipment 27,492 69,698 Leasehold improvements 21,412 33,466 Mechanical equipment 7,694 855 Software 5,438 16,437 Construction in progress 665 — Motor vehicles 470 541 Total cost 210,052 841,663 Less: Accumulated depreciation and amortization (24,486) (243,675) Property, equipment and software, net 185,566 597,988 |
Summary of depreciation and amortization expenses | Depreciation and amortization expenses recognized for the years ended December 31, 2020, 2021 and 2022 are summarized as follows: For the Years Ended December 31, 2020 2021 2022 General and administrative expenses 7,680 6,439 11,954 Research and development expenses 3,874 2,826 6,047 Cost of revenues 217 1,715 208,362 Sales and marketing expenses 81 29 56 Total 11,852 11,009 226,419 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Components of lease expenses | (a) The components of lease expenses were as follows: For the Years Ended December 31, 2020 2021 2022 Lease cost: Reduction in the carrying amount of ROU assets 13,432 17,584 15,701 Interest of lease liabilities 1,938 1,613 1,342 Expenses for short-term lease within 12 months 505 443 1,506 Total lease cost 15,875 19,640 18,549 |
Summary of supplemental cash flow information related to leases | For the Years Ended December 31, 2020 2021 2022 Lease cost: Reduction in the carrying amount of ROU assets 13,432 17,584 15,701 Interest of lease liabilities 1,938 1,613 1,342 Expenses for short-term lease within 12 months 505 443 1,506 Total lease cost 15,875 19,640 18,549 |
Summary of supplemental balance sheet information related to leases | For the Years Ended December 31, 2020 2021 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 14,322 20,739 20,507 Right-of-use assets obtained in exchange for lease obligations: Operating leases 5,516 36,672 16,704 Lease liability settled through termination of lease: Operating leases 427 2,590 2,493 (c) Supplemental balance sheet information related to leases was as follows: As of December 31, 2020 2021 2022 Weighted-average remaining lease term Operating leases 1.3 year 2.4 year 1.9 year Weighted-average discount rate Operating lease 6.73% per annum 5.17% per annum 4.58% per annum |
Schedule of maturities of lease liabilities | As of December 31, 2020 2021 2022 Weighted-average remaining lease term Operating leases 1.3 year 2.4 year 1.9 year Weighted-average discount rate Operating lease 6.73% per annum 5.17% per annum 4.58% per annum |
Accrued Liabilities and Other_2
Accrued Liabilities and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities and Other Liabilities | |
Schedule of accrued liabilities and other liabilities | As of December 31, 2021 2022 Accrued liabilities and other current liabilities Salary and welfare payable 118,712 144,473 Provision for reserve for inventory purchase commitments (Note a) — 75,847 Other tax payables 19,128 56,116 Customer refund 10,738 29,432 Warranty reserve (Note b) 18,026 11,953 Refund from depository bank – current 2,013 2,199 VAT payable 128,939 748 VAT received from customers related to contract liabilities 2,427 135 Withholding tax payables due to restricted share units (Note c) 126,198 — Rental deposits. 2,120 — Others 9,093 15,802 Total 437,394 336,705 Other non-current liabilities Refund from depository bank – non-current 5,824 4,163 |
Schedule of product warranty liability | Movement of provision for warranty is as follows: For the year ended December 31, 2021 2022 Accrued warranty—beginning of year — 18,026 Accrual for warranties issued during the year 28,826 12,742 Warranty claims paid (10,800) (7,843) Warranty expired — (10,972) Accrued warranty—end of year 18,026 11,953 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Warrants | |
Summary of Significant Unobservable Inputs Used In Calculation Of Warrant Liability | Fair Value at Fair Value at June 23, 2022 December 31, 2021 (remeasurement date) Risk Free Rate 0.37%-0.81 % 2.32%-2.63 % Volatility 131.47%-127.93 % 126.66%-140.39 % Expected dividend yield 0 % 0 % Expected term 2.3 years-3 years 1.9 years-2.1 years |
Schedule of movement of warrant liability | For the years ended December 31, 2021 2022 Beginning balance — 66,347 Issuance of warrant 258,782 — Change in fair value of warrant liability (190,178) (24,598) Repurchase of warrant liability — (44,282) Foreign currency translation adjustment (2,257) 2,533 Ending balance 66,347 — |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Stock Option Activity | The following table summarizes the share options for the years ended December 31, 2020, 2021 and 2022: Weighted-Average Weighted per Share Average Number of Exercise Remaining Aggregate shares Price Contractual Term Intrinsic Value RMB Years RMB Outstanding as of December 31, 2019 and 2020 — — — — Granted 114,000,000 4.90 — — Outstanding as of December 31, 2021 114,000,000 4.90 9.10 — Outstanding as of December 31, 2022 114,000,000 4.90 8.12 — Expected to vest as of December 31, 2022 114,000,000 4.90 8.12 — Exercisable as of December 31, 2022 42,000,000 4.90 8.12 — |
Summary of fair values of the share options granted | The fair values of the share options granted by the Company to employees for the year ended December 31, 2021 are as follows: For the Year Ended December 31, 2021 Weighted average grant date fair value of option per share 6.63 Aggregate grant date fair value of options 465,553 |
Summary of assumptions used to determine the fair value of stock options | The assumptions used to estimate the fair values of the share options granted were as follows: For the Year Ended December 31, 2021 Risk-free rate of return (1) 1.25% to 1.85 % Dividend yield (2) 0 % Expected volatility (3) 136.91% to 142.01 % Expected term (4) 10 years Exercise multiple (5) 2.80 Fair value of ordinary share US$ 3.78 to US$17.51 |
Restricted Share Units | |
Summary of Restricted Shares Activity | The following table summarizes the RSUs activity for the years ended December 31, 2020, 2021 and 2022: Number of Weighted average shares grant date fair value RMB Outstanding as of December 31, 2019 15,733,334 1.51 Forfeited (2,691,282) 1.51 Vested (4,002,052) 1.51 Outstanding as of December 31, 2020 9,040,000 1.51 Granted 236,768,940 3.74 Forfeited (6,991,000) 3.10 Vested (101,574,270) 2.15 Outstanding as of December 31, 2021 137,243,670 4.81 Granted 62,410,200 1.63 Forfeited (22,844,235) 2.11 Vested (53,018,580) 4.36 Outstanding as of December 31, 2022 123,791,055 3.90 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of Reconciliation Between Effective Income Tax Rate and PRC Statutory Income Tax Rate | A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: For the Years Ended December 31, 2020 2021 2022 PRC statutory income tax rates (25.0) % 25.0 % 25.0 % Permanent book-tax difference (4.5) % 1.4 % (2.4) % Share-based compensation 0.2 % 3.4 % 5.5 % Super deduction of R&D expense (5.7) % (2.6) % (14.0) % Others 1.0 % 0.6 % 6.1 % Different tax rates in other jurisdictions 2.0 % (2.2) % 2.0 % Effect of tax holiday 4.4 % (7.8) % (16.9) % Change in valuation allowance 23.1 % (14.0) % 12.6 % Total 0.0 % 2.4 % 20.3 % Effects of tax holidays entitled by the PRC subsidiaries (9,553) 160,246 103,195 Effects of tax holidays entitled by the PRC subsidiaries on basic income (loss) per Class A and Class B ordinary share (RMB cent per share) (0.41) 6.35 4.03 |
Schedule of Composition of Income Tax Expense | The current and deferred portions of income tax expense included in the consolidated statements of comprehensive income (loss) are as follows: For the Years Ended December 31, 2020 2021 2022 Current income tax expense — 149,152 217,856 Deferred income tax benefits — (99,044) (93,854) Income tax expense — 50,108 124,002 |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to the deferred tax asset balances as of December 31, 2021 and 2022 are as follows: As of December 31, 2021 2022 Deferred tax assets Tax losses carried forward 102,239 71,668 Write-down of inventories 10,771 108,229 Property, equipment and software — 34,905 Share-based compensation — 30,835 Allowance for doubtful accounts 1,314 1,416 Warranty reserve 2,704 967 Subtotal 117,028 248,020 Less: Valuation allowance (17,984) (96,610) Deferred tax assets 99,044 151,410 |
Schedule of Movement of Valuation Allowance | Movement of valuation allowance is as follows: For the Years Ended December 31, 2020 2021 2022 Beginning balance 254,039 304,790 17,984 Additions (decreases) during the year 50,751 (286,806) 78,626 Ending balance 304,790 17,984 96,610 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Schedule of Related Party Transactions | For the years ended December 31, 2020, 2021 and 2022, the related party transactions are as follows: For the Years Ended December 31, 2020 2021 2022 Transaction amount with related parties Disposal of motor vehicles 637 — — 637 — — |
Basic and Diluted Earnings (L_2
Basic and Diluted Earnings (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Basic and Diluted Earnings (Loss) Per Share | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings (loss) per share have been calculated in accordance with ASC 260 on computation of earnings (loss) per share for the years ended December 31, 2020, 2021 and 2022 as follows: For the Years Ended December 31, 2020 2021 2022 Basic earnings (loss) per share calculation Numerator: Net income (loss) (215,094) 2,000,282 486,357 Denominator: Weighted-average ordinary shares outstanding 2,345,703,779 2,521,667,815 2,560,106,403 Basic earnings (loss) per Class A and Class B ordinary share (RMB cent per share) (9.17) 79.32 19.00 For the Years Ended December 31, 2020 2021 2022 Diluted earnings (loss) per share calculation Numerator: Net income (loss) (215,094) 2,000,282 486,357 Denominator: Weighted-average ordinary shares outstanding 2,345,703,779 2,521,667,815 2,560,106,403 Add: weighted-average RSUs — 54,489,432 17,785,666 Weighted-average number of shares used in calculating diluted earnings (loss) per Class A and Class B ordinary share 2,345,703,779 2,576,157,247 2,577,892,069 Diluted earnings (loss) per Class A and Class B ordinary share (RMB cent per share) (9.17) 77.65 18.87 |
Effects of Outstanding RSUs Excluded From Computation of Diluted Loss Per Share Due to Anti-Dilutive Effect | The potentially dilutive securities that have not been included in the calculation of diluted net loss per share as their inclusion would be anti- dilutive are as follows: For the Year Ended December 31, 2020 2021 2022 Weighted-average RSUs 10,710,636 — — Share options — 114,000,000 114,000,000 Warrants — 70,833,345 — |
Condensed Financial Informati_2
Condensed Financial Information of the Parent Company (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed financial information of the parent company | |
Schedule of Condensed Balance Sheets | CONDENSED BALANCE SHEETS As of December 31, 2021 2022 US$ RMB RMB (Note 2(e)) ASSETS Current assets: Cash 30,860 39,573 5,738 Prepayment for repurchase of ordinary shares — 1,251 181 Total current assets 30,860 40,824 5,919 Non-current assets: Investments in and receivables from subsidiaries 3,502,014 4,201,822 609,208 Total assets 3,532,874 4,242,646 615,127 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Refund from depository bank – current 2,013 2,199 319 Other payable — 557 81 Non-current liabilities: Refund from depository bank – non-current 5,824 4,163 604 Warrant liability 66,347 — — Total liabilities 74,184 6,919 1,004 Shareholders’ equity: Ordinary shares 1 1 — Subscriptions receivable from shareholders (1) (1) — Treasury stocks (231,281) (380,538) (55,173) Additional paid-in capital 2,891,134 3,298,531 478,242 Statutory reserves 97,420 102,586 14,874 Accumulated other comprehensive loss (101,925) (4,844) (702) Retained earnings 803,342 1,219,992 176,882 Total shareholders’ equity 3,458,690 4,235,727 614,123 Total liabilities and shareholders’ equity 3,532,874 4,242,646 615,127 |
Schedule of Condensed Statements of Comprehensive Loss | CONDENSED STATEMENTS OF COMPREHENSIVE LOSS For the year ended December 31, 2020 2021 2022 US$ RMB RMB RMB (Note 2(e)) Operating expenses: Research and development expenses (652) — — — Sales and marketing expenses (41) — — — General and administrative expenses (2,277) (6,668) (20,968) (3,040) Loss from operations (2,970) (6,668) (20,968) (3,040) Interest income — 1 7 1 Other income, net 2,425 2,037 2,122 308 Change in fair value of warrant liability — 190,178 24,598 3,566 Share of income (losses) from subsidiaries (214,549) 2,306,195 416,058 60,323 Net income (loss) (215,094) 2,491,743 421,817 61,158 Foreign currency translation adjustment, net of nil tax (24,238) (22,145) 97,081 14,075 Total comprehensive income (loss) (239,332) 2,469,598 518,898 75,233 |
Schedule of Condensed Statements of Cash Flows | CONDENSED STATEMENTS OF CASH FLOWS For the year ended December 31, 2020 2021 2022 US$ RMB RMB RMB (Note 2(e)) Cash flows from operating activities Receipt of refund from depository bank 13,285 — — — Other cash used in operating activities (1) (6,462) (21,439) (3,108) Net cash provided by (used in) operating activities 13,284 (6,462) (21,439) (3,108) Cash flows from investing activities Decrease (increase) in receivables from subsidiaries 28,451 (871,194) 305,529 44,298 Net cash provided by (used in) investing activities 28,451 (871,194) 305,529 44,298 Cash flows from financing activities Repurchase of warrants — — (44,282) (6,420) Payment for repurchase of ordinary shares (23,915) (103,543) (234,307) (33,970) Prepayment under share repurchase agreement (16,146) (573) — — Payment for cost of issuance — (519) — — Proceeds from issuance of ordinary shares and warrants — 1,029,455 — — Net cash provided by (used in) financing activities (40,061) 924,820 (278,589) (40,390) Net increase in cash 1,674 47,164 5,501 799 Effect of exchange rate changes on cash (1,541) (16,451) 3,212 466 Cash, beginning of year 14 147 30,860 4,474 Cash, end of year 147 30,860 39,573 5,739 |
Organization and Principal Ac_3
Organization and Principal Activities - Schedule of Subsidiaries (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Canaan Creative (HK) Holdings Limited | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan Creative (HK) Holdings Limited |
Date of incorporation | Feb. 22, 2018 |
Place of incorporation | Hong Kong Special Administrative Region |
Equity interest held | 100% |
Principal activities | Research and development of ICs |
Canaan Creative Co., Ltd | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan Creative Co., Ltd. |
Date of incorporation | Apr. 01, 2013 |
Place of incorporation | Beijing, China |
Equity interest held | 100% |
Principal activities | Research and development of ICs |
Langfang Creative Technology Co., Ltd | |
Organization and Principal Activities | |
Name of subsidiaries | Langfang Creative Technology Co., Ltd. |
Date of incorporation | May 15, 2014 |
Place of incorporation | Langfang, China |
Equity interest held | 100% |
Principal activities | Assembly of mining equipment and spare parts |
Canaan Convey Co., Ltd | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan Convey Co., Ltd. |
Date of incorporation | Nov. 02, 2017 |
Place of incorporation | Beijing, China |
Equity interest held | 100% |
Principal activities | International distribution of mining equipment and spare parts |
Zhejiang Avalon Technology Co., Ltd | |
Organization and Principal Activities | |
Name of subsidiaries | Zhejiang Avalon Technology Co., Ltd. |
Date of incorporation | Dec. 05, 2017 |
Place of incorporation | Hangzhou, China |
Equity interest held | 100% |
Principal activities | Distribution of mining equipment and spare parts |
Canaan Creative (SH) Co., Ltd. | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan Creative (SH) Co., Ltd. |
Date of incorporation | Jan. 27, 2021 |
Place of incorporation | Shanghai, China |
Equity interest held | 100% |
Principal activities | Research and development of ICs |
Canaan Creative International PTE Limited | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan Creative International PTE. Ltd |
Date of incorporation | Mar. 09, 2021 |
Place of incorporation | Singapore |
Equity interest held | 100% |
Principal activities | Mining business |
Hangzhou Canaan Intelligence Information Technology Co., Ltd. | |
Organization and Principal Activities | |
Name of subsidiaries | Hangzhou Canaan Intelligence Information Technology Co., Ltd. |
Date of incorporation | Apr. 09, 2013 |
Place of incorporation | Hangzhou, China |
Equity interest held | 100% |
Principal activities | Research and development of ICs |
Canaan Bright Sight Co., Ltd. | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan Bright Sight Co., Ltd. |
Date of incorporation | Dec. 24, 2018 |
Place of incorporation | Beijing, China |
Equity interest held | 100% |
Principal activities | International distribution of AI products |
Canaan Creative Global Pte. Ltd | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan Creative Global Pte. Ltd. |
Date of incorporation | Sep. 18, 2021 |
Place of incorporation | Singapore |
Equity interest held | 100% |
Principal activities | International headquarters, research and development ofICs, international distribution ofmining equipments and spare parts |
Canaan U.S. Inc | |
Organization and Principal Activities | |
Name of subsidiaries | Canaan U.S. Inc. |
Date of incorporation | Feb. 01, 2022 |
Place of incorporation | United States |
Equity interest held | 100% |
Principal activities | International distribution ofmining equipments and spareparts, mining business |
Summary of significant accoun_4
Summary of significant accounting policies (Details) ₸ in Thousands, ¥ in Thousands, $ in Thousands, $ in Thousands, $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2022 CNY (¥) segment | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 SGD ($) | Dec. 31, 2022 KZT (₸) | |
Summary of significant accounting policies | ||||||||
Foreign currency convenience translation of amounts from RMB into US$ | 6.8972 | 6.8972 | 6.8972 | 6.8972 | 6.8972 | |||
Investment income | ¥ 0 | ¥ 277 | ¥ 5,844 | |||||
Accounts payable | 116,333 | 143,441 | $ 16,867 | |||||
Non-current financial investment | 20,000 | 20,000 | 2,900 | |||||
Impairment charge to non-current financial investment | 0 | 25 | 2,475 | |||||
Operating lease asset | ¥ 29,600 | 30,920 | 4,292 | |||||
Operating lease assets, estimated economic useful life | 18 months | 18 months | ||||||
Prepayment received from customers | ¥ 4,613 | 1,340,731 | 669 | |||||
Revenue recognized from contract liability | ¥ 1,323,344 | 424,426 | 8,008 | |||||
Payment terms under credit sales | The payment terms under credit sales generally consist of 50% down payment and 50% subsequent payments over a period of 90 to 180 days. | The payment terms under credit sales generally consist of 50% down payment and 50% subsequent payments over a period of 90 to 180 days. | ||||||
Price concessions | ¥ 0 | 0 | 11,455 | |||||
Adjustment to the previously estimated variable considerations | ¥ 0 | 0 | 14,685 | |||||
Standard product warranty | 360 days that the product will operate under normal use | 360 days that the product will operate under normal use | ||||||
Advertising expense | ¥ 6,771 | 4,461 | 3,701 | |||||
Employee social security and welfare benefit expenses | ¥ 47,154 | 27,740 | 14,919 | |||||
Appropriation to statutory general reserve percentage | 10% | 10% | ||||||
Statutory general reserve required maximum percentage of registered capital | 50% | 50% | ||||||
Number of operating segment | segment | 1 | 1 | ||||||
Number of reportable segment | segment | 1 | 1 | ||||||
Warranty costs incurred | ¥ 12,742 | 28,826 | 764 | |||||
Impairment of indefinitely lived intangible assets | ¥ 52,959 | $ 7,678 | ||||||
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment of indefinitely lived intangible assets | Impairment of indefinitely lived intangible assets | ||||||
Bank Time Deposits [Member] | ||||||||
Summary of significant accounting policies | ||||||||
Bank deposits insured by government authorities | ¥ 20,248 | 11,579 | ||||||
CHINA | Deposits With Financial Institution [Member] | ||||||||
Summary of significant accounting policies | ||||||||
Bank deposits insured by government authorities | 500 | |||||||
HONG KONG | Deposits With Financial Institution [Member] | ||||||||
Summary of significant accounting policies | ||||||||
Bank deposits insured by government authorities | $ | $ 500 | |||||||
UNITED STATES | ||||||||
Summary of significant accounting policies | ||||||||
Long lived assets, net | 349,688 | |||||||
UNITED STATES | Deposits With Financial Institution [Member] | ||||||||
Summary of significant accounting policies | ||||||||
Bank deposits insured by government authorities | $ | $ 250 | |||||||
SINGAPORE | Deposits With Financial Institution [Member] | ||||||||
Summary of significant accounting policies | ||||||||
Bank deposits insured by government authorities | $ | $ 75 | |||||||
KAZAKHSTAN | Deposits With Financial Institution [Member] | ||||||||
Summary of significant accounting policies | ||||||||
Bank deposits insured by government authorities | ₸ | ₸ 15,000 | |||||||
Central Asia | ||||||||
Summary of significant accounting policies | ||||||||
Long lived assets, net | 173,505 | |||||||
Assets Subject To Operating Lease [Member] | ||||||||
Summary of significant accounting policies | ||||||||
Operating lease asset | 0 | 0 | ||||||
Government Grants | ||||||||
Summary of significant accounting policies | ||||||||
Government grants received | ¥ 19,226 | 5,699 | 32,499 | |||||
Minimum | ||||||||
Summary of significant accounting policies | ||||||||
Value added tax recoverable percentage | 6% | 6% | ||||||
Maximum | ||||||||
Summary of significant accounting policies | ||||||||
Value added tax recoverable percentage | 12% | 12% | ||||||
Statutory Reserves | ||||||||
Summary of significant accounting policies | ||||||||
Profit appropriations to statutory reserves | ¥ 5,166 | 113 | ¥ 0 | |||||
Cryptocurrency | ||||||||
Summary of significant accounting policies | ||||||||
Accounts payable | ¥ 0 | ¥ 2,500 |
Summary of significant accoun_5
Summary of significant accounting policies - Summary of Assets and liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring - Warrant [Member] ¥ in Thousands | Dec. 31, 2021 CNY (¥) |
Summary of significant accounting policies | |
Warrant liability | ¥ 66,347 |
Level 3 | |
Summary of significant accounting policies | |
Warrant liability | ¥ 66,347 |
Summary of significant accoun_6
Summary of significant accounting policies - Summary of Cash and Cash Equivalents (Details) ¥ in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash and cash equivalents, at carrying value | ¥ 707,261 | ¥ 2,684,342 | |
Deposits with signature bank | |||
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash deposits | $ | $ 1.1 | ||
China | |||
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash and cash equivalents, at carrying value | 11 | 39,746 | |
Overseas | |||
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash and cash equivalents, at carrying value | 16,406 | 317 | |
China, Yuan Renminbi | China | |||
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash and cash equivalents, at carrying value | 77,373 | 1,167,445 | |
China, Yuan Renminbi | Overseas | |||
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash and cash equivalents, at carrying value | 56 | 0 | |
United States of America, Dollars | China | |||
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash and cash equivalents, at carrying value | 430,006 | 1,447,336 | |
United States of America, Dollars | Overseas | |||
Disclosure Of Significant Accounting Policies [Line Items] | |||
Cash and cash equivalents, at carrying value | ¥ 183,409 | ¥ 29,498 |
Summary of significant accoun_7
Summary of significant accounting policies - Schedule of Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Leasehold Improvements | |
Property, Equipment and Software | |
Estimated useful lives | the shorter of their useful lives and the lease terms |
Computers and Electronic Equipment | Minimum | |
Property, Equipment and Software | |
Estimated useful lives | 3 years |
Computers and Electronic Equipment | Maximum | |
Property, Equipment and Software | |
Estimated useful lives | 5 years |
Mechanical Equipment | |
Property, Equipment and Software | |
Estimated useful lives | 5 years |
Mining Equipment | |
Property, Equipment and Software | |
Estimated useful lives | 1 year 6 months |
Motor Vehicles | |
Property, Equipment and Software | |
Estimated useful lives | 5 years |
Software | |
Property, Equipment and Software | |
Estimated useful lives | 3 years |
Summary of significant accoun_8
Summary of significant accounting policies - Summary of Revenue Segregated by Geographic Region (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Summary of significant accounting policies | ||||
Total net revenues | ¥ 4,378,907 | $ 634,882 | ¥ 4,986,706 | ¥ 447,686 |
Mainland China | ||||
Summary of significant accounting policies | ||||
Total net revenues | 122,770 | 1,779,923 | 379,418 | |
Kazakhstan | ||||
Summary of significant accounting policies | ||||
Total net revenues | 386,768 | 711,596 | 47,792 | |
Cyprus | ||||
Summary of significant accounting policies | ||||
Total net revenues | 243,500 | 633,322 | ||
Canada | ||||
Summary of significant accounting policies | ||||
Total net revenues | 122,799 | 402,489 | 162 | |
Malaysia | ||||
Summary of significant accounting policies | ||||
Total net revenues | 802,063 | |||
Indonesia | ||||
Summary of significant accounting policies | ||||
Total net revenues | 1,446,347 | |||
Australia | ||||
Summary of significant accounting policies | ||||
Total net revenues | 405,808 | 361,377 | 114 | |
United States of America | ||||
Summary of significant accounting policies | ||||
Total net revenues | 631,243 | 312,722 | 3,528 | |
Thailand | ||||
Summary of significant accounting policies | ||||
Total net revenues | 18,644 | 289,013 | 31 | |
Sweden | ||||
Summary of significant accounting policies | ||||
Total net revenues | 6,285 | 152,127 | 8 | |
Hong Kong Special Administrative Region | ||||
Summary of significant accounting policies | ||||
Total net revenues | 149,488 | 87,971 | 12,301 | |
Laos | ||||
Summary of significant accounting policies | ||||
Total net revenues | 32,660 | |||
Other Foreign Countries | ||||
Summary of significant accounting policies | ||||
Total net revenues | ¥ 10,532 | ¥ 256,166 | ¥ 4,332 |
Risks and Concentration - Summa
Risks and Concentration - Summary of Accounts Receivable Concentration of Credit risk and Customers Contribution of Total Revenue (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Concentration of Credit Risk | Accounts Receivable | Customer A | ||
Risks and Concentration | ||
Concentration risk, percentage | 52% | |
Customer Concentration Risk | Total Revenue | Customer B | ||
Risks and Concentration | ||
Concentration risk, percentage | 33% | |
Customer Concentration Risk | Total Revenue | Customer C | ||
Risks and Concentration | ||
Concentration risk, percentage | 22% | 18% |
Customer Concentration Risk | Total Revenue | Customer D | ||
Risks and Concentration | ||
Concentration risk, percentage | 16% |
Risks and Concentration (Detail
Risks and Concentration (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Risks and Concentration | ||
Accounts receivable current | ¥ 367 | |
Credit Concentration Risk [Member] | ||
Risks and Concentration | ||
Accounts receivable current | ¥ 0 | ¥ 367 |
Restricted cash (Details)
Restricted cash (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) |
Restricted cash | ||||
Restricted cash | ¥ 0 | $ 0 | ¥ 47,362 | ¥ 4,494 |
Restricted cash | ¥ 0 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Inventories | |||
Raw materials | ¥ 789,134 | ¥ 429,208 | |
Finished goods | 423,420 | 304,801 | |
Work in process | 261,436 | 78,354 | |
Total | ¥ 1,473,990 | $ 213,708 | ¥ 812,363 |
Inventories (Details)
Inventories (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Inventories | ||||
Inventory write-down | ¥ 467,271 | $ 67,748 | ¥ 50,714 | ¥ 44,916 |
Reclassification of inventory to operating lease assets at the beginning of lease period | 0 | 15,169 | 135,276 | |
Reclassification of operating lease assets to inventory at the end of lease period | 0 | 12,051 | 115,887 | |
Depreciation expense of operating lease assets | 3,118 | 19,389 | ||
Cost of Revenues | ||||
Inventories | ||||
Depreciation expense of operating lease assets | ¥ 0 | ¥ 3,118 | ¥ 19,389 |
Prepayments and Other Assets -
Prepayments and Other Assets - Summary of Prepayments and Other Assets (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
Prepayments and Other Assets | |||
Prepayments to vendors | ¥ 1,105,194 | ¥ 1,427,820 | |
VAT recoverable | 396,701 | 260,571 | |
Prepayment for repurchase of ordinary shares | 24 | 15,901 | |
VAT refund for export sales | 107,549 | 14,041 | |
Deferred charges | 42,943 | ||
Deposits | 23,183 | 1,494 | |
Others | 13,485 | 9,200 | |
Prepayments and other current assets | 1,689,079 | $ 244,893 | 1,729,027 |
Other non-current assets | |||
Rental and other deposits | 17,046 | 2,956 | |
Prepayments for purchase of software | 391 | ||
Other non-current assets | ¥ 17,437 | $ 2,528 | ¥ 2,956 |
Prepayments and Other Assets _2
Prepayments and Other Assets - Summary of Prepayments and Other Assets (Parenthetical) (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Prepayments and Other Assets | ||||
Write-downs of prepayments | ¥ (86,216) | $ (12,500) | ¥ 0 | |
Allowance for credit loss, other receivables | 90 | 911 | ¥ 4,849 | |
Foundry Service [Member] | ||||
Prepayments and Other Assets | ||||
Purchase obligation to third parties | ¥ 465,709 | ¥ 917,346 |
Cryptocurrency - Schedule of Cr
Cryptocurrency - Schedule of Cryptocurrency (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Crypto Currency [Abstract] | ||
Gross carrying amount | ¥ 104,997 | ¥ 21,371 |
Impairment on cryptocurrency | (17,724) | (1,061) |
Net | ¥ 87,273 | ¥ 20,310 |
Cryptocurrency - Additional inf
Cryptocurrency - Additional information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
Cryptocurrency | |||
Beginning balance | ¥ 20,310 | ||
Revenue recognized on acceptance of cryptocurrency | 238,596 | $ 34,593 | ¥ 21,688 |
Cost recognized on payment of cryptocurrency | 56,877 | 8,246 | |
Proceeds from disposal of cryptocurrency | (64,806) | (9,396) | |
Realised gain on sale of cryptocurrency | (1,167) | (169) | |
Impairment of indefinitely lived intangible assets | 52,959 | $ 7,678 | |
Ending balance | 87,273 | 20,310 | |
Cryptocurrency | |||
Cryptocurrency | |||
Beginning balance | 20,310 | ||
Revenue recognized on acceptance of cryptocurrency | 238,596 | 21,688 | |
Cost recognized on payment of cryptocurrency | (56,877) | ||
Proceeds from disposal of cryptocurrency | (64,806) | ||
Realised gain on sale of cryptocurrency | (1,167) | ||
Impairment of indefinitely lived intangible assets | (52,959) | (1,061) | |
Foreign currency translation adjustment | 4,176 | (317) | |
Ending balance | ¥ 87,273 | ¥ 20,310 |
Property, Equipment and Softw_3
Property, Equipment and Software - Schedule of Property, Equipment and Software (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Property, Equipment and Software | |||
Total cost | ¥ 841,663 | ¥ 210,052 | |
Less: Accumulated depreciation and amortization | (243,675) | (24,486) | |
Property, equipment and software, net | 597,988 | $ 86,700 | 185,566 |
Mining Equipment | |||
Property, Equipment and Software | |||
Total cost | 720,666 | 146,881 | |
Computers and Electronic Equipment | |||
Property, Equipment and Software | |||
Total cost | 69,698 | 27,492 | |
Leasehold Improvements | |||
Property, Equipment and Software | |||
Total cost | 33,466 | 21,412 | |
Mechanical Equipment | |||
Property, Equipment and Software | |||
Total cost | 855 | 7,694 | |
Software | |||
Property, Equipment and Software | |||
Total cost | 16,437 | 5,438 | |
Construction in Progress | |||
Property, Equipment and Software | |||
Total cost | 665 | ||
Motor Vehicles | |||
Property, Equipment and Software | |||
Total cost | ¥ 541 | ¥ 470 |
Property, Equipment and Softw_4
Property, Equipment and Software - Schedule of Depreciation and Amortization Expenses (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Property, Equipment and Software | ||||
Depreciation and amortization of property, equipment and software | ¥ 226,419 | $ 32,828 | ¥ 11,009 | ¥ 11,852 |
General and administrative expenses | ||||
Property, Equipment and Software | ||||
Depreciation and amortization of property, equipment and software | 11,954 | 6,439 | 7,680 | |
Research and development expenses | ||||
Property, Equipment and Software | ||||
Depreciation and amortization of property, equipment and software | 6,047 | 2,826 | 3,874 | |
Cost of Revenues | ||||
Property, Equipment and Software | ||||
Depreciation and amortization of property, equipment and software | 208,362 | 1,715 | 217 | |
Sales and marketing expenses | ||||
Property, Equipment and Software | ||||
Depreciation and amortization of property, equipment and software | ¥ 56 | ¥ 29 | ¥ 81 |
Leases - Components of Lease Ex
Leases - Components of Lease Expenses (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Lease cost: | ||||
Reduction in the carrying amount of ROU assets | ¥ 15,701 | ¥ 17,584 | ¥ 13,432 | |
Interest of lease liabilities | 1,342 | $ 195 | 1,613 | 1,938 |
Expenses for short-term lease within 12 months | 1,506 | 443 | 505 | |
Total lease cost | ¥ 18,549 | ¥ 19,640 | ¥ 15,875 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Leases (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | ¥ 20,507 | ¥ 20,739 | ¥ 14,322 |
Right-of-use assets obtained in exchange for lease obligations: | |||
Operating lease liabilities | 16,704 | 36,672 | 5,516 |
Lease liability settled through termination of lease: | |||
Operating leases | ¥ 2,493 | ¥ 2,590 | ¥ 427 |
Leases - Summary of Supplemen_2
Leases - Summary of Supplemental Balance Sheet Information Related to Leases (Details) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Leases | |||
Weighted-average remaining lease term Operating leases | 1 year 10 months 24 days | 2 years 4 months 24 days | 1 year 3 months 18 days |
Weighted-average discount rate Operating lease | 4.58% | 5.17% | 6.73% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Leases | |||
2022 | ¥ 16,934 | ||
2023 | 8,762 | ||
2024 and thereafter | 1,486 | ||
Total undiscounted lease payments | 27,182 | ||
Less: imputed interest | (1,025) | ||
Operating lease liabilities | 26,157 | ||
Amounts due within 12 months | 16,118 | $ 2,337 | ¥ 14,819 |
Non-current lease liability | ¥ 10,039 | $ 1,456 | ¥ 16,292 |
Accrued Liabilities and Other_3
Accrued Liabilities and Other Liabilities - Schedule of Accrued Liabilities and Other Liabilities (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Accrued Liabilities and Other Liabilities | |||
Salary and welfare payable | ¥ 144,473 | ¥ 118,712 | |
Provision for reserve for inventory purchase commitments | 75,847 | 0 | |
Other tax payables | 56,116 | 19,128 | |
Customer refund | 29,432 | 10,738 | |
Warranty reserve (Note b) | 11,953 | 18,026 | |
Refund from depository bank - current | 2,199 | 2,013 | |
VAT payable | 748 | 128,939 | |
VAT received from customers related to contract liabilities | 135 | 2,427 | |
Withholding tax payables due to restricted share units (Note c) | 126,198 | ||
Rental deposits | 2,120 | ||
Others | 15,802 | 9,093 | |
Total | 336,705 | $ 48,814 | 437,394 |
Other non-current liabilities | |||
Refund from depository bank - non-current | ¥ 4,163 | ¥ 5,824 |
Accrued Liabilities and Other_4
Accrued Liabilities and Other Liabilities - Schedule of Accrued Liabilities and Other Liabilities (Parenthetical) (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
Accrued Liabilities and Other Liabilities | |||
Provision for reserve for inventory purchase commitments | ¥ 75,847 | $ 10,997 | |
Withholding tax payable restricted share units current. | ¥ 126,198 | ||
Foundry Service | |||
Accrued Liabilities and Other Liabilities | |||
Provision for reserve for inventory purchase commitments | 75,847 | 0 | |
Purchase obligation to third parties | ¥ 465,709 | ¥ 917,346 |
Accrued liabilities and other_5
Accrued liabilities and other liabilities - Schedule of Product Warranty Liability (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accrued Liabilities and Other Liabilities | ||
Accrued warranty-beginning of year | ¥ 18,026 | ¥ 0 |
Accrual for warranties issued during the year | 12,742 | 28,826 |
Warranty claims paid | (7,843) | (10,800) |
Warranty expired | (10,972) | |
Accrued warranty-end of year | ¥ 11,953 | ¥ 18,026 |
Warrants - Summary of Significa
Warrants - Summary of Significant Unobservable Inputs Used In Calculation Of Warrant Liability (Details) - Warrants To Purchase Common Stock | Jun. 23, 2022 Y | Dec. 31, 2021 Y |
Risk Free Rate | Maximum | ||
Warrants | ||
Fair value of the warrant liability | 2.63 | 0.81 |
Risk Free Rate | Minimum | ||
Warrants | ||
Fair value of the warrant liability | 2.32 | 0.37 |
Volatility | Maximum | ||
Warrants | ||
Fair value of the warrant liability | 140.39 | 127.93 |
Volatility | Minimum | ||
Warrants | ||
Fair value of the warrant liability | 126.66 | 131.47 |
Expected dividend yield | ||
Warrants | ||
Fair value of the warrant liability | 0 | 0 |
Expected term | Maximum | ||
Warrants | ||
Fair value of the warrant liability | 2.1 | 3 |
Expected term | Minimum | ||
Warrants | ||
Fair value of the warrant liability | 1.9 | 2.3 |
Warrants - Additional Informati
Warrants - Additional Information (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||
Jun. 23, 2022 CNY (¥) shares | Jun. 23, 2022 USD ($) $ / shares shares | May 03, 2021 CNY (¥) shares | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | May 01, 2021 $ / shares shares | |
Warrants | ||||||||
Payments for repurchase of warrants | ¥ 44,282 | $ 6,420 | ||||||
Change in fair value of warrant liability | ¥ (258,782) | ¥ 24,598 | $ 3,566 | ¥ 190,178 | ¥ 0 | |||
ADR [Member] | ||||||||
Warrants | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 674,603 | |||||||
ADR [Member] | Warrants | Separate warrant repurchase agreements | ||||||||
Warrants | ||||||||
Price paid per share | $ / shares | $ 1.4 | |||||||
Shares outstanding | 4,722,223 | 4,722,223 | ||||||
Class A ordinary shares | ||||||||
Warrants | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 10,119,045 | |||||||
Class A ordinary shares | Warrants | ||||||||
Warrants | ||||||||
Class of warrant or right, exercise price of warrants or rights | $ / shares | $ 1.05 | |||||||
Class A ordinary shares | Warrants | Separate warrant repurchase agreements | ||||||||
Warrants | ||||||||
Shares outstanding | 70,833,345 | 70,833,345 | ||||||
Tranche One | ADR [Member] | Warrants To Purchase Common Stock | ||||||||
Warrants | ||||||||
Class of warrant or right, exercise price of warrants or rights | $ / shares | 16.38 | |||||||
Tranche One | Class A ordinary shares | Warrants To Purchase Common Stock | ||||||||
Warrants | ||||||||
Class of warrant or right, exercise price of warrants or rights | $ / shares | 1.09 | |||||||
Tranche Two | ADR [Member] | Warrants | ||||||||
Warrants | ||||||||
Class of warrant or right, exercise price of warrants or rights | $ / shares | $ 15.75 | |||||||
Tranche Two | ADR [Member] | Warrants To Purchase Common Stock | ||||||||
Warrants | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 674,603 | |||||||
Tranche Two | Class A ordinary shares | Warrants To Purchase Common Stock | ||||||||
Warrants | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 10,119,045 | |||||||
Investor Warrants | Tranche One | Warrants | Separate warrant repurchase agreements | ||||||||
Warrants | ||||||||
Payments for repurchase of warrants | $ | $ 6,600 | |||||||
Investor Warrants | Tranche One | ADR [Member] | Warrants To Purchase Common Stock | ||||||||
Warrants | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 4,047,620 | |||||||
Payments for repurchase of warrants | ¥ | ¥ 44,300 | |||||||
Investor Warrants | Tranche One | Class A ordinary shares | Warrants To Purchase Common Stock | ||||||||
Warrants | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 60,714,300 |
Warrants - Movement of warrant
Warrants - Movement of warrant liability (Details) - Warrant liability - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Movement of warrant liability | ||
Beginning balance | ¥ 66,347 | |
Issuance of warrant | ¥ 258,782 | |
Change in fair value of warrant liability | (24,598) | (190,178) |
Repurchase of warrant liability | (44,282) | |
Foreign currency translation adjustment | ¥ 2,533 | (2,257) |
Ending balance | ¥ 66,347 |
Ordinary shares - Additional In
Ordinary shares - Additional Information (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||
May 03, 2021 CNY (¥) shares | Nov. 25, 2020 shares | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2021 $ / shares shares | Jan. 01, 2020 shares | |
Ordinary shares | ||||||||
Ordinary shares, shares authorized | 1,000,000,000,000 | 1,000,000,000,000 | 1,000,000,000,000 | |||||
Ordinary shares, shares issued | 2,804,138,492 | 2,804,138,492 | 2,372,222,222 | |||||
Ordinary shares, par value | $ / shares | $ 0.00 | $ 0.00 | ||||||
Common stock shares outstanding | 2,496,001,757 | 2,577,386,552 | 2,350,123,270 | |||||
Change in fair value of warrant liability | ¥ (258,782) | ¥ 24,598 | $ 3,566 | ¥ 190,178 | ¥ 0 | |||
Proceeds from Issuance of Common Stock | ¥ | ¥ 770,673 | |||||||
ADR | ||||||||
Ordinary shares | ||||||||
Issuance of ordinary shares (in shares) | 4,047,620 | |||||||
Class of warrant or right, number of securities called by warrants or rights | 674,603 | |||||||
Class A ordinary shares | ||||||||
Ordinary shares | ||||||||
Shares issued upon conversion | 45,000,000 | |||||||
Issuance of ordinary shares | ¥ | ¥ 1,029,455 | |||||||
Common stock vote per share | one vote | one vote | ||||||
Common stock shares outstanding | 2,184,377,313 | 1,993,498,826 | ||||||
Class of warrant or right, number of securities called by warrants or rights | 10,119,045 | |||||||
Class B Ordinary Shares | ||||||||
Ordinary shares | ||||||||
Shares converted | 45,000,000 | |||||||
Common stock vote per share | fifteen votes | fifteen votes | ||||||
Common stock shares outstanding | 311,624,444 | |||||||
Class B Ordinary Shares | Chairman and CEO | ||||||||
Ordinary shares | ||||||||
Common stock shares outstanding | 356,624,444 | |||||||
Institutional Investors | ADR | ||||||||
Ordinary shares | ||||||||
Issuance of ordinary shares (in shares) | 13,492,065 | |||||||
Institutional Investors | Class A ordinary shares | ||||||||
Ordinary shares | ||||||||
Issuance of ordinary shares (in shares) | 202,380,975 | |||||||
Class of warrant or right, number of securities called by warrants or rights | 60,714,300 |
Treasury Stocks - Additional In
Treasury Stocks - Additional Information (Details) ¥ in Thousands, $ in Millions | 1 Months Ended | 12 Months Ended | |||||||||
May 03, 2021 CNY (¥) shares | Sep. 30, 2021 shares | May 31, 2021 shares | Jan. 31, 2020 shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2020 CNY (¥) shares | Mar. 16, 2022 USD ($) | Sep. 09, 2020 USD ($) | Jan. 01, 2020 shares | Apr. 30, 2018 shares | |
Equity Class Of Treasury Stock | |||||||||||
Common stock shares outstanding | 2,496,001,757 | 2,577,386,552 | 2,350,123,270 | ||||||||
Treasury stock, shares | 308,136,735 | 226,751,940 | |||||||||
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | ¥ | ¥ 31,097 | ¥ 150,705 | |||||||||
2018 Equity Incentive Plan | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Ordinary shares Held in trust | 51,624,000 | ||||||||||
Restricted Share Units | 2018 Equity Incentive Plan | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Shares transferred from treasury stock to ordinary shares | 5,757,945 | 4,002,052 | |||||||||
Restricted Share Units | Amended 2018 Plan | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Treasury stock, shares | 9,867,045 | 83,097,225 | |||||||||
Number of shares transferred from treasury stock to ordinary shares upon vesting | 53,018,580 | ||||||||||
Restricted Ordinary Shares | 2018 Equity Incentive Plan | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Treasury stock, shares | 12,338,955 | 12,338,955 | |||||||||
Restricted Ordinary Shares | Amended 2018 Plan | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Treasury stock, shares | 95,816,325 | ||||||||||
Restricted Ordinary Shares | Initial Public Offering | 2018 Equity Incentive Plan | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Restricted share units vested transferred from treasury stocks to ordinary shares | 22,098,952 | ||||||||||
Shares Repurchase | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Share repurchased | 154,614,975 | 34,683,225 | 25,799,190 | ||||||||
Proceeds from repurchases | ¥ | ¥ 253,079 | ¥ 103,543 | ¥ 23,915 | ||||||||
Shares Repurchase | Restricted Ordinary Shares | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Treasury stock, shares | 215,097,390 | ||||||||||
Share Repurchase Program | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Stock repurchase program authorized amount | $ | $ 100 | $ 10 | |||||||||
ADR | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Stock Issued During Period, Shares, New Issues | 4,047,620 | ||||||||||
ADR | Shares Repurchase | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Common stock shares outstanding | 10,307,665 | 2,312,215 | 1,719,946 | ||||||||
Class A ordinary shares | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Common stock shares outstanding | 2,184,377,313 | 1,993,498,826 | |||||||||
Stock Issued During Period, Value, New Issues | ¥ | ¥ 1,029,455 | ||||||||||
Class A ordinary shares | Amended 2018 Plan | |||||||||||
Equity Class Of Treasury Stock | |||||||||||
Ordinary shares contributed for future share awards | 63,774,885 | 63,774,885 | |||||||||
Share-based payment arrangement, shares withheld for tax withholding obligation | 17,102,175 | 33,255,495 | |||||||||
Shares Issued in Period | 94,927,065 | 94,927,065 | |||||||||
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | ¥ | ¥ 31,097 | ¥ 150,705 | |||||||||
Stock Issued During Period, Shares, New Issues | 37,313,775 | 13,043,895 | |||||||||
Stock Issued During Period, Value, New Issues | ¥ | ¥ 134,919 | ¥ 45,728 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - CNY (¥) ¥ in Thousands | 1 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | May 31, 2021 | Apr. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based compensation | |||||
Number of options granted | 0 | 114,000,000 | |||
2018 Equity Incentive Plan | Common Class A | |||||
Share-based compensation | |||||
Share-Based Compensation Arrangement By Share-Based Payment Award Cumulative Annual Increase Percentage | 15% | ||||
Share-based compensation arrangement by share-based payment award, percentage of outstanding stock maximum | 3% | ||||
Number of additional shares authorized for issuance under share-based payment arrangement | 63,774,885 | 94,927,065 | |||
Amended 2018 Plan | Common Class A | |||||
Share-based compensation | |||||
Issuance of ordinary shares (in shares) | 37,313,775 | 13,043,895 | |||
Share Options | |||||
Share-based compensation | |||||
weighted-average period for recognization of unrecognized compensation expense related to share options | 23 months 9 days | ||||
Unrecognized compensation expense related to share options | ¥ 145,063 | ||||
Restricted Share Units | |||||
Share-based compensation | |||||
Restricted share units granted | 62,410,200 | 236,768,940 | |||
Unrecognized compensation expense | ¥ 346,568 | ||||
weighted-average period for recognization of unrecognized compensation expense related to share options | 31 months 19 days | ||||
Restricted Share Units | Amended 2018 Plan | |||||
Share-based compensation | |||||
Restricted share units granted | 62,410,200 | ||||
Requisite service period | 5 years | ||||
Restricted Ordinary Shares | Amended 2018 Plan | |||||
Share-based compensation | |||||
Restricted share units granted | 62,410,200 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Restricted Shares Activity (Details) - Restricted Share Units - ¥ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based compensation | |||
Number of shares, Outstanding | 137,243,670 | 9,040,000 | 15,733,334 |
Number of shares, Granted | 62,410,200 | 236,768,940 | |
Number of shares, Forfeited | (22,844,235) | (6,991,000) | (2,691,282) |
Number of shares, Vested | (53,018,580) | (101,574,270) | (4,002,052) |
Number of shares, Outstanding | 123,791,055 | 137,243,670 | 9,040,000 |
Weighted average grant date fair value, Outstanding | ¥ 4.81 | ¥ 1.51 | ¥ 1.51 |
Weighted average grant date fair value, Granted | 1.63 | 3.74 | |
Weighted average grant date fair value, Forfeited | 2.11 | 3.10 | 1.51 |
Weighted average grant date fair value, Vested | 4.36 | 2.15 | 1.51 |
Weighted average grant date fair value, Outstanding | ¥ 3.90 | ¥ 4.81 | ¥ 1.51 |
Share-based compensation - Sche
Share-based compensation - Schedule of Stock Options Activity (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share Options | ||
Number of shares , Beginning Balance | 114,000,000 | 0 |
Number of options granted | 0 | 114,000,000 |
Number of shares , Ending Balance | 114,000,000 | 114,000,000 |
Number of shares , Expected to vest | 114,000,000 | |
Number of shares , Exercisable | 42,000,000 | |
Share Based Compensation Arrangement By Share Based Payment Award Options Weighted Average Exercise Price [Abstract] | ||
Weighted-Average per Share Exercise Price , Beginning Balance | ¥ 4.90 | ¥ 0 |
Weighted-Average per Share Exercise Price , Granted | 4.90 | |
Weighted-Average per Share Exercise Price , Ending Balance | 4.90 | ¥ 4.90 |
Weighted-Average per Share Exercise Price, Expected to vest | 4.90 | |
Weighted-Average per Share Exercise Price , Exercisable | ¥ 4.90 | |
Share-Based Compensation Arrangement by Share-Based Payment Award Options Weighted Average Remaining Contractual Terms [Abstract] | ||
Weighted Average Remaining Contractual Term, Expected to vest | 8 years 1 month 13 days | 9 years 1 month 6 days |
Share-Based Compensation Arrangements By Share-Based Payment Award Options Aggregate Intrinsic Value [Abstract] | ||
Aggregate Intrinsic Value, Beginning balance | ¥ 0 | ¥ 0 |
Aggregate Intrinsic Value, Granted | 0 | |
Aggregate Intrinsic Value, Ending balance | 0 | ¥ 0 |
Aggregate Intrinsic Value, Expected to vest | 0 | |
Aggregate Intrinsic Value, Exercisable | ¥ 0 |
Share-based compensation - Su_2
Share-based compensation - Summary of Fair Values of the Share Options Granted (Details) | 12 Months Ended |
Dec. 31, 2021 ¥ / shares | |
Share-Based Compensation | |
Weighted average grant date fair value of option per share | ¥ 6.63 |
Aggregate grant date fair value of options | ¥ 465,553 |
Share-based compensation - Su_3
Share-based compensation - Summary of Assumptions Used to determine the Fair Value of Stock Options (Details) | 12 Months Ended |
Dec. 31, 2021 $ / shares | |
Share-based compensation | |
Dividend yield | 0% |
Expected term | 10 years |
Exercise multiple | 2.80 |
Maximum | |
Share-based compensation | |
Risk-free rate of return | 1.85% |
Expected volatility | 142.01% |
Fair value of ordinary share | $ 17.51 |
Minimum | |
Share-based compensation | |
Risk-free rate of return | 1.25% |
Expected volatility | 136.91% |
Fair value of ordinary share | $ 3.78 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||||
Mar. 16, 2007 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2017 | Dec. 31, 2019 | |
Income Taxes | ||||||
Statutory income tax rate | 25% | |||||
Preferential tax rate | 15% | |||||
Income tax holiday, description | Canaan is qualified as an integrated circuit enterprise and enjoying a 5-year tax holiday (two year full exemption followed by three year half reduction) beginning from 2016 after utilizing all prior years tax losses. Therefore, Hangzhou Canaan is eligible to enjoy a preferential tax rate of 0% from 2016 to 2017 and 12.5% from 2018 to 2020. | |||||
Income tax holiday period | 5 years | |||||
Income tax full exemption holiday period | 2 years | |||||
Income tax half reduction holiday period | 3 years | |||||
Withholding income tax rate on dividends | 10% | |||||
Undistributed earnings available for distribution | ¥ 1,628,165 | |||||
Withholding income tax | 0 | ¥ 0 | ||||
Tax loss carry forwards | ¥ 373,683 | 437,187 | ||||
Tax loss carry forwards period | 10 years | 5 years | ||||
Operating loss carry forwards expiration start year | 2030 | |||||
Operating loss carry forwards expiration end year | 2033 | |||||
Deferred tax assets valuation allowance | ¥ 96,610 | ¥ 17,984 | ¥ 304,790 | ¥ 254,039 | ||
Other PRC Subsidiaries | ||||||
Income Taxes | ||||||
Statutory income tax rate | 25% | |||||
PRC mainland and Hong Kong subsidiaries | ||||||
Income Taxes | ||||||
Operating Loss Carryforwards, Limitations on Use | tax losses of RMB1,581, RMB17,173, nil and RMB3,804 will expire, if unused, by 2030, 2031, 2032 and 2033, respectively. | |||||
Tax Year 2016 to 2017 | ||||||
Income Taxes | ||||||
Preferential tax rate | 0% | |||||
Tax Year 2018 to 2020 | ||||||
Income Taxes | ||||||
Preferential tax rate | 12.50% | |||||
Tax Year 2019 to 2021 | ||||||
Income Taxes | ||||||
Preferential tax rate | 15% | |||||
2030 | PRC mainland and Hong Kong subsidiaries | ||||||
Income Taxes | ||||||
Operating Loss Carryforwards, Subject to Expiration | ¥ 1,581 | |||||
Operating Loss Carryforwards, Expiration year | 2030 | |||||
2031 | PRC mainland and Hong Kong subsidiaries | ||||||
Income Taxes | ||||||
Operating Loss Carryforwards, Subject to Expiration | ¥ 17,173 | |||||
Operating Loss Carryforwards, Expiration year | 2031 | |||||
2032 | PRC mainland and Hong Kong subsidiaries | ||||||
Income Taxes | ||||||
Operating Loss Carryforwards, Subject to Expiration | ¥ 0 | |||||
2033 | PRC mainland and Hong Kong subsidiaries | ||||||
Income Taxes | ||||||
Operating Loss Carryforwards, Subject to Expiration | ¥ 3,804 | |||||
Operating Loss Carryforwards, Expiration year | 2033 | |||||
Hong Kong | ||||||
Income Taxes | ||||||
Statutory income tax rate | 16.50% | 16.50% | 16.50% | |||
Hong Kong | FIE | ||||||
Income Taxes | ||||||
Ownership percentage | 25% | |||||
Hong Kong | Maximum | ||||||
Income Taxes | ||||||
Withholding income tax rate | 5% | |||||
China | Enterprise Income Tax | ||||||
Income Taxes | ||||||
Statutory income tax rate | 25% | |||||
United States | ||||||
Income Taxes | ||||||
Statutory income tax rate | 21% | 21% | 21% | |||
Singapore | ||||||
Income Taxes | ||||||
Statutory income tax rate | 17% | 17% | 17% |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation Between Effective Income Tax Rate and PRC Statutory Income Tax Rate (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
PRC statutory income tax rates | 25% | 25% | (25.00%) |
Permanent book - tax difference | (2.40%) | 1.40% | (4.50%) |
Share-based compensation | 5.50% | 3.40% | 0.20% |
Super deduction of R&D expense | (14.00%) | (2.60%) | (5.70%) |
Others | 6.10% | 0.60% | 1% |
Different tax rates in other jurisdictions | 2% | (2.20%) | 2% |
Effect of tax holiday | (16.90%) | (7.80%) | 4.40% |
Change in valuation allowance | 12.60% | (14.00%) | 23.10% |
Total | 20.30% | 2.40% | 0% |
Effects of tax holidays entitled by the PRC subsidiaries | ¥ 103,195 | ¥ 160,246 | ¥ (9,553) |
Class A and ClassB | |||
Income Taxes | |||
Effects of tax holidays entitled by the PRC subsidiaries on basic income (loss) earnings per Class A and Class B ordinary share (RMB cent per share) | ¥ 4.03 | ¥ 6.35 | ¥ (0.41) |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Composition of Income Tax Expense (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Income Taxes | ||||
Current income tax expense | ¥ 217,856 | ¥ 149,152 | ¥ 0 | |
Deferred income tax benefits | (93,854) | (99,044) | 0 | |
Income tax expense | ¥ 124,002 | $ 17,979 | ¥ 50,108 | ¥ 0 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets | ||||
Tax losses carried forward | ¥ 71,668 | ¥ 102,239 | ||
Write-down of inventories | 108,229 | 10,771 | ||
Property, equipment and software | 34,905 | 0 | ||
Share-based compensation | 30,835 | 0 | ||
Allowance for doubtful accounts | 1,416 | 1,314 | ||
Warranty reserve | 967 | 2,704 | ||
Subtotal | 248,020 | 117,028 | ||
Less: Valuation allowance | (96,610) | (17,984) | ¥ (304,790) | ¥ (254,039) |
Deferred tax assets | ¥ 151,410 | ¥ 99,044 |
Income Taxes - Schedule of Move
Income Taxes - Schedule of Movement of Valuation Allowance (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
Beginning balance | ¥ 17,984 | ¥ 304,790 | ¥ 254,039 |
Additions (decreases) during the year | 78,626 | (286,806) | 50,751 |
Ending balance | ¥ 96,610 | ¥ 17,984 | ¥ 304,790 |
Related Party Transaction - Add
Related Party Transaction - Additional Information (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transactions | ||
Amounts due from related parties | ¥ 0 | ¥ 0 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Related Party Transactions (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Transaction amount with related parties | |||
Transaction amount with related parties | ¥ 0 | ¥ 0 | ¥ 637 |
Disposal of motor vehicles | |||
Transaction amount with related parties | |||
Transaction amount with related parties | ¥ 0 | ¥ 0 | ¥ 637 |
Basic and Diluted Earnings (L_3
Basic and Diluted Earnings (Loss) Per Share - Computation of Basic and Diluted Earnings Per Share (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Numerator : | ||||
Net income (loss) | ¥ 486,357 | $ 70,514 | ¥ 2,000,282 | ¥ (215,094) |
Denominator: | ||||
Weighted-average ordinary shares outstanding | 2,560,106,403 | 2,560,106,403 | 2,521,667,815 | 2,345,703,779 |
Basic earnings (loss) per Class A and Class B ordinary share (RMB cent per share) | (per share) | ¥ 19 | $ 2.75 | ¥ 79.32 | ¥ (9.17) |
Diluted earnings (loss) per share calculation Numerator : | ||||
Net income (loss) | ¥ 486,357 | $ 70,514 | ¥ 2,000,282 | ¥ (215,094) |
Diluted net earnings/(loss) per share calculation: Denominator | ||||
Weighted-average ordinary shares outstanding | 2,560,106,403 | 2,560,106,403 | 2,521,667,815 | 2,345,703,779 |
Add: weighted-average RSUs | 17,785,666 | 17,785,666 | 54,489,432 | |
Weighted-average number of shares used in calculating diluted earnings (loss) per Class A and Class B ordinary share | 2,577,892,069 | 2,577,892,069 | 2,576,157,247 | 2,345,703,779 |
Diluted earnings (loss) per Class A and Class B ordinary share (RMB cent per share) | (per share) | ¥ 18.87 | $ 2.74 | ¥ 77.65 | ¥ (9.17) |
Class A and Class B ordinary share | ||||
Denominator: | ||||
Basic earnings (loss) per Class A and Class B ordinary share (RMB cent per share) | ¥ / shares | ¥ 19 | ¥ 79.32 | ¥ (9.17) | |
Diluted net earnings/(loss) per share calculation: Denominator | ||||
Weighted-average number of shares used in calculating diluted earnings (loss) per Class A and Class B ordinary share | 2,577,892,069 | 2,577,892,069 | 2,576,157,247 | 2,345,703,779 |
Diluted earnings (loss) per Class A and Class B ordinary share (RMB cent per share) | ¥ / shares | ¥ 18.87 | ¥ 77.65 | ¥ (9.17) |
Basic and Diluted Earnings (L_4
Basic and Diluted Earnings (Loss) Per Share - Effects of Outstanding RSUs Excluded From Computation of Diluted Loss Per Share Due to Anti-Dilutive Effect (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Weighted-average RSUs | |||
Basic and diluted earnings (loss) per share | |||
Weighted-average of shares | 0 | 0 | 10,710,636 |
Share options | |||
Basic and diluted earnings (loss) per share | |||
Weighted-average of shares | 114,000,000 | 114,000,000 | 0 |
Warrants | |||
Basic and diluted earnings (loss) per share | |||
Weighted-average of shares | 0 | 70,833,345 | 0 |
Contingencies (Details)
Contingencies (Details) ¥ in Thousands | Dec. 31, 2022 CNY (¥) |
Contingencies | |
Contingent liabilities | ¥ 0 |
Condensed Financial Informati_3
Condensed Financial Information of the Parent Company - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Subsidiaries | |
Condensed Financial Statements Captions [Line Items] | |
Restricted net assets as percentage of consolidated and unconsolidated subsidiaries | 25% |
Condensed Financial Informati_4
Condensed Financial Information of the Parent Company - Schedule of Condensed Balance Sheets (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 CNY (¥) |
Current assets: | |||||
Cash | ¥ 707,261 | ¥ 2,684,342 | |||
Total current assets | 3,870,330 | $ 561,144 | 5,273,461 | ||
Total assets | 4,774,038 | 692,169 | 5,632,257 | ||
Current liabilities: | |||||
Refund from depository bank - current | 2,199 | 2,013 | |||
Non-current liabilities: | |||||
Refund from depository bank - non-current | 4,163 | 5,824 | |||
Warrant liability | 66,347 | ||||
Total liabilities | 538,311 | 78,046 | 2,173,567 | ||
Shareholders' equity: | |||||
Ordinary shares | 1 | 1 | |||
Subscriptions receivable from shareholders | (1) | (1) | |||
Treasury stocks | (380,538) | (55,173) | (231,281) | ||
Additional paid-in capital | 3,298,531 | 478,242 | 2,891,134 | ||
Statutory reserves | 102,586 | 14,874 | 97,420 | ||
Accumulated other comprehensive loss | (4,844) | (702) | (101,925) | ||
Retained earnings | 1,219,992 | 176,882 | 803,342 | ||
Total shareholders' equity | 4,235,727 | 614,123 | 3,458,690 | ¥ 432,558 | ¥ 692,795 |
Total liabilities and shareholders' equity | 4,774,038 | 692,169 | 5,632,257 | ||
Parent Company | |||||
Current assets: | |||||
Cash | 39,573 | 5,738 | 30,860 | ||
Prepayment for repurchase of ordinary shares | 1,251 | 181 | |||
Total current assets | 40,824 | 5,919 | 30,860 | ||
Investments in and receivables from subsidiaries | 4,201,822 | 609,208 | 3,502,014 | ||
Total assets | 4,242,646 | 615,127 | 3,532,874 | ||
Current liabilities: | |||||
Refund from depository bank - current | 2,199 | 319 | 2,013 | ||
Other payable | 557 | 81 | |||
Non-current liabilities: | |||||
Refund from depository bank - non-current | 4,163 | 604 | 5,824 | ||
Warrant liability | 66,347 | ||||
Total liabilities | 6,919 | 1,004 | 74,184 | ||
Shareholders' equity: | |||||
Ordinary shares | 1 | 1 | |||
Subscriptions receivable from shareholders | (1) | (1) | |||
Treasury stocks | (380,538) | (55,173) | (231,281) | ||
Additional paid-in capital | 3,298,531 | 478,242 | 2,891,134 | ||
Statutory reserves | 102,586 | 14,874 | 97,420 | ||
Accumulated other comprehensive loss | (4,844) | (702) | (101,925) | ||
Retained earnings | 1,219,992 | 176,882 | 803,342 | ||
Total shareholders' equity | 4,235,727 | 614,123 | 3,458,690 | ||
Total liabilities and shareholders' equity | ¥ 4,242,646 | $ 615,127 | ¥ 3,532,874 |
Condensed Financial Informati_5
Condensed Financial Information of the Parent Company - Schedule of Condensed Statements of Comprehensive Loss (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
May 03, 2021 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Operating expenses: | |||||
Cost of revenues | ¥ 2,831,107 | $ 410,472 | ¥ 2,135,961 | ¥ 409,922 | |
Research and development expenses | (546,642) | (79,256) | (332,846) | (140,041) | |
Sales and marketing expenses | (62,966) | (9,129) | (100,467) | (19,980) | |
General and administrative expenses | (580,523) | (84,168) | (589,107) | (131,624) | |
Interest income | 15,938 | 2,311 | 7,310 | 3,153 | |
Other income, net | 22,156 | 3,212 | 6,410 | 30,958 | |
Change in fair value of warrant liability | ¥ 258,782 | (24,598) | (3,566) | (190,178) | 0 |
Net income (loss) | 486,357 | 70,514 | 2,000,282 | (215,094) | |
Total comprehensive income (loss) | 583,438 | 84,589 | 1,978,137 | (239,332) | |
Foreign currency translation adjustment, tax | 0 | 0 | 0 | ||
Parent Company | |||||
Operating expenses: | |||||
Research and development expenses | (652) | ||||
Sales and marketing expenses | (41) | ||||
General and administrative expenses | (20,968) | (3,040) | (6,668) | (2,277) | |
Loss from operations | (20,968) | (3,040) | (6,668) | (2,970) | |
Interest income | 7 | 1 | 1 | ||
Other income, net | 2,122 | 308 | 2,037 | 2,425 | |
Change in fair value of warrant liability | 24,598 | 3,566 | 190,178 | ||
Share of income (losses) from subsidiaries | 416,058 | 60,323 | 2,306,195 | (214,549) | |
Net income (loss) | 421,817 | 61,158 | 2,491,743 | (215,094) | |
Foreign currency translation adjustment, net of nil tax | 97,081 | 14,075 | (22,145) | (24,238) | |
Total comprehensive income (loss) | ¥ 518,898 | $ 75,233 | ¥ 2,469,598 | ¥ (239,332) |
Condensed Financial Informati_6
Condensed Financial Information of the Parent Company - Schedule of Condensed Statements of Cash Flows (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
May 03, 2021 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Cash flows from operating activities | |||||
Net cash provided by (used in) operating activities | ¥ (1,696,698) | $ (246,000) | ¥ 1,438,850 | ¥ 42,297 | |
Cash flows from investing activities | |||||
Net cash provided by (used in) investing activities | (30,323) | (4,396) | 5,115 | (49,576) | |
Cash flows from financing activities | |||||
Repurchase of warrants | 44,282 | 6,420 | |||
Proceeds from issuance of ordinary shares | ¥ 770,673 | ||||
Payment for repurchase of ordinary shares | (234,307) | (33,971) | (103,543) | (23,915) | |
Proceeds from issuance of ordinary shares and warrants | 1,029,455 | ||||
Net cash provided by (used in) financing activities | (365,506) | (52,991) | 905,854 | (111,940) | |
Net increase in cash | (2,092,527) | (303,387) | 2,349,819 | (119,219) | |
Effect of exchange rate changes on cash | 68,084 | 9,870 | (13,919) | (9,823) | |
Cash and restricted cash at the beginning of year | 2,731,704 | 396,060 | 395,804 | 524,846 | |
Cash and restricted cash at the end of year | 707,261 | 102,543 | 2,731,704 | 395,804 | |
Parent Company | |||||
Cash flows from operating activities | |||||
Receipt of refund from depository bank | 0 | 0 | 0 | 13,285 | |
Other cash used in operating activities | (21,439) | (3,108) | (6,462) | (1) | |
Net cash provided by (used in) operating activities | (21,439) | (3,108) | (6,462) | 13,284 | |
Cash flows from investing activities | |||||
Decrease (increase) in receivables from subsidiaries | 305,529 | 44,298 | (871,194) | 28,451 | |
Net cash provided by (used in) investing activities | 305,529 | 44,298 | (871,194) | 28,451 | |
Cash flows from financing activities | |||||
Repurchase of warrants | (44,282) | (6,420) | 0 | 0 | |
Payment for repurchase of ordinary shares | (234,307) | (33,970) | (103,543) | (23,915) | |
Prepayment under share repurchase agreement | 0 | 0 | (573) | (16,146) | |
Payment for cost of issuance | 0 | 0 | (519) | 0 | |
Proceeds from issuance of ordinary shares and warrants | 0 | 0 | 1,029,455 | 0 | |
Net cash provided by (used in) financing activities | (278,589) | (40,390) | 924,820 | (40,061) | |
Net increase in cash | 5,501 | 799 | 47,164 | 1,674 | |
Effect of exchange rate changes on cash | 3,212 | 466 | (16,451) | (1,541) | |
Cash and restricted cash at the beginning of year | 30,860 | 4,474 | 147 | 14 | |
Cash and restricted cash at the end of year | ¥ 39,573 | $ 5,739 | ¥ 30,860 | ¥ 147 |