NIO (NYSE:NIO) announced that its chip division has shipped more than 300,000 units of the NX9031X assisted-driving processor, a milestone that shifts investor focus toward the potential for external sales. The company disclosed the figure during Shanghai's WAIC conference, noting that the chips are used in both NIO and Onvo vehicles. However, the event summary did not identify any external customers or provide chip-related revenue, leaving investors to speculate on the division's commercial progress.
The chip division, operated under NIO's Shenji unit, is pursuing broader AI markets beyond automotive applications. February's disclosed financing terms offer a valuation benchmark: investors committed RMB2.257 billion for a 27.3% stake, implying a post-money valuation of RMB8.27 billion. Based on these figures, NIO's 62.7% stake would be worth approximately RMB5.18 billion, though these are illustrative calculations rather than actual market prices.
This implied valuation is roughly 2.7 times NIO's RMB1.885 billion first-quarter research and development spending. The comparison is approximate, as overall R&D also covers non-chip projects. External sales could help distribute chip development costs over a greater volume of units, potentially improving profitability.
U.S. cash equity markets were closed on Sunday, but NIO ADRs finished Friday at $4.88, down 2.2% on the day but up 2.1% for the week. The stock underperformed its Chinese EV rivals, XPeng and Li Auto, which posted weekly gains of 3.8% and 2.4%, respectively. NIO ended the period below its Monday close of $4.93.
Goldman Sachs analyst Tina Hou upgraded NIO to Buy on Monday with a $7 price target, implying a 43.4% gain from Friday's close. However, the stock gave back one-third of Monday's 15-cent increase by Friday, highlighting market skepticism.
NIO reported second-quarter deliveries of 107,658 vehicles, a 49.4% year-over-year increase but 2.1% below the company's preliminary forecast of at least 110,000 units. Profitability remains a key concern: first-quarter vehicle margin improved 70 basis points quarter-over-quarter to 18.8%, and adjusted operating profit was RMB66.8 million. CFO Stanley Yu Qu stated that margin has been "improving quarter-over-quarter for four consecutive quarters."
U.S. cash markets reopen Monday at 9:30 a.m. EDT. Tesla (NASDAQ:TSLA) is due to report second-quarter results after Wednesday's close, with options pricing in a 7% swing. How markets respond to NIO's chip division update will be an initial gauge of Shenji's external sales strategy, which currently has scale but no disclosed revenue.
Risks include the lack of external revenue disclosure for Shenji and NIO's GAAP operating loss of RMB308.8 million in the first quarter. The chip division's success in winning outside customers will be critical for its long-term valuation.
