Annual Report 2019

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) China Merchants China Direct Investments Limited Annual Report 2019 24 REVIEW OF INVESTMENTS (CONTINUED) Cambricon launched its second-generation cloud chip MLU270 and its first-generation edge chip MLU220, along with their corresponding PCB products, in June and November 2019, respectively. Together with its existing endpoint IP products, Cambricon has achieved comprehensive multi-dimensional coverage of cloud, edge and endpoint AI accelerated computation. In response to AI inference tasks, MLU270 and MLU220 adopted the newest generation of the MLUv02 instruction set, independently developed by Cambricon, which supports highly diversified AI applications such as vision, audio, natural language processing and traditional machine learning. In particular, the theoretical peak performance and capacity of chip MLU270 has been increased to 4 times that of the previous generation MLU100, reaching 128TOPS (INT8). Coupled with its compatibility with both INT4 and INT16 operations, as well as its support for floating-point operations and mixed-precision operations, the chip MLU270 has demonstrated faster speed, lower power consumption and a better performance-to-price ratio, and millions-worth orders have been obtained since its launch. The chip MLU220 features a maximum computation capacity of 32TOPS (INT4), compatibility with both INT4 and INT16, power consumption of only 10W and extensive I/O interfaces. With its acceleration card, the chip MLU220 can achieve intelligent deployment for edge applications such as retail, transportation, factory production lines and sales outlets in a palm-sized AI box. In addition, Cambricon’s second-generation endpoint structure of 1H16 has been integrated into Spreadtrum’s new 5G mobile phone main chips. Cambricon completed its conversion into a joint-stock limited company in November 2019 and has changed its name to “CAS Cambricon Technology Co., Ltd.” It also plans to apply for an IPO on the Shanghai Sci-Tech Board. Pony AI Inc. (“Pony AI”) was established in Silicon Valley, the United States, in December 2016 and is a research and development company that focuses on technology solutions for autonomous driving. In July 2018, the Fund invested US$8 million for a 0.889% equity interest in Pony AI. In April 2019, the Fund exercised its anti-dilution rights and invested US$0.61 million in Pony AI during a new round of equity financing, with the equity interest remaining unchanged after the investment. As such, the Fund has invested a total of US$8.61 million and held a 0.889% equity interest in Pony AI as of 31 December 2019. As of the end of 2019, the carrying value of the Fund’s interest in Pony AI was US$8.61 million, representing an increase of 7.63% over US$8 million at the end of last year. The Fund’s unrealised gain attributable to its investment in Pony AI for 2019 was US$3,433. Pony AI is presently a leader in the field of autonomous driving technology in China. Through the end of 2019, Pony AI has achieved an accumulated total autonomous driving distance of over 1 million kilometres, covering complicated and diversified scenarios of different roads and under a wide range of climatic and traffic conditions. In particular, PonyPilot Robotaxi has operated successfully for one year, receiving over 70,000 orders in total, and its operational efficiency, fleet scale and the width and breadth of coverage areas continued to expand. Furthermore, Pony AI has launched its fourth-generation autonomous driving software and hardware system, namely PonyAlpha 2.0, with substantial improvement in the stability of both software and hardware, as well as the level of integration and system security. Testing has been carried out on various vehicle platforms.