Kuaishou incubates a potential unicorn, which has raised another 1 billion yuan in financing.

On November 4, Lingchuan Technology, incubated by Kuaishou, announced that it has completed a RMB 1 billion Series B financing.

Lingchuan Technology develops "compression chips" for video platforms, helping them save bandwidth and cut costs. Its founder Liu Lingzhi once served as Vice President of Kuaishou. The SL200 video chip developed by his team has sold nearly 100,000 units in total, covering 99.7% of Kuaishou's live streaming-related businesses.

"Without a strong backing like Kuaishou, few startups would choose this direction," Hao Yi (pseudonym), founder of a leading chip company, told Pencil News.

In his view, the biggest challenge for video chip startups is whether there are large enough customers willing to make long-term purchases of their products.

Developing Custom Chips for Kuaishou to Securing RMB 1 Billion Financing

In 2018, Kuaishou's daily active users exceeded 100 million, leading to a sharp rise in server cost pressure. In the same year, Liu Lingzhi joined Kuaishou as Vice President and set up the heterogeneous computing and chip team. He holds a doctorate from Shanghai Jiao Tong University, was a postdoctoral fellow at the University of Washington in the United States, and previously worked at Huawei and Intel.

Two years later, Kuaishou officially launched its self-developed chip project. The goal is clear: to specially develop a chip dedicated to video codec processing to significantly reduce related costs.

In 2023, tens of thousands of SL200 chips developed by the team have been deployed within Kuaishou. Liu Lingzhi previously revealed in an interview with 36Kr that the cost savings brought by the chips exceeded expectations.

In March 2024, the Beijing Artificial Intelligence Fund and Kuaishou Group jointly initiated the establishment of Lingchuan Technology. The original team was spun off from Kuaishou, and Liu Lingzhi took the positions of Chairman and CEO.

Since then, the financing process has kept accelerating: it completed a Series A financing of several hundred million yuan in July 2025, and received a Series A+ financing of several hundred million yuan in June 2026. Less than half a year later, the RMB 1 billion Series B financing was closed. This round is jointly led by Yizhuang State Investment Yitang Shenghe Fund, Qiming Venture Partners and Zhaohui Capital. Among the 20 new and old investors, state-owned capital and industrial capital account for the vast majority.

Against the background of domestic substitution of chips, a chip company spun off from a large Internet enterprise has become a scarce target in the eyes of state-owned capital.

As a highly sought-after target in the capital market, Hao Yi believes that Lingchuan Technology's advantages go far beyond technology. "The core lies in where the application scenarios are and what the actual demands of customers are."

He told Pencil News that video chip R&D requires continuous investment, but there are not many customers that truly have large-scale demand. Without the support of sufficiently large customers, it is very difficult for the founding team to sustain long-term operation.

Backed by Kuaishou, Lingchuan Technology has deployed tens of thousands of chips in Kuaishou's own business before seeking external customers.

Nearly 100,000 Units Sold, Profitability Still Requires Detailed Calculation

What exactly does Lingchuan Technology sell?

The SL200, which has been put into large-scale application at present, is mainly responsible for video encoding, decoding and transcoding. When a live streamer goes live, the platform needs to convert the video footage into video streams of different definitions in real time, so that audiences with different network speeds can watch smoothly. The more live rooms there are, the more video streams the background needs to process — for the platform, reducing the cost of each video stream means tangible cost savings.

The SL200 is designed to target exactly this type of expenditure.

The technical performance of this chip has passed public verification. In the MSU World Codec Competition, the SL200 won the first place in the commercial track for three consecutive sessions, outperforming the contemporary solutions from NVIDIA and Intel. According to 36Kr reports, a single SL200 can process 36 video tasks, saving about 30% of energy compared with traditional solutions, and reducing the processing cost per channel by around 40%.

Lingchuan Technology disclosed that the SL200 has accumulated nearly 100,000 units in total sales, and has been deployed in customer scenarios such as Kuaishou, Alibaba Cloud, Baidu Cloud and Bilibili. Since the beginning of this year, the products have also entered data centers, smart security and other fields through partners.

However, a closer look shows that the business's profit account is not easy to balance.

The company has not disclosed its revenue and profit, and the only confirmed shipment figure is the total of nearly 100,000 units. For chips, from design, tape-out to mass production, the investment for each generation is measured in hundreds of millions of yuan — the majority of this RMB 1 billion Series B financing is used for the R&D and mass production of the next generation of chips.

Customer structure is another account that requires careful calculation. The fact that 99.7% of Kuaishou's live streaming-related businesses run on the SL200 shows that its parent company Kuaishou is still its absolute base market; although the list of external customers includes Alibaba Cloud, Baidu Cloud and Bilibili, the company has not disclosed how much revenue each of these customers contributes. For a startup spun off from its parent group, this is the most sensitive part in its valuation story.

The difficulty of this business lies precisely in the customer side.

Hao Yi told Pencil News that large-scale video processing demand is mainly concentrated in top Internet platforms, cloud service providers, and some public security and security customers. "It is very difficult to find real customers, and find customers with sufficiently large demand to support you to carry out this business."

On the one hand, the number of such customers is limited; on the other hand, these customers have very high requirements for chips. Video processing equipment must run stably for a long time. Once customers have adopted a mature solution, new suppliers need to go through tests, software adaptation and business migration to enter their supply chain.

Such customers are not easy to find, and it is not easy to win their trust either.

Another video chip company, Rongming Microelectronics, is a reference case. Founded in 2015, this company specializes in developing VPU video processing chips, whose products are applied in scenarios such as live streaming, video on demand, and cloud games. Its CEO Zhu Zhaoyuan revealed in a media interview this year that the company's VPU has accumulated hundreds of thousands of shipments.

Rongming Microelectronics and Lingchuan take different development paths: the former has long been selling professional chips to the external market, while the latter was spun off from Kuaishou's internal team. One learned to find business opportunities on its own first, and the other got sufficient support from its parent group in the initial stage.

Hao Yi believes that whether video chips can finally make a profit still depends on the usage volume. Only when the customer's procurement scale is large enough can the R&D cost be amortized.

In order to boost shipment volume, Lingchuan Technology has set its sights on AI video generation since the beginning of this year.

Generating and modifying footage for AI advertisements and AI short dramas both consume large amounts of computing power. The company disclosed that its new generation 3D stacked chip for AI video generation has completed tape-out in April and recently returned from the factory, and is scheduled to be shipped in large quantities in 2027; the supporting LUCAS computing platform is also adapting to mainstream video generation models.

Interestingly, Keling, one of the leading players in AI video generation, is a product under Kuaishou. After a full circle, the starting point of the new growth story may still be its parent company Kuaishou.

However, when entering this market, its competitors have also changed. In the past, Lingchuan mainly competed with traditional video processing solutions for efficiency; in the future, it will also compete with general-purpose AI computing solutions such as GPU in terms of performance, cost and software adaptation capability.

Large Tech Firms Develop Chips In-house, Startups Compete for External Customers

There is an interesting phenomenon in the video chip industry: the enterprises that need this type of chips most often also have the ability to develop them on their own.

Google is a typical example. YouTube processes massive amounts of videos every day. To reduce costs, Google specially developed the video processing chip Argos. In 2021, Google disclosed in a research paper that compared with the previously optimized non-dedicated acceleration solution, the computing efficiency of the Argos system was increased by 20 to 33 times. Two years later, Meta also made public its self-developed video processing chip MSVP, which is used for video codec tasks on platforms such as Facebook.

Google and Meta chose to develop chips by themselves, and Kuaishou set up its chip team in the first place for similar cost considerations. The difference is that Lingchuan later separated from Kuaishou and started selling chips to external customers.

Large tech firms develop chips for their own internal use, while professional manufacturers sell chips to the market, both competing for the computing power budget of video processing.

But Hao Yi analyzed that we can't just see that video traffic is growing larger and larger, and assume that professional video chip companies will definitely make more and more money easily.

One of the reasons is the high customer concentration. Large Internet platforms control massive video businesses, and some of them also have independent R&D capabilities. To win these customers, professional chip companies have to provide sufficiently attractive advantages in cost and efficiency.

Another change comes from the video processing method itself.

Hao Yi observed that in the past, many video tasks were undertaken by cameras, terminal devices or edge nodes, but now more and more tasks are being concentrated on servers and the cloud. Customers with private deployment requirements such as public security and security are also shifting to centralized processing. The same applies to vehicle-mounted cameras, and part of the video processing tasks have been assigned to the main control chip of the car.

The work that originally required independent chips to process is being absorbed by other computing platforms.

A greater variable comes from AI.

Hao Yi believes that in the future, video chips may develop along two paths: one is dedicated chips like Lingchuan's, which continue to improve the processing efficiency of multi-channel videos while expanding AI computing capabilities at the same time; the other is general-purpose chips such as GPU, which continuously enhance dedicated functions including video codec and AI inference.

"Dedicated chips are becoming more general-purpose, while general-purpose chips are becoming more dedicated."

In the past, professional video chips were responsible for video codec, and GPUs were responsible for a wider range of computing tasks. Now, the two sides are beginning to enter each other's market.

For Lingchuan, the chips it holds in this race are very clear: nearly 100,000 units of installed capacity accumulated with Kuaishou's support, and the newly obtained RMB 1 billion financing. The answer sheet it needs to submit is also very clear — to step out of Kuaishou's system and prove its independent market value.

This article does not constitute any investment advice.

This article is from the WeChat official account "Pencil News" (ID: pencilnews), Author: Pencil News, published with authorization from 36Kr.