ANNUAL
(相关资料图)
REPORT
Contents
Espressif from the CEO
Espressif Announcements DevCon22
Highlights
Report
Content
Development Compensation
Financial Balance Sheet Statement - Indirect Method
Statements
Statement of Changes in Equity
Flow Statement
Information of the Report
Report
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | ABOUT
FACTS ABOUT
ESPRESSIF
ESPRESSIF
About Espressif
Espressif Systems is a public, multinational, fabless, semiconductor company focused on developing cutting-edge,
wireless-communication, low-power chipsets. By leveraging wireless computing, we provide green, versatile and cost-
effective AIoT solutions. We have accomplished a hardware-and-software, closed-loop development cycle for a series
of core technologies, including RF, Wi-Fi & Bluetooth LE network protocol stacks, RISC-V MCUs, AI instruction sets
and algorithms, operating systems, toolchains, compilers, IoT software application frameworks, Cloud, etc.
We have a diverse team of engineers from around the world. All company branches employ about 580 members of
staff from almost 30 countries and regions, +76% of whom are based in our Research & Development Department. We
have eight R&D centers in five countries, including China, India, the Czech Republic, Brazil and Singapore. The
company’s increasing reputation in recent years has been instrumental in attracting talented engineers from across the
world. Being united by our passion for technology, our diversity is our strength, as it allows the creative blending of
different kinds of knowledge, perspectives and ways of thinking.
global Wi-Fi MCU products distributed millions of users
market share* all over the world
Our R&D Centers
China
Shanghai Hefei
Suzhou Wuxi
Brazil India
Campinas Pune
Czech Singapore
Republic
Brno
* Market share data from TSR
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MESSAGE FROM THE CEO
Message from
the CEO
“Espressif has consistently demonstrated its ability to thrive
in the face of challenges, and we are confident that this will
continue in 2023 and beyond. We remain committed to
seizing every opportunity to develop even better solutions
to address our customers" future needs.”
Teo Swee Ann
Espressif’s Founder & CEO
We are delighted to present the Annual Report for Espressif, covering our performance in 2022, a year
that witnessed extraordinary global challenges. The COVID pandemic, lockdowns in China, supply chain
disruptions, a significant war in Europe, rising energy prices, and inflationary pressures culminated in a
cost-of-living crisis in numerous countries. These events contributed to a highly volatile socio-economic
environment.
Throughout these turbulent times, Espressif has demonstrated steadfast commitment to our customers"
success, showcasing our ability to navigate complex situations while maintaining price stability, supply
chain reliability, and competitive positioning in an ever-evolving market. We are proud to have deepened
our relationships with our valued customers, whose support has been instrumental to our achievements.
We would also like to extend our sincere gratitude to our suppliers for their unwavering dedication during
the past year. Our collaborations have been crucial in preserving supply chain stability and ensuring the
exceptional quality of our products.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MESSAGE FROM THE CEO
In 2022, Espressif made significant progress in advancing our core intellectual properties (IPs), including
Wi-Fi 6, Wi-Fi 6E, Bluetooth Low Energy, ESP RainMaker (Cloud), ESP Insights (device observability), ESP-
Hosted (connectivity), ESP-CSI (wireless environment sensing), video encoders, RISC-V, new RF
transceivers, and more. Our in-house developed RF transceivers, power management systems, RISC-V
CPU, Wi-Fi 6, Bluetooth Low Energy IPs have successfully entered production with the release of our
ESP32-C6 chip, which has also achieved certification in all these areas.
The ESP32-C6 chip, a low-power, cost-effective 2.4 GHz Wi-Fi 6 + Bluetooth 5 (LE) + Thread/ZigBee
SoC, featuring a 32-bit RISC-V core, is designed for securely connected devices. By improving sleep and
deep sleep power consumption, and with the support of the TWT protocol of Wi-Fi 6, the chip can be
deployed in new battery-operated or novel power supply applications. The inclusion of ZigBee and Thread
in ESP32-C6 enables the chip to support the Matter standard.
The Matter standard, a new open-source standard for smart home devices, was developed by a
consortium of leading tech companies, including Apple, Amazon, Google, and the CSA Alliance. Matter
aims to simplify the development and enhance the compatibility of smart home devices across different
ecosystems and platforms, providing a seamless experience for users. It is designed to work with a wide
range of devices, such as lighting, HVAC, safety and security, and more.
Our latest product portfolio is designed to meet the evolving needs of our customers and empower them
to create innovative IoT solutions based on the Matter standard. ESP RainMaker and ESP Insights have
gained considerable traction among our customers. These tools, combined with Espressif hardware,
facilitate the creation of highly advanced IoT systems. By utilizing ESP Insights, customers can gather
feedback from end-users and monitor the status of their deployments, enabling them to continuously
refine their products and achieve optimal performance promptly. This powerful tool has resulted in
enhanced reliability and reduced costs for our customers.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MESSAGE FROM THE CEO
In 2022, we also unveiled a new iteration of the ESP32-S3-BOX development kit, incorporating our most
advanced AI voice-development platform. This platform offers a comprehensive hardware-software
framework for controlling intelligent devices through both online and offline voice assistants. The ESP32-
S3-BOX is particularly well-suited for smart speakers and IoT devices that require offline human-computer
voice interaction capabilities. The market response has been overwhelmingly positive, and we anticipate
continued growth in this segment.
Furthermore, we are excited to announce the introduction of the ESP32-P4, which was showcased at the
instructions extension, an integrated H264 encoder, an advanced high throughput memory subsystem,
and high-speed peripherals. The ESP32-P4 has been specifically designed for high-performance HMI
applications demanding robust security.
Our unwavering commitment to in-house technological development has enabled us to consistently
outperform competitors and cater to the dynamic needs of our customers. This dedication has also
attracted exceptional talent to our organization. In 2022, our workforce grew from 517 to 578 employees,
with the majority of new hires joining our R&D departments. At Espressif, our team members are engaged
in groundbreaking R&D activities, acquiring new skills while contributing to the company"s growth.
We are immensely proud of our accomplishments in 2022 and eagerly anticipate pushing the boundaries
of innovation in the years to come. We attribute our sustained success to the unwavering dedication and
tireless efforts of our entire team. Espressif has consistently demonstrated its ability to thrive in the face of
challenges, and we are confident that this will continue in 2023 and beyond. We remain committed to
seizing every opportunity to develop even better solutions to address our customers" future needs
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | FACTS ABOUT ESPRESSIF
Facts About Espressif
R&D R&D employee female
employees
centers employees nationalities employees
open-source, Espressif-powered
projects
Git
Hub
You
views of the most popular videos
of Espressif-powered projects
Tub
e
k
Boo
books written about Espressif’s
SoCs in 10+ languages
d dit
Re
members of
ESP32 groups
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | KEY ANNOUNCEMENTS
FACTS ABOUT ESPRESSIF
Key Announcements
New SoCs Security
TEXT
ESP32-C2 Features, such as Secure Boot, Flash
Encryption, cryptographic accelerators, TRNG,
is a small, simple and cheap combo Wi-Fi 4
etc., provide all the necessary components for
+ Bluetooth 5 (LE) SoC in a 4mm x 4mm
keeping connected devices secured and
package, with272 kB of memory and
trusted.With the help of the Digital Signature
robust connectivity.
Peripheral and a dedicated Key Management
ESP32-C5 Unit, our chips ensure that private keys are
is our first RISC-V SoC solution that supports generated on the SoC itself and are not
Bluetooth 5 (LE). by any physical attacks. The SoC also
supports hardware access protection that
facilitates Access Permission Management as
well as Privilege Separation.
AI
Thread
Espressif’s 3A Audio Algorithms
include Acoustic Echo Cancelation (AEC), Thread-Certified (1.3.0) Components
Audio Noise Suppression (ANS) and Automatic
Gain Control (AGC). They significantly reduce The ESP32-H2 SoC, along with Espressif’s
noise and echo in calls, keeping high-quality Thread SDK, have been officially given the
voice intercoms stable at all times. status of “Thread-Certified (1.3.0)
Components”. The 1.3.0 Thread certificate is
a prerequisite for Matter-over-Thread device
certification.
OS
ESP-IDF Matter
Espressif’s own IoT Development
Framework, including RTOS, has Matter 1.0 Certification
been upgraded to v5.0 and has
won 9.9K stars on GitHub. Espressif has successfully
completed theMatter 1.0
certificationprogram. Customers
Zephyr
can benefit from an accelerated
We keep updating our support for certification process for their
Zephyr, with Low-Power Modes, Wi-Fi Matter devices and reduced time-
Manager, Asymmetric Multiprocessing to-market.
(AMP) and peripheral support.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | ESPRESSIF DEVCON22
Espressif DevCon22
Espressif has had a truly fruitful collaboration with the developer community at least since 2014 when ESP8266 was
launched. Ever since, the impact of our work has increased considerably across different domains of the high-tech
industry, but so has the importance of the developer community. Innovation has been the common goal for everyone
involved in this business. Likewise, innovation at Espressif remains at the heart of everything we do. Equally central,
however, is our belief in the significance of the developer community’s contribution to new technologies. Our products
and services reflect this philosophy, as their evolution is shaped by community feedback to a certain extent. Through
the widespread availability of our development boards, open-source documentation, software and tools, the
communication between Espressif and the developer community is always free-flowing, candid and, therefore,
effective.
This is how Espressif’s Developer Conference came to life in October 2022. After a six-month period of intense
preparations we were able to offer more than thirty presentations on such topics as Matter, RainMaker, ESP-IDF,
Privilege Separation, Embedded Rust, Components Manager, Board Support Packages, third-party frameworks, and
more. It was not just Espressif engineers who presented their most recent work, though. We were delighted to also
host guest speakers from Microsoft, Arduino, Adafruit, Golioth, WOKWI and Toit.
The above-mentioned content covered nearly twenty hours of live broadcasting on three different platforms
simultaneously, that is, Espressif’s official channels on YouTube, WeChat, and Bilibili. Our graphics, documentation and
marketing teams, as well as our engineers in Brno, Pune and Shanghai worked tirelessly, in order to ensure that the
finalised content would be of the highest quality, while reaching as far and wide an audience as possible. Thus, on
YouTube alone, our conference, or Espressif DevCon22 as we officially named it, garnered a total 70,000 views by
spectators from all four corners of the world.
The aim of this online conference was to increase Espressif"s engagement with the wider community of developers,
thus solidifying the connection between Espressif and developers. Our main objectives were to share knowledge,
promote Espressif’s latest projects, products and services, as well as collect feedback on everything we do.
Espressif DevCon23 will be the next edition for 2023. We hope to establish a tradition by organizing this conference
once a year, so that we provide our community of developers, partners and supporters not just with updated
information on our portfolio of products and services, but also with a chance to voice their thoughts on our work and
common goals.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | BUSINESS HIGHLIGHTS
Business Highlights
Key Financial Data
Fiscal Year
CNY 2022 2021 2020
Consolidated Statement of Income Data
Revenue 1,271,127,201 1,386,371,541 831,286,490
Gross profit 508,251,068 549,025,732 343,235,573
Selling expenses 49,323,100 41,815,693 31,485,447
General and administrative expenses 59,639,944 55,485,146 46,595,295
Research and development expenses 337,121,814 271,689,981 192,792,044
Net income 97,323,103 198,427,708 104,051,961
Earnings per share:
Basic 1.2129 2.4775 1.3006
Diluted 1.2127 2.4566 1.3006
Consolidated Balance Sheet Data
Cash, cash equivalents and financial investments 1,200,219,436 1,114,558,363 1,357,770,452
Working capital 1,518,383,808 1,749,605,271 1,634,809,451
Total assets 2,082,796,825 2,129,056,143 1,829,631,150
Long-term obligations 65,591,788 68,244,392 50,822,540
Total shareholders’ equity 1,826,677,535 1,823,017,913 1,641,130,356
Consolidated Cash Flow Data
Net cash flow from operating activities 71,321,658 31,460,857 36,055,511
Non-GAAP Adjustment
Stock-based compensation 14,726,019 21,787,964 18,757,990
Non-GAAP net income 112,049,122 220,215,672 122,809,951
Key Financial Indicators
Fiscal Year
Gross margin 39.98% 39.60% 41.29%
R&D-to-sales ratio 26.52% 19.60% 23.19%
EBITDA margin 9.29% 16.78% 14.90%
Weighted ROE 5.36% 11.52% 6.47%
Number of Espressif employees as of December 31 578 517 449
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | BUSINESS HIGHLIGHTS
Financial Analysis
Espressif’s total revenue in 2022 was CNY 1,271 million, marking a decrease of 8.31% from CNY 1,386 million in 2021,
due to the current inflation-driven recession and the consequent decline in consumer confidence. Therefore, the net
income was CNY 97 million, which marked a decrease of 50.95% year-on-year, mainly due to our increased R&D
expenditure.
The overall gross margin was 39.98%, in which the gross margin for IoT chips was 47.28%. The overall gross margin is
basically flat in comparison with the previous year.
Customers in mainland China prefer purchasing chips, while the customers from the rest of the world prefer modules.
We keep the chip margin at a reasonable level, in order to support our future R&D expenditure.
Revenue by Area Revenue by Top-5 Customer
Sales Mode Concentration Rate
China"s
Rest of
Direct Indirect 2019 2020 2021 2022
Mainland the World
Revenue by Product Category
Chip Module Others
Key Financial Indicators
Overall GM Chip GM Module GM EBITDA
SG&A as % of R&D as % of
Margin sales sales
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Management Report
Business Strategy
Espressif Systems’ business strategy emanates from our service/product areas and our engagement with the
developer ecosystem.
Our product and service areas include IoT chips, OS-level development environments, software tools, application
solutions, and value-added services, such as Cloud and Matter. The above-mentioned products ensure that we are in
the heart of numerous commercial AIoT applications in different markets, including smart home, consumer electronics,
industrial automation, healthcare, etc.
Products Solutions Value-added services
Cloud
SoCs HMI Smart
Audio
service
Displays Solutions
Modules
Matter
Face
Low-Power
Solution
Recognition Solutions
DevKits … …
OS-level development environments & software tools
Customers
Brands OEM/ODMs Module Houses Solution providers Makers
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Key Products - IoT Chips
Espressif is recognized as a market leader in the field of Wi-Fi MCUs. We released our first Wi-Fi MCU in 2014, and our
first Wi-Fi/Bluetooth LE combo chip in 2016. In 2020, we successfully developed our own RISC-V MCU core, adding it
to our product portfolio, while in 2021 we released our first Thread/Zigbee/Bluetooth LE 5 combo chip and a 2.4GHz
Wi-Fi 6 chip. In 2022, we released our first 2.4 & 5GHz Wi-Fi 6 chip and our product range has expanded to Wireless
SoCs.
In fact, we have been constantly diversifying our product portfolio, introducing new solutions through our numerous
investments. Thus, we now have various product lines in the main short- and medium-range connectivity technologies.
Our core technologies are self-developed, including connectivity IPs, RF components, RISC-V IPs, software
frameworks, tools, AI functions etc.
We also provide IoT modules based on our chips. The benefit for customers is that they can get direct support from us,
shortening and optimizing their supply chain, even in case of chip shortages.
Wireless SoC
Medium Range Short Range
Wi-Fi 6E Bluetooth 5.3 (LE) Thread
Connectivity
Technical Depth
Wi-Fi 4 Bluetooth 4.2
RISC-V MCU AI
Computing 32-bit Single-Core 240MHz
Technical Breadth
In progress
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Software Solutions
HMI Smart Displays
The solution has an innovative user-interface that enables data visualization,
touch or knob control, voice wake-up and recognition, multi-mode gateway, etc.
It is widely used in smart-home control, home appliance screens, healthcare,
industrial control, and educational devices for children.
Espressif’s HMI smart displays, based on ESP32-S3 and ESP32-C3 SoCs, are
designed to support RGB and SPI interfaces, respectively.
The RGB display is a common interface for smart-home control. ESP32-S3 is an
excellent choice for RGB interface LCDs. ESP32-S3 has a dual-core CPU with
powerful Al features.
SPI is a common interface for small displays. The state-of-the-art technology of
ESP32-C3 allows it to dynamically adjust the operating frequency and switch
over to low-power modes.
The solution is supported by ESP-IDF, Espressif’s mature IoT development
framework, with which users can easily build new applications.
Low-Power Solution
Smart Switch
Based on ESP32-C2/ESP32-C3, the ESP Smart Switch
Solution allows customers to easily build Wi-Fi switches
with low power-consumption, excellent Wi-Fi performance,
security, and reliability.
Ultra-Low Power, No Anti-Flicker Required
ESP-NOW protocol
ESP-NOW is a connectionless communication protocol defined by
Espressif, which enables a direct, quick and low-power control of
smart devices without the need of a router.
ESP-NOW can work with Wi-Fi and Bluetooth LE, and supports
ESP8266, ESP32, ESP32-S and ESP32-C series of SoCs.It’s widely
used in smart appliances, remote controls, sensors, etc.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Audio Solutions
AFE (Audio Front-End) Algorithms
have a solid voice-controlled performance even in
noisy environments. Customers can use these
algorithms with Espressif’s powerful ESP32 and
ESP32-S3 SoCs, in order to build high-performance,
yet low-cost, products with a voice user interface.
Espressif"s AFE algorithms have been qualified by
Amazon as an “Audio Front End” solution for Alexa
built-in devices.
Offline smart-voice assistant
supports a configurable wake-word engine
(WakeNet), and an offline speech-recognition engine
(MultiNet) with up to 200+ offline commands and
acoustic algorithms.
Face Recognition
ESP-WHO
is a face detection and recognition development framework
based on ESP32 and ESP32-S3.
You can use it with the ESP-EYE or the ESP-WROVER-KIT
development board. Then, by adding only a few peripherals,
such as cameras and screens, you can easily create
complete AIoT applications.
Security High Performance
Local memory 10 frames per second
Expandability
Cost-Effectiveness Object detection
Object tracking
Hand-gesture recognition
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Value-Added Services
Cloud
ESP RainMaker
This is a complete, yet light-weight, AIoT solution that
enables private Cloud deployment for our customers’
business in a simple, cost-effective and efficient manner.
Espressif offers a turnkey solution that includes product
firmware, private Cloud and a dashboard, as well as a
voice assistant and mobile apps. This allows customers
to build their very own brand of an IoT business in an
efficient, affordable and speedy way.
Matter
One-stop Matter Solution
Espressif is an active contributor to the development of
the Matter protocol. Espressif, with its unique
combination of connectivity SoCs, software, and
complete solutions makes it easy for our customers to
build Matter-enabled smart-home devices of various
types. Espressif provides the most comprehensive
solutions for Matter, including support for Wi-Fi or
Thread end-point devices, Thread Border Routers, and
Matter gateway reference designs.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Market
The market for wireless SoCs is truly diverse, including applications for smart homes (e.g., smart lights, air conditioners,
ovens, coffee machines, etc.), consumer electronics (e.g., smart speakers, drones, etc.), industrial automation (e.g.,
mechanical arms), smart agriculture (e.g., soil PH detector, CO2 detector, etc.), healthcare (e.g., monitoring devices for
diabetes, blood pressure, etc.), energy control (solar energy devices, EV chargers, etc.), the internet of vehicles (OBD
devices, dashboards, etc.), and education (talking pens, interactive whiteboards, etc.).
Although the consumer market shrunk in 2022 due to various macroeconomic factors, digitalization in the non-
consumer sectors has brought us many new customers.
Consumer Industrial Smart
Smart Home
Electronics Automation Agriculture
Smart Ovens Smart Speakers Mechanical Arms Soil PH Detector
Energy Internet of
Healthcare Education
Management Vehicles
Smart Solar
Medical Detectors OBD Devices Talking Pens
Panels
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Core Competitiveness
Chip System
Operating Systems
Connectivity Technology
Development Environment
Chip Design Capability
Software Tools
Ecosystem Software
Documentation Software Solutions
Developer Communities Business Applications
Internet Platforms Cloud Services
Chip Competitiveness
Espressif takes pride in the invaluable experience that our R&D team leaders have in the field of wireless-
communication chips. For example, Espressif’s founder and CEO, Mr Teo Swee-Ann, has over 20 years of experience
in the semiconductor industry, having also registered over 40 IC and IoT-related patents under his name.
After the huge success of our initial series of Wi-Fi MCUs, our company expanded to other wireless-connectivity
technologies, including Bluetooth LE and Thread/Zigbee. This development has further enhanced our Company"s high-
tech offerings, thus increasing our market opportunities, while also keeping our customers spoiled for choice.
Our products are renowned for their high level of integration, small size, low power consumption, great computing
power, large memory space and strong security mechanisms. They are being used by independent developers and big
companies alike, while Espressif is recognized as a leading force in the AIoT chip industry.
System Competitiveness
ESP-IDF is Espressif’s official IoT Development Framework for the ESP32, ESP32-S, ESP32-C and ESP32-H series of
SoCs. It provides a self-sufficient SDK for any generic application development with the above-mentioned SoCs, using
programming languages such as C and C++. ESP-IDF currently powers millions of devices in the field, and enables
building a variety of network-connected products ranging from simple light bulbs and toys to big appliances and
industrial devices.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
ESP-IDF has established a fastidious release process, and a support policy which ensures that customers can choose
a stable release, while also getting important updates. Each stable release undergoes a rigorous QA process that
ensures production readiness at all times. Also, ESP-IDF comes with an extensive documentation for its software
components not only at the usage level but also at the design level. This helps developers to fully understand what
ESP-IDF offers, and select whatever suits their applications best.
Furthermore, ESP-IDF supports a large number of software components, including RTOS, peripheral drivers, network
stacks, protocol implementations, and examples of common use cases. These components help developers focus on
their business logic, while the SDK provides most of the building blocks required for typical applications. Open-source
and freely-available developer tools, as well as officially supported Eclipse and VSCode IDEs, ensure ease-of-use for
developers.
Software Competitiveness
The company provides numerous software solutions, including AI-related ones (e.g., offline/online voice recognition and
smart control, AI image recognition, etc.), Wi-Fi Mesh, BLE Mesh, HMI functions, various peripheral drivers and other
functions covering all the development needs of our customers. These solutions greatly reduce the cost of application
development for our customers.
Espressif’s AI Lab has developed Audio Front-End (AFE) algorithms that have been qualified as a“Software Audio
Front-End Solution” to Amazon-Alexa Built-in devices.This is the result of Espressif’s incessant focus not just on the
connectivity of its own AIoT solutions, but also on high-performance Machine Learning on the edge.Furthermore, in
Suppression (ANS), and Automatic Gain Control (AGC). Based on Espressif"s 3A audio algorithms, Espressif-powered
Real-Time Communication applications benefit from significantly reduced noise and echo in calls, and sustained
stability in high-quality voice intercoms.
Our newly-launched, one-stop Matter solution, including the fully-customized ESP-Matter SDK and Cloud services, can
simplify and accelerate the development process of Matter-compatible products significantly. This is the culmination of
our ongoing contribution to the Matter platform in various areas, including protocol formulation, core stack
implementation and certification test events.
Furthermore, ESP RainMaker® is a one-stop, development-free and maintenance-free AIoT solution for private Cloud
deployment, which reduces R&D costs and accelerates time-to-market. More specifically, this is a complete system for
building AIoT products with a minimal amount of code, which enables our customers to deploy and develop secure,
customized AIoT solutions. It covers all of Espressif’s chips and modules, device firmware, voice-assistant integrations,
phone apps and Cloud backend. This helps our customers avoid expensive investments in Cloud capabilities, gain
independence and focus on innovating their core-value offerings.
Ecosystem Competitiveness
Our company has brought together professionals and companies from across the AIoT industry, e.g., hardware and
software developers, business applications, and Cloud platforms, as well as maker communities. Espressif’s own
software development platforms and the accompanying documentation are entirely open-source, thus making our
innovative products available to people from all walks of life.
As a result, thousands of third-party projects have been based on Espressif"s technologies. For example, on GitHub,
which is the largest provider of Internet hosting for software development, there are more than 80,000 open-source
projects based on Espressif"s IoT chips. Furthermore, the popularity of our products has stimulated an increasing
number of authors who have produced teaching resources based on Espressif chipsets in several languages including
English, Chinese, German, Portuguese, Japanese, and Serbo-Croatian. At present, there are more than 100 digital and
physical books about Espressif’s SoCs in more than ten languages.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Developer Community Content
ITEM Dec 31, 2022 Dec 31, 2021 change%
GitHub (Worldwide open-source development platform)
ESP32 Projects 41,891 29,007 44%
ESP8266 Projects 39,294 35,055 12%
Gitee (Chinese open-source development platform)
ESP32 Projects 2,629 2,592 1%
ESP8266 Projects 1,868 1,867 0%
CSDN (Chinese Tech-blog platform)
Search results for ESP32 93,242 79,188 18%
Search results for ESP8266 36,286 30,033 21%
Hackaday (open-source hardware platform)
ESP32 projects 4,702 3,816 23%
ESP8266 projects 6,101 5,789 5%
ESP32 group members 59,619 46,540 28%
ESP8266 group members 59,004 53,523 10%
bilibili (Chinese video-sharing platform)
Official account followers 24,064 17,502 37%
Official account views 658,235 390,000 69%
YouTube
Official account subscribers 14,800 11,600 28%
Official account views 810,523 556,846 46%
ESP32 community videos 641,926 466,459 38%
ESP8266 community videos 778,090 687,155 13%
Views of the most watched ESP32 community video around 3.4m around 1.5m
Views of the most watched ESP8266 community video around 1.6m around 1.5m
N.B.：
Statistical data derived from different platforms may be based on different collecting methods. It is possible for certain platforms to modify their algorithms from
time to time and, therefore, impact the resulting statistical data. The above-mentioned data resulted from the Company’s research at the end of each quarter
reported here, unless otherwise stated.
The search results of the keyword "ESP32" include the ESP32 series, ESP32-C series, ESP32-S series, and ESP32-H series.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Business Model
Business-to-Developer-to-Business (B2D2B)
Espressif has deployed the Business-to-Developer type of marketing, not only because it has gained prominence in
recent years, but also because it has proven to be more effective since the influence of developers on organizations of
all sizes has gained traction. In other words, most developers are R&D employees in various companies and bring forth
business opportunities from the companies they work for.
This way, the developer ecosystem we have created at Espressif demonstrates how the value of networks can grow
exponentially:
• The more developers we attract as customers, the more hardware and software solutions we generate.
• The more successful hardware and software solutions we create, the more our reputation spreads with positive
feedback from happy customers/developers.
• The above-mentioned interaction between people in our network prompts the creation of more content, which -in
turn- attracts more users/developers searching for new content.
• Likewise, other third-party development platforms join our ecosystem and bring in new developers, as our influence
continues to grow.
Having successfully applied the B2D2B model, Espressif can now focus on R&D investments, while maintaining a small
business team that supports a large number of customers directly. In fact, most of our revenue is gained through direct
sales.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Research and Development
R&D Investment
R&D investment is at the heart of Espressif Systems’ development. During the reporting period, R&D cost CNY 337
million, which marked a 24.08% increase compared with that of 2021. At the same time, the R&D-to-sales ratio was
Espressif’s escalating R&D investment cost can be attributed to the increase in the number of R&D staff and their
subsequent compensation level, which increased significantly year-over-year.
Fiscal Year
CNY 2022 2021 change (%)
R&D Expenses 337,121,814 271,689,981 24.08
R&D-to-sales ratio 26.52% 19.60%
Intellectual Property
We seek to protect our technologies through a combination of patents, software
Applied for
copyright and trade secrets. By the end of 2022, the Company had been granted 141
patents. We continue to submit new patent applications relating to our recent R&D
innovations.
Granted
List of Intellectual Property Rights Applied and Granted
Applied for Granted Applied for Granted
Invention patents 14 10 124 72
Utility model patents 0 0 26 26
Design patents 0 0 1 1
Software copyright 4 2 23 21
Others 9 10 55 21
Total 27 22 229 141
N.B.: The number of patents that have been “applied for" does not include the rejected applications in China, or the PCT patent applications not submitted to any
particular country, or any patent applications beyond the reporting period. The number of “granted" patents includes those with expired IP rights. The category of
“others” includes overseas (non-Chinese) patent applications, i.e. the PCT patent applications, U.S. patent applications through the PCT route or the Paris
Convention route, as well as patent applications in India.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
R&D Employees
We are proud of our talented, diverse and multicultural workforce. By December 31, 2022, across our eight branches
worldwide, we had employed 578 people, more than 76% of whom are in engineering roles. Meanwhile, we have
expanded our business beyond Wi-Fi MCUs, thus offering innovative solutions to wireless connectivity and processing,
including AI, RISC-V MCU, Wi-Fi 6, Bluetooth LE, Thread, Zigbee and other IoT-related technologies.
Since the research and development of software and hardware are inextricably intertwined, we constantly invest in
software technology, too. Hence, we are currently focused on AIoT technologies, including toolchains, compilers,
operating systems, application frameworks, AI algorithms, Cloud products, apps, etc. Our aim is to make Espressif a
one-stop solution-provider offering anything relating to hardware, software and the Cloud.
Fiscal Year
December 31, 2022 December 31, 2021
R&D employees 440 388
R&D employees as a percentage of total employees 76.12% 75.05%
Total compensation of R&D employees (CNY in thousands) 270,083 200,254
Average compensation of R&D employees (CNY in thousands) 652 550
R&D Expenses R&D Employees
R&D expenses (in million) R&D-to-sales ratio R&D employees R&D employees %
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Ownership of Securities
Basic information of securities
Share types Ordinary share
Share capital 80,469,285 (as of December 31, 2022)
Listing Shanghai Stock Exchange (SSE)
Ticker 688018.SH
Listing Date 2019-07-22
Shareholder Structure as of December 31, 2022
Shareholder Share Numbers Percentage (%)
Espressif (Hong Kong) Investment Ltd. 34,760,000 43.20
Shinvest Holding Ltd. 2,804,446 3.49
Dajia Life Insurance Co., Ltd. – Universal Products 2,321,738 2.89
BOC - Franklin Templeton Sealand Fund 2,184,324 2.71
CITIC Securities Co., Ltd. 1,047,353 1.30
Ningbo Meishan Free Trade Port Le Tun Investment Management
Partnership (Limited Partnership)
ABC - Franklin Templeton Sealand Fund 1,020,467 1.27
Yadong Beichen Investment Management Co., Ltd. 909,374 1.13
BARCLAYS BANK PLC 757,242 0.94
China Resources SZITIC Trust - Broadvision Selection II Fund 725,500 0.90
Top 10 shareholders 47,576,474 59.13
Other public shareholders 32,892,811 40.87
Total of outstanding shares 80,469,285 100.00
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Stock-Based Compensation
Espressif has four ongoing restricted stock incentive plans. The fair value of the restricted stock incentive plans is
calculated by using the Black-Scholes model. The following table presents details of stock-based compensation costs
acknowledged in the Consolidated Statements of Income.
Restricted Stock Incentive Plans
Proportion of
Number of Ratio of Number of
Awarded Grant Price
Plan Award Type Underlying Underlying Employees in
Employees (CNY)
Shares Shares (%) the Plan
to Total (%)
incentive plan restricted
Class II 215,186 0.27 120 20.76 92.025
incentive plan restricted
Class II 952,116 1.18 206 35.64 92.900
incentive plan restricted
Class II 1,099,302 1.37 160 27.68 118.400
incentive plan restricted
stock
N.B.:
The above-mentioned numbers were calculated on December 31, 2022.
The grant price has been adjusted due to dividend distribution.
Stock-Based Compensation
Fiscal Year
CNY December 31, 2022 December 31, 2021
Selling expenses 669,137 897,990
G&A expenses 1,398,357 1,722,458
R&D expenses 12,658,526 19,167,516
Total stock-based compensation 14,726,019 21,787,964
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | MANAGEMENT REPORT
Risks and Uncertainties
Financial Risk
The Company performs periodic credit evaluations of its customers’ financial
condition and generally requires of its customers no collateral. The Company
provides an allowance for expected credit losses, based on the net amount
expected to be collected on such receivables. Losses have not been significant
for any of the periods presented in this report.
R&D Risk
Espressif’s research and development strategy is focused on leveraging new
technologies for the creation of innovative AIoT products. Any delays or changes
in the development of these technologies by our industry partners, or a failure of
our products to achieve market acceptance, could compromise our competitive
position.
Competitors
As the market for AIoT products grows, we face an increasing antagonism from
relatively large competitors, such as Realtek, MediaTek, Infineon, NXP, Qualcomm
and others. Intense competition from current players, as well as new entrants,
such as Silicon Labs and Nordic, may reduce our product sales and market share.
Suppliers
A significant portion of the Company’s products is fabricated by the Taiwan
Semiconductor Manufacturing Company Limited (TSMC). The inability of TSMC to
deliver wafers to the Company in a timely manner could impact the production of
the Company’s products for a certain period of time, which could have an adverse
effect on the Company’s business, financial condition, results of operations and
cash flow.
Customers
The Company sells directly to end customers, distributors, solution providers and
contract manufacturers. Our customers are a mix of several big customers and
numerous small customers. The concentration ratio for our top-five customers
was 26.4% in 2022, and it has been shrinking over the years. None of the
customers accounted for yielded more than 10% of our revenue during 2022.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial
Statements
Consolidated Balance Sheet
CNY December 31, 2022 December 31, 2021
Assets
Current assets:
Cash and cash equivalents 350,677,354 367,149,078
Held for trading financial assets 461,223,082 747,409,285
Notes receivable 789,099 11,600,177
Accounts receivable, net 198,406,116 306,823,758
Accounts receivable financing 1,441,520
Prepayments 9,724,045 8,172,703
Other receivables 9,578,753 9,519,869
Including: Interest receivable 838,168 298,796
Inventories 448,981,896 326,168,928
Other current assets 228,089,444 210,555,311
Total current assets 1,708,911,310 1,987,399,110
Non-current assets:
Debt investment 212,484,600
Investment in other equity assets 35,340,648 56,600,700
Other non-current financial assets 19,879,347
Fixed assets 60,243,507 46,176,368
Construction work in progress
Right-of-use assets 21,692,767 21,731,123
Intangible assets 2,412,317 3,191,335
Long-term deferred expenses 6,565,887 7,582,637
Deferred income tax assets 15,266,444 6,374,870
Total assets 2,082,796,825 2,129,056,143
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet
CNY December 31, 2022 December 31, 2021
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable 77,918,867 138,572,198
Contract liabilities 9,044,287 17,184,196
Payroll payable 85,041,335 66,168,763
Taxes payable 5,211,995 6,472,494
Other payable 2,925,552 754,261
Non-current liabilities due within one year 9,607,030 8,641,928
Other current liabilities 778,437
Total current liabilities 190,527,502 237,793,839
Non-current liabilities:
Lease liabilities 12,839,126 12,116,036
Deferred income tax liabilities 52,752,662 56,128,356
Total liabilities 256,119,290 306,038,230
Owners’ equity (or shareholders" equity):
Share capital 80,484,430 80,158,963
Capital reserves 1,309,813,001 1,266,771,034
Less: Treasury stock 40,966,012
Other comprehensive income 16,946,374 -15,711,579
Surplus reserves 46,570,910 33,462,951
Retained earnings 413,828,832 458,336,543
Total shareholders’ equity 1,826,677,535 1,823,017,913
Total liabilities and shareholders" equity 2,082,796,825 2,129,056,143
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Income Statement
End of Year
CNY December 31, 2022 December 31, 2021
Revenue 1,271,127,201 1,386,371,541
Cost of Revenue 762,876,133 837,345,809
Gross Profit 508,251,068 549,025,732
Taxes and surcharges 5,269,680 3,556,395
Selling expenses 49,323,100 41,815,693
General and administrative expenses 59,639,944 55,485,146
Research and development expenses 337,121,814 271,689,981
Financial expenses 1,370,257 -2,312,067
Including: Interest expenses 768,965 608,767
Interest income 3,903,309 4,379,324
Add: Other income 10,304,212 4,251,502
Investment income (mark"-" for loss) 24,156,207 20,794,725
Income from changes in fair value (mark"-" for loss) 1,223,082 4,509,285
Credit impairment losses (mark"-" for loss) -105,594 -13,830
Assets impairment losses (mark"-" for loss) -4,981,614 34,567
Assets disposal income (mark"-" for loss) -2,124
Operating Income 86,122,566 208,364,710
Add: Non-operating revenue 58,946 66,231
Less: Non-operating expenses 93,817 100,817
Income before income taxes 86,087,694 208,330,124
Provision (benefit) for income taxes -11,235,408 9,902,416
Net Income 97,323,103 198,427,708
Earnings per share
Basic 1.2129 2.4775
Diluted 1.2127 2.4566
End of Year
CNY December 31, 2022 December 31, 2021
Net Income 97,323,103 198,427,708
Other comprehensive income (loss), after tax
Changes to the fair value of investment in other
-1,269,304 11,929
equity instruments
Currency translation reserves 33,927,257 -8,322,431
Other comprehensive income (loss) 32,657,953 -8,310,502
Comprehensive income 129,981,056 190,117,205
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Cash Flow Statement
End of Year
CNY December 31, 2022 December 31, 2021
Operating Activities
Cash from sales of merchandise and provision of
services
Tax refund 66,050,716 37,691,770
Other received cash related to operational activities 18,771,365 8,720,037
Subtotal of cash inflow from operational activities 1,578,634,151 1,500,156,429
Cash paid for merchandise and services 1,042,903,737 1,105,365,342
Cash paid to and for employees 312,650,430 232,723,048
Cash paid for taxes and surcharges 62,356,050 41,903,120
Other paid cash related to operational activities 89,402,275 88,704,063
Subtotal of cash outflow from operational activities 1,507,312,493 1,468,695,573
Net cash provided by operating activities 71,321,658 31,460,857
Investing activities
Cash arising from the disposal of investments 2,938,975,287 3,096,596,236
Cash arising from investment income 6,724,461 3,266,350
Net cash arising from the disposal of fixed assets, intangible 12,510
assets and other long-term assets
Other received cash relating to investment activities 1,936,000 1,535,102
Subtotal of cash inflow from investment activities 2,947,635,748 3,101,410,198
Cash paid for the purchase and construction of fixed assets, 26,220,587 31,912,546
intangible assets and other long-term assets
Cash paid for investments 2,867,100,000 3,187,670,000
Other paid cash relating to investment activities 2,050,000 1,500,000
Subtotal of cash outflow from investment activities 2,895,370,587 3,221,082,546
Net cash provided by investment activities 52,265,160 -119,672,349
Financing activities
Cash arising from the issuance of common stock 28,641,415 9,997,637
Including: Cash arising from subsidiaries absorbing
investments by minority shareholders
Subtotal of cash inflow from financing activities 28,641,415 9,997,637
Cash paid for the distribution of dividends and profits, or 128,722,856 40,015,250
payment of interests
Including: dividends and profits paid to minority
shareholders by subsidiaries
Other paid cash relating to financing activities 51,360,071 8,815,291
Subtotal of cash outflow from financing activities 180,082,927 48,830,541
Net cash used for financing activities -151,441,512 -38,832,903
Impact of fluctuation in exchange rates on cash and cash 11,389,321 -9,052,722
equivalents
Net increase in cash and cash equivalents -16,465,372 -136,097,117
Add: Cash and cash equivalent at the commencement
of the period
Cash and cash equivalents at the end of the period 350,677,354 367,142,726
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Cash Flow Statement
- Indirect Method
End of Year
CNY December 31, 2022 December 31, 2021
Additional information
Net income 97,323,103 198,427,708
Adjustments to cash provided by operating activities, for
the purpose of reconciling net income:
Add: provision for the impairment of assets 4,981,614 -34,567
Credit impairment provision 105,594 13,830
Depreciation of fixed assets 16,066,265 11,167,228
Depreciation of right-of-use assets 10,994,590 7,547,081
Amortization of intangible assets 779,019 844,718
Amortization of long-term prepaid expenses 3,351,764 4,129,969
Losses on disposal of fixed assets, intangible assets 2,124
and other long-term assets (mark"-" for income)
Losses on scrapping of fixed assets (mark"-" for
income)
Losses on fair value changes（mark"-" for income） -1,223,082 -4,509,285
Financial expenses（mark"-" for income） 4,960,685 1,700,139
Losses on investment（mark"-" for income） -24,156,207 -20,794,725
Decrease on deferred income tax assets（mark”-"
-8,891,574 3,568,877
for increase）
Increase on deferred income tax liabilities（mark"-"
-3,375,693 5,305,815
for decrease）
Changes in operating assets and liabilities:
Decrease in inventories（mark"-" for increase） -118,521,370 -129,902,049
Decrease in operational receivables（mark"-" for
increase）
Increase in operational payables（mark"-" for
-48,313,483 91,379,998
decrease）
Others 14,726,019 21,959,215
Net cash flow provided by operating activities 71,321,658 31,460,857
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
Less: Other
Share Capital Treasury comprehensive Surplus Retained
CNY capital reserves stock income reserves earnings Total equity
Balance as of
December 31, 2020
Comprehensive income,
net of tax
Net Income 198,427,708 198,427,708
Other comprehensive
-8,310,502 -8,310,502
income
Transactions with owners
Capital increase 128,463 20,963,006 21,091,469
Stock-based
compensation
Surplus reserves 18,034,786 -18,034,786
Dividends -40,015,250 -40,015,250
Balance as of
December 31, 2021
Comprehensive income,
net of tax
Net Income 97,323,103 97,323,103
Other comprehensive
income
Transactions with owners
Capital increase 325,467 40,420,694 40,966,012 -219,850
Stock-based
compensation
Surplus reserves 13,107,959 -13,107,959
Dividends -128,722,856 -128,722,856
Balance as of
December 31, 2022
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | FURTHER INFORMATION
Further Information
Terms and Conditions of the Report
Responsibility Statement
The Board of Directors, the Board of Supervisors and the executive management of the Company warrant that the
contents of this report are true, accurate and complete, and do not contain any false information, misleading
statements or material omissions, severally and jointly accepting any legal responsibility thereof.
Shanghai, 17 March 2023
Espressif Systems
Board of Directors Board of Supervisors
Teo Swee Ann Lv Zhihua
Founder and Chairman Employee-elected
Ng Pei Chi Fu Hanyu
Shareholder-elected
Information Technology Officer
Wang Yiwen
Teo Teck Leong Shareholder-elected
Shareholder-elected
Xu Xin Executive Management
Shareholder-elected
Teo Swee Ann
Lan Yuzhe Founder and CEO
Independent Director
Wang Jue
Koh Chuan Koon Deputy General Manager
Independent Director
Shao Jingbo PRESSIF
Lee Sze Chin ES
Financial Director
Independent Director
Declaration
Forward-looking Statements SY
STE MS
This report contains forward-looking statements and/or assessments about the business,
financial condition, performance and strategy of the Espressif Group. These statements and/
or assessments are based on assumptions and management expectations resting upon
currently available information and current estimates. These are subject to a multitude of
uncertainties and risks, many of which are partially or entirely beyond Espressif’s control.
Espressif’s actual business development, financial condition, performance and strategy may,
therefore, differ from what is discussed in this report.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | FURTHER INFORMATION
Independent Auditor’s Report
To the Shareholders of
Espressif Systems (shanghai) Co., Ltd.
Opinion
We have audited the financial statements of Espressif Systems (Shanghai) Co., Ltd. (“the Company”), which comprise
the consolidated balance sheet and balance sheet as of December 31, 2022, the consolidated income statement, the
income statement, the consolidated cash flow statement, the cash flow statement, the consolidated statement of
changes in equity, and the statement of changes in equity for the year then ended, and the notes to the financial
statements.
In our opinion, the enclosed financial statements were prepared in accordance with the Accounting Standards for
Business Enterprises (the “ASBE”) in all material aspects, and present fairly the consolidated and other financial
positions of the company as of December 31, 2022, the consolidated and other results of company operations, and
the consolidated and other cash flows of the company for the year then ended.
Basis For the Opinion
We conducted our audit in accordance with China’s Standards on Auditing (the “CSA”). Our responsibilities under
those standards are further described in the section of our report detailing the “Auditor’s responsibilities for the audit of
the financial statements”. We are independent of the Company, in accordance with the CSA’s Code of Ethics for
Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities, again, in accordance with
the Code. We believe that the audit evidence we have obtained is sufficient and appropriate for providing the basis of
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of the greatest significance in our
auditing of the financial statements for the financial year from January 1, 2022 to December 31, 2022. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
we do not provide a separate opinion on these matters.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | FURTHER INFORMATION
Key Audit Matter How our audit addressed the Key Audit Matter
Revenue Recognition
Espressif’s main business includes Our main auditing procedures for revenue recognition are as follows:
the sales of chips and modules,
> Understanding and evaluating the effectiveness of the internal
which created a revenue of CNY
control design relating to the revenue recognition of product sales, and
testing the effectiveness of the critical control point.
Since the operating revenue is a > Evaluating the appropriateness of the sales revenue recognition
key performance indicator, there is policy by interviewing the management, reviewing the main terms of
an inherent management risk when the sales contracts and the time point of major control transfers
adjusting the time point of revenue relating to the revenue recognition.
recognition, in order for it to
> Checking the origin of revenue by performing analytical procedures
coincide with certain goals or
for the operating revenue, including monthly sales analysis, as well as
expectations. Therefore, we gross profit analysis categorized by customers and products.
identify revenue recognition, too,
as a key auditing matter. > Checking the authenticity of revenue by sampling supporting
documents related to revenue recognition, such as sales contracts,
shipping records and customer receipts.
> Performing a confirmation procedure on the current amount of sales
by using the sampling method.
> Checking commercial information and the transaction prices paid by
important customers, in order to determine whether any abnormal
transactions were made by the company.
> Performing a cut-off test to check whether the revenue recognition is
recorded within the correct accounting period.
Inventory
As of December 31, 2022, the Our main auditing procedures for the inventory are as follows:
inventory balance amounts to CNY
> Evaluating the effectiveness of the internal control design of the
inventory management, and testing the effectiveness of the critical
inventory impairment CNY control point.
amount of CNY 448,981,896.
> Analyzing the rationality of the inventory balance fluctuation at the
end of the reporting period by investigating its production cycle and
Since most inventories are stored stock policy.
in warehouses entrusted by
> Performing a confirmation procedure on the third-party warehouse.
external processors and third
parties, and the determination of > Implementing a supervision on the inventory check at the end of the
provision for inventory impairment reporting period.
involves significant management
> Evaluating whether the provision for inventory impairment at the end
judgment and estimation, we
of the reporting period is fully accrued by conducting storage age
identify the existence of inventories analysis and by reviewing the calculation model and the results of
and the provision for inventory provision for inventory impairment.
impairments as key matters.
> Calculating the inventory turnover and making a comparison to other
similar companies.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | FURTHER INFORMATION
Other Information
The management of Espressif Systems (Shanghai) Co., Ltd. (henceforth, “the management”) is responsible for any
information on all aspects of the 2022 company report, apart from the financial statements and the auditor’s report on
them.
Our opinions on the financial statements and the group management report do not cover the rest of the information
provided here, and consequently we do not express an opinion or any other form of assurance conclusion thereof.
In connection with our audit, our responsibility is to read the rest of the information provided and, in so doing, consider
whether this information:
> is materially inconsistent with the consolidated financial statements, with the group management report information
audited for content or our knowledge obtained in the audit, or
> appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. However, we have nothing to report in this regard.
Management"s Responsibilities for the Financial Statements
The management is responsible for the preparation of financial statements that give a true and fair view, in accordance
with the ASBE, and for the design, implementation and maintenance of such internal controls as the management
deems necessary, to enable the preparation of financial statements that are free from material misstatements, whether
due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue
its operation, disclosing, as applicable, any matters related to ongoing concerns and using them as the basis of
accounting, unless the management either intends to liquidate the Company or cease its operations, having no realistic
alternative but to do so.
Auditor’s Responsibilities for the Auditing of the Financial
Statements
Our objectives are to obtain reasonable assurances about whether the financial statements as a whole are free from
material misstatements, due to either fraud or errors, and to issue an auditor’s report that includes our true opinion.
Reasonable assurances provide a high level of confidence, but are not a guarantee that an audit conducted in
accordance with CSAs will always detect a material misstatement when and where it exists.
Misstatements can arise from fraud or errors and are considered substantial if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users, taken on the basis of these financial statements.
As part of an audit in accordance with CSAs, we exercise our professional judgment and maintain professional
skepticism throughout the audit. We also:
> Identify and assess the risks of substantial financial misstatements, due to either fraud or errors; design and perform
auditing procedures in response to those risks, and obtain auditing evidence that is sufficient and appropriate for
providing a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal controls.
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | FURTHER INFORMATION
> Obtain an understanding of internal controls relevant to the audit, in order to design auditing procedures that are
appropriate to the circumstances.
> Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the management.
> Conclude on the appropriateness of the management’s use of a growing concern as the basis of accounting and,
according to the auditing evidence obtained, determine whether a substantial uncertainty exists about events or
conditions that may cast a significant doubt on the Company’s ability to continue its operation. If we conclude that
there is substantial uncertainty, we are required to draw users’ attention to our auditor’s report on the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the auditing evidence obtained up until the date of our auditor’s report. However, future events or
conditions may force the Company to cease its operation altogether.
> Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
determine whether the financial statements represent the underlying transactions and events in a manner that achieves
a fair presentation.
> Obtain sufficient and appropriate auditing evidence about the financial information of entities or business activities of
the Company, in order to express our auditing opinion on the Company’s consolidated financial statements. We are
responsible for directing, supervising and executing group audits and assume full responsibility for auditing opinions.
We communicate with those charged with governance, among other matters, on the planned auditing scope, timing
and significant audit findings, including any significant deficiencies in internal controls that we may identify during our
audit.
We also provide those charged with governance with a statement that we have complied with all relevant ethical
requirements regarding our independence, and we also communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence and, where applicable, any other related protections.
From the matters communicated to those charged with governance, we determine which matters are of the highest
significance in the auditing of the financial statements of the current period and are, therefore, the key auditing findings.
We describe these findings in our auditor’s report, unless a law or regulation prohibits such public disclosure about
those findings, or when -in extremely rare circumstances- we determine that a finding should not be communicated in
our report, because the adverse consequences of its disclosure would reasonably be expected to outweigh the
benefits of such communication for the public interest.
Beijing, 17 March 2023
Baker Tilly China
Ma Gang Yu Yanli
Chinese Certified Public Accountant Chinese Certified Public Accountant
ESPRESSIF SYSTEMS | 2022 ANNUAL REPORT | FURTHER INFORMATION
List of abbreviations
AI Artificial Intelligence
AIoT Artificial Intelligence and Internet of Things
Bluetooth LE Bluetooth Low Energy
CEO Chief Executive Officer
CES Consumer Electronics Show
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization
Espressif ESPRESSIF SYSTEMS (SHANGHAI) CO., LTD.
G&A General and Administrative
GM Gross Margin
IC Integrated Circuit
IoT Internet of Things
MCU Microcontroller Unit
OBD On-Board Diagnostics
R&D Research and Development
RF Radio Frequency
RISC-V Reduced Instruction Set Computer-V
ROE Return on Earnings
RTOS Real-Time Operating System
SG&A Selling, General and Administrative
SH Shanghai
SoCs System on Chips
TSR Techno Systems Research
YoY Year-on-Year
Investor Relations
ir@espressif.com
Official Platforms Social Media
www.espressif.com twitter.com/EspressifSystem
blog.espressif.com facebook.com/espressif
github.com/espressif linkedin.com/company/espressif-systems
esp32.com youtube.com/EspressifSystems
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乐鑫科技:EspressifSystems2022AnnualReport2023-03-19
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