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KEY STAT | BYD Semiconductor raised USD 270 million, setting stage for IPO

Semiconductor investment has been growing steadily in 2020 as China aims for technological self-sufficiency.

Electric vehicle (EV) maker BYD’s semiconductor and chip-manufacturing unit recently secured an RMB 1.9 billion (USD 270 million) strategic investment in just 42 days, as China emphasizes upgrading its technology infrastructure in upcoming years.

The investment from Sequoia Capital, China International Capital Corporation (CICC), Himalaya Capital, and other, lifts the valuation of BYD Semiconductor to USD 1.3 billion from the pre-money USD 1.05 billion, as per BYD (HKEX: 1211) ‘s announcement.

“In the future, the company will continue to actively advance the listing of BYD Semiconductor,” said the Xi’an-based EV maker.

CICC estimates that BYD Semiconductor could reach a market value of RMB 30 billion (USD 4.2 billion) after its spin-off and initial public offering, as reported by 36Kr.

China has been emphasizing localizing semiconductor production and design for years, “but so far with only modest success outside Huawei,” said Kyna Wong, head of China technology research for Credit Suisse at a conference in November 2019.

Coming into 2020, as the government issued a national directive of “new infrastructure” to encourage technology upgrade in sectors like big data centers, artificial intelligence, and new energy vehicle charging infrastructure, boosting investments in semiconductors as well as integrated circuits because of their wide appliance in the sectors mentioned above.

China has long depended on imports to satisfy the domestic demand for semiconductors, which are the core components of integrated circuits.

In 2018, the nation bought USD 311 billion worth of semiconductors from abroad, which accounted for around 70% of its total technology-related imports, said Credit Suisse.

Right now BYD is the biggest supplier for the insulated-gate bipolar transistor (IGBT), a key semiconductor device for EVs, in China, according to investment Insititute ChinaVenture.