BYD carmaker

BYD chip unit is now on ChiNext

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Chinese electric car maker BYD Co. Ltd revealed on Wednesday (June 30) that it has successfully listed its controlled subsidiary BYD Semiconductor Co. Ltd, on ChiNext, the Shenzhen Stock Exchange’s board for growth enterprises.

Shenzhen-based BYD, which is 8.3% owned by Warren Buffett’s Berkshire Hathaway based on most recent filings, announced on May 11 its plans to spin off BYD Semiconductor Co.Ltd. for the independent listing.

The spinoff would not result in any changes in BYD’s shareholding structure, and BYD would still be the controlling shareholder of BYD Semiconductor.

Formerly named Shenzhen BYD Microelectronics Co., Ltd., BYD Semiconductor was founded in October 2004 and , and BYD directly holds 72.3 percent of the shares, making it the controlling shareholder of the company. The semiconductor maker has been involved in developing, designing and producing power semiconductors, IC chips, sensors and LED products which have been used in BYD’s electric vehicles as well as in other industrial and commercial applications over the years.

BYD Semiconductor’s full-year net profit attributable to shareholders of parent companies reached 33 million yuan ($5.125 million), 30 million yuan ($4.659 million) and 32 million yuan ($4.97 million) in 2018, 2019 and 2020 respectively. Last year the semiconductor maker made up almost 0.8% of the parent’s entire business. Its net assets stood at CNY3.2 billion (USD496.4 million), or almost 4.1% of BYD’s total.

According to Crunchbase, BYD Semiconductor has raised a total of CNY2.7B in funding over two rounds from more than 20 investment institutions. Their latest funding was raised on Jun 17, 2020 from a Series A round from investors, including SK Group, Xiaomi, SMIC, ARM, and Huaqiang, lifting its valuation to CNY10.2 billion (USD1.6 billion).

Unlike multiple other carmakers worldwide, the firm stated earlier that it experienced no chip shortages in the previous quarter.

BYD ordinary shares

“According to BYD, it has no chip shortages issue on their NEV (new-energy vehicle) production” for the April-June quarter, Citigroup analyst Jeff Chung wrote in a client note this week. “BYD may be vulnerable to raw material inflation but is less impacted by the global chip shortage due to self-sufficiency.” Alexious Lee of Jefferies wrote.

BYD said that the IPO would enhance the subsidiary’s “brand recognition and market influence” and improve its corporate governance and management efficiency. The separate listing would also expand the group’s own fundraising capabilities.

The funds from the IPO would be used for its primary business, including supplementing working capital, purchasing assets, hiring personnel and research and development, and other purposes approved by investors.

ChiNext has been attractive for Chinese semiconductor companies to go public on the back of rising investor interest in the chip sector after China encouraged companies to reduce their reliance on American technology.