Who Is Throwing Money at Early-Stage Chinese Semiconductor Startups?
A glance at the most recently active investors in the country’s young chipmakers.
Being at the cusp of the new technological revolution, which is likely to change the global socio-economic landscape entirely, the world’s second-biggest economy faces numerous challenges. Objective forces such as post-transition imbalances and ever-growing 1.4 billion-strong consumer market along with stiff international rivalry make China cultivate its own capabilities across a number of knowledge-intensive sectors in order to float into the new era smoothly.
Though it has recently become superabundant, driving oversaturation on the global scale, data is the core of nearly all processes that the future ‘smart’ ecosystems are projected to be filled with. But information doesn’t appear from nowhere: every bit of primary data is backed by real-life events and/or observations. It is thereby of economic interest how, how fast and how precise both the ‘real-to-digital’ and ‘digital-to-real’ schemes work. Here come integrated circuits (IC), or computer chips.
China, which produces more consumer electronics than the rest of the world, has always been short of its own IC products. The country’s five-year import bill for semiconductors exceeded USD 1 trillion in 2012-2017, according to the United Nations Comtrade. Triggered by this and several other issues, China National Integrated Circuit Industry Investment Fund (国家集成电路产业投资基金), known as the ‘Big Fund’, was incubated in 2014 to enrich the nascent domestic industry with capital.
So far, the Fund has taken part in around 30 investment projects. Some companies from its portfolio have already successfully exited. This is, indeed, a positive indicator.
For one, Anji Technology (688019:SH), which carried out a CNY 115 million (USD 16.09 million) Series B in July 2016, went public on the Shanghai Stock Exchange Star Market, seeing its stock moving up by 340% in the first day of trading. AMEC (Advanced Micro-Fabrication Equipment China, 688012:SH) has also made an illustrious IPO. The firm’s market capitalization was CNY 36.83 billion (USD 5.15 billion) as of October 4, 2019.
Nonetheless, it is widely known that state-backed organizations understand and assess risks differently from private investors. As a result, only a few companies 'blessed' by the Fund received money in their Series A or B rounds of financing. Considering the market and private funding among the most effective economic growth engines, EqualOcean has crunched the data in order to unveil the top 10 early-stage investors in China’s semiconductor industry. Here’re the results.