• Valuation target at CNY 30bn in Pre-IPO,
• CICC, E&Y, and Tian Yuan hired for IPO

BYD Semiconductor, a China-based automotive-grade chips and electronic components maker under BYD Company [HKG:1211; SHE:002594], is working on its final private round – before a domestic ChiNext listing next year – at a CNY 30bn (USD 4.11bn) valuation pre money, two sources familiar with the situation said.

Some existing shareholders are involved in the pre-IPO (initial public offering) funding talks, they said, declining to disclose the deal’s size and timeframe.

The Shenzhen, Guangdong-based company has hired CICC as IPO sponsor, Ernst & Young as an auditor, and Tian Yuan Law Firm as a lawyer, both said.

They target to submit filings to the Shenzhen Stock Exchange for the ChiNext IPO within the first half of next year, the first source said.

ChiNext is a Nasdaq-style bourse under the Shenzhen Stock Exchange.

BYD Semiconductor’s valuation is projected to hit as high as CNY 150bn upon listing, both said.

StarPower Semiconductor [SHA:603290], Silan Microelectronics [SHA:600460], Oriental Semiconductor [SHA:688261], and Sino-microelectronics [SHA:600360] are among its Chinese listed comparables, the first source said.

Globally, the company competes with Germany-based Infineon Technologies [ETR:IFX] and Netherlands-based NXP Semiconductors [NASDAQ:NXPI], he added.

Separately, an unidentified Chinese venture capital fund is seeking to exit separately via selling its 0.2% stake, as its lifespan ends soon, both said. The fund is asking for around CNY 60m for the stake, the first source said.

BYD Semiconductor generated a net profit of CNY 1.2bn on a revenue of CNY 8bn last year, up from 2021, when it reported CNY 381m in net profit on CNY 3.17bn in revenue, the first source said.

Its net profit is projected to double to CNY 2.25bn, while revenue is seen at CNY 15bn for 2023, based on BYD Semiconductor’s projections, the first source said.

BYD Semiconductor’s existence dates back to 2002, when its parent BYD launched an integrated circuit (IC) design unit to support battery production. BYD Semiconductor was set up as a subsidiary in 2004 to focus on chip operations.

BYD had intended to spin off the subsidiary in 2021 for an eventual ChiNext listing, an earlier statement shows.

In November 2022, BYD scrapped the plan, allowing BYD Semiconductor to focus on ramping up the wafer capacity of its Ji’nan-based foundry, in a bid to meet the surging demand amid the global electric car sales growth, according to the same statement.

BYD said last November it would kick off again the spin-off listing plan after BYD Semiconductor completes the project to ramp up the wafer production.

Over 72% owned by BYD, the company has also attracted a great army of Chinese state-owned and renowned global investors, including Sequoia Capital China, Advanced Manufacturing Investment Fund, Himalaya Capital, Xiaomi Yangtze Industrial Fund, CICC, Shenzhen Capital Group, Country Garden Venture Capital, Shangqi Capital, CPE, Lenovo Capital, BAIC Capital, China Fortune-Tech Capital, among others, per the public disclosure.

BYD Semiconductor develops and makes power semiconductors (IGBT, and SiC MOSFET), smart controller units, smart sensors (CMOS chips), and optoelectronic semiconductors primarily used in the automotive industry, with demand also coming from industrial, renewable energy, home appliance and consumer electronics sectors, per its website.

BYD Semiconductor, BYD Company and CICC declined to comment. E&Y, while Tian Yuan did not return requests for comments.