TAIPEI – Chinese electric car maker BYD’s plan to list its semiconductor arm has been suspended due to a regulatory investigation by the law firm advising the company on the deal, according to the latest sign of Chinese authorities tightening control of local technology companies and capital markets.
BYD Semiconductor, the largest automotive microcontroller chip maker, filed an application in May to list it at Shenzhen’s ChiNext, a Nasdaq-style market overseen by the Shenzhen Stock Exchange. According to its brochure, the company intended to raise at least 2.68 billion yuan ($ 412 million) for the development of automotive chips. The stock exchange accepted the IPO application for review in June.
This plan has been suspended, however, due to a regulatory investigation by the Security Regulatory Commission into Beijing’s Tian Yuan Law Firm, one of China’s largest legal service providers. The law firm, which has helped companies like Bilibili and Nongfu Spring with their own listing plans, was advising BYD on the market debut of its chip unit.
“The file [Shenzhen Stock Exchange] needed to suspend the review of these IPO plans “due to the probe,” Shenzhen Stock Exchange said in a public notice issued over the weekend and added that it stopped reviewing the BYD application on August 18th. The Beijing Tian Yuan has also been suspended, although neither the Shenzhen Stock Exchange nor the Security Regulatory Commission gave any reason for the investigation.
BYD Semiconductor competes directly with international players such as Infineon of Germany and Rohm Semiconductor of Japan. Investors had said the company was about to become China’s “main stock of automotive chips.”
Its parent company BYD is the largest Chinese automaker by market capitalization and is backed by American heavy investment Warren Buffett. This year he split the chip arm he founded in 2004 this year to accelerate its development.
Several other listing plans involving other law firms, accounting firms and securities firms that were investigated were also stopped, according to the public notice, although no reasons were given for such investigations either.
A source of venture capital familiar with the IPO process in China told Nikkei Asia that the BYD unit’s listing plan has not been finalized, but that it may be delayed for several months while the company resolves the problem and update the necessary procedures.
However, if BYD Semiconductor’s IPO were to be canceled, it would mark the first major chip company to overcome regulatory hurdles in the search for public funding since Beijing stepped up control of business listings. . Chinese authorities rejected what would have been an IPO surpassed by Ant Group last year and launched cybersecurity reviews of Didi Global following the publication of regulators in the United States.
BYD’s listing plan for its chip unit comes as the world struggles with a severe chip supply crisis that has affected a large number of industries, from PCs, servers, home appliances and automobiles. All major economies are struggling to strengthen their local semiconductor industries and build more resilient supply chains due to national security concerns.
BYD controls more than 70% of its semiconductor arm, while BYD Semiconductor considers its parent company as its largest customer, accounting for 59% of its revenue by 2020. Other notable investors include Xiaomi’s investment fund, the second largest smartphone maker in the world. announced its plans to enter the electric vehicle market in 2024.
BYD, BYD Semiconductor, and Zhu Xiaohui, a partner at Beijing’s Tian Yuan Law Firm, which directly oversaw BYD Semiconductor’s listing, have not responded to Nikkei Asia’s requests for comment since the publication.