Sudden! BYD Semiconductor terminates IPO, the reason is revealed

BYD Semiconductor suddenly terminated its IPO.

The originally promising domestic “power semiconductor leader” and “first car core supplier” failed to achieve expectations and fell into disgrace.

In fact, BYD Semiconductor's IPO sprint has already been full of twists and turns. First, the law firm hired was investigated for violations, and then the financial information of the application documents was expired... Now it has simply withdrawn and terminated the IPO, and further explained the reasons generously. ——It is developing so fast that it cannot wait for IPO to raise funds.

BYD Semiconductor terminates IPO

Once the latest news was revealed, it exploded.

Planning work for BYD Semiconductor’s independent listing has been started as early as 2020. But I didn't expect it to end in this way.

The official reason for the sudden termination of the IPO is very specific: wafer production capacity cannot keep up with the sales of new energy vehicles, and production capacity must now be prioritized.

Why will this have an impact on IPO listings? Because during the IPO review period, big money, big projects, and big costs are all spent, and various data and expectations may change again.

In order to expand wafer production capacity, BYD Semiconductor has invested in the Jinan power semiconductor production capacity construction project during the review period. The Jinan project has been successfully put into production and the production capacity is ramping up well. However, in the face of the continued growth of the new energy vehicle industry, the new wafer production capacity is still far from meeting downstream demand.

 

Wafer refers to the silicon wafer used to make silicon semiconductor circuits, and its original material is silicon.

The manufacture of mobile phone computer chips cannot be separated from wafers, and the manufacture of automotive-grade semiconductor chips cannot be separated from wafers.

However, BYD made the reason for terminating the IPO so straightforward, not because it wanted to highlight that the review process was too slow, but because the new energy market and the automotive chip market were indeed developing too fast.

It’s too fast to be listed first, it’s too fast to raise money and raise money, it’s a waste of time, but it’s too fast to get started quickly, put into production and build factories.

BYD Semiconductor's next step plan has also been explained to the outside world - to seize the time window and carry out large-scale investment and construction of wafer production capacity;

Based on the Jinan project, we will further increase large-scale investment.

BYD stated that the purpose of doing so is to improve its wafer production capacity supply capability and independent controllability.

Therefore, in the end, considering the impact that frequent investment would have on the company's future assets and business structure, we chose to terminate the IPO at this point in time.

Of course, BYD Semiconductor's long-term plan for an independent IPO has not changed.

BYD revealed that after the relevant investment and expansion are completed and the conditions are mature, it will choose an opportunity to launch a spin-off and listing again.

What does BYD Semiconductor do? How's it going?

BYD Semiconductor was established in October 2004.

It was first born out of the IC design department established by BYD in 2002, and then entered the fields of microelectronics, optoelectronics, and LED lighting until it was officially renamed BYD Semiconductor in 2020.

The company's current main business includes the research and development, production and sales of power semiconductors, intelligent control ICs, intelligent sensors and optoelectronic semiconductors.

△The prospectus discloses the sales revenue, unit price, and gross profit margin of automotive-grade semiconductors

From the perspective of the industry chain, BYD Semiconductor takes automotive-grade semiconductors as its core and has laid out a full industry chain IDM model from chip design, wafer manufacturing, module packaging and testing to system and application testing.

In terms of product categories, BYD's automotive-grade semiconductors are mainly divided into three categories: SiC (silicon carbide) modules, IGBT modules (insulated gate bipolar transistors), and highly integrated self-developed hybrid DM control modules.

In the IGBT field, BYD Semiconductor ranked second globally among new energy passenger vehicle motor driver manufacturers for two consecutive years in 2019 and 2020, and ranked first among domestic manufacturers, with a market share of 19%, second only to Infineon.

The so-called "first car core stock" in China comes from this.

In addition, BYD Semiconductor has many independently developed technologies in various aspects such as automotive-grade IGBT chip design, wafer manufacturing, and wafer testing.

In the field of SiC devices, BYD Semiconductor is in a leading position. It is not only a technological breakthrough, but also the large-scale application of SiC modules in high-end new energy vehicles.

Of course, BYD Semiconductor’s business scope extends beyond automotive semiconductors.

According to the prospectus information, in addition to automotive-grade semiconductors, BYD Semiconductor has achieved mass production of products in the fields of industry, home appliances, new energy, and consumer electronics.

It can be seen from the financial data released by BYD Semiconductor in the past few years that the revenue for the first half of 2021 has been close to or even exceeded the full-year revenue in previous years.

Judging from the basic business situation of BYD Semiconductor, it can indeed be regarded as the leader in domestic automotive-grade semiconductors.

But here comes the question, can such a leading company solve the problem of chip "stuck neck"?

From a technical point of view, BYD Semiconductor started earlier and has a relatively complete layout.

At present, BYD's car-grade silicon carbide module voltage is mainly 1200V, and the current level covers 400A-950A. It is a world leader in technology and commercial use.

However, from the perspective of production capacity, BYD Semiconductor's current chip production business mainly focuses on wafer production, and has not yet been able to get rid of its reliance on foundry and outsourcing.

Of course, as a member of the BYD Group, the independence of BYD Semiconductor has also been questioned by relevant departments many times during the review process.

Actually, after asking around, to put it bluntly: can we live without BYD? Can there be external customers and needs?

But frankly speaking, the issue of BYD Semiconductor is not whether it can supply external products. It is BYD, its largest customer, and it is overwhelmed.

Why? BYD's cars are selling really well.

In the past October, BYD's new energy sales exceeded 218,000 vehicles. It is difficult to rival it globally. Before 2022 is over, the cumulative sales have exceeded 1.4 million vehicles, a year-on-year increase of 159%.

And you should know that BYD's 3 millionth new energy vehicle just rolled off the assembly line today - which shows the rapid growth in the past two years.

Therefore, BYD Semiconductor is already very good if it can supply BYD well. Whether the business is independent or not is no longer a matter of consideration at this stage. Even in the future, there may be a number of "DI chain" companies that will be formed specifically around BYD's supply chain.

In the final analysis, the development of new energy and the demand for BYD Automobile far exceed previous estimates.

Others go public to raise money and then expand reproduction.

Now BYD Semiconductor has shown a different side - I'm sorry, the IPO listing and financing delayed my production and making money.