Anhui YOFC Advanced Semiconductor Company (YASC), which engages in the R&D and manufacture of third-generation semiconductor products using materials including silicon carbide (SiC) and gallium nitride (GaN), has secured 3.8 billion yuan ($562.3 million) in a Series A financing round.
The round — the largest semiconductor deal in China this year — has attracted a slew of state-affiliated investors to join, including Optics Valley Industry Development Fund; CNBM New Materials Fund; Dongfeng Asset; Founder Hesheng; and CICC Capital, the flagship private equity platform of China International Capital Corp (CICC); among others.
Hong Kong-listed Yangtze Optical Fibre and Cable Joint Stock Limited Company (YOFC), the parent firm of YASC, also injected around 281 million yuan ($38.9 million) in cash as part of the Series A funding. The Hong Kong-listed firm also entered into an agreement to purchase all the equity interest that Wuhu Zewan No. 2 Investment Management Partnership had in YASC for around 64.4 million yuan ($8.9 million), per the filing.
Upon completion, YOFC’s equity stake in YASC will be reduced from 30% to 22.9%; therefore, YASC will no longer be a subsidiary of YOFC.
Local private equity and venture capital firms — including the likes of Luxin Venture Capital, Haijing New Energy, Zhonghu Zhiyun, Baoyue Qicheng, Tianxing Tongxin, and Yunlang Xiutong — have also chipped in.
The Series A equity financing round is part of YASC’s plan to raise a total of 6 billion yuan ($830 million) to build up a third-generation semiconductor epitaxy, wafer fabrication, and packaging production line equipped with an annual production capacity of 360,000 6-inch silicon carbide wafers and 61,000,000 power device modules, while the rest of the funding will be raised via debt financing, per the filing.
Founded in January 2018, Wuhu-based YASC — formerly known as Wuhu Tus Semiconductor — offers epitaxy of silicon carbide and gallium nitride, related wafer manufacturing, and sales of the whole industry chain including power modules and power single tube packaging and testing.
While the significant bodes well for the firm, YOFC noted in the filing that the market of third generation semiconductors remains at a nascent stage, not to mention that YASC did not garner any bulk sales as of June 26, which indicates that there could be uncertainties in the development of both customers and product sales in the future.
“If YOFC Advanced Semiconductor’s future R&D results are not satisfactory or if its products do not meet the market needs, the recovery of initial investment and materialisation of expected benefits of the company may be affected,” the listed firm said in the filing.
Third-generation semiconductors such as silicon carbide, known as SiC, are equipped with better energy efficiency compared with silicon, which is crucial when it comes to lowering carbon emissions. The materials have been increasingly crucial in sectors including new energy vehicles and mobile communication industry, as China strives for self-reliance in chipmaking amid intensifying crackdown from the US.