In the first half of this year, the primary market fell as a whole due to the impact of the epidemic – the total amount of fundraising fell by 29.5% year-on-year, the total investment fell by 21.5% year-on-year, and the investment cases fell by 32.7% year-on-year, but semiconductor investment rose against the trend. According to the incomplete statistics of Yunxiu Capital, in the first seven months of 2020, there were 128 semiconductor equity investment cases, with a total investment of more than 60 billion yuan, more than double the investment amount of last year.
Among the institutions specializing in semiconductor investment, Walden International, Wu Yuefeng, Yuanhe Puhua, Linxin Investment, and Heli Capital pay more attention to fields such as AI, storage, Internet of Things, and analog chips. Due to the background of SMIC, Juyuan Capital focuses on the field of materials and equipment.
Industrial capital has also become a sweet pastry in the eyes of semiconductor entrepreneurs. Manufacturers such as Huawei, CLP Hikvision, Xiaomi, and Intel are actively investing in and supporting domestic supply chain companies. Start-up companies also particularly favor investment from industrial capital. Many projects give priority to industrial capital, and are even willing to discount their valuations.
Among industrial capital, Huawei’s investment focuses on analog chips and devices, and pays less attention to digital chips; Core Kinetics, due to BOE’s background, focuses on manufacturing packaging, Display drivers, and the Internet of Things; OPPO focuses on optical chips, Internet of Things, and 5G RF; Medium Dianhaikang focuses on AI chips, IoT and analog chips that are in line with Hikvision’s strategy and supply chain system; Xiaomi focuses on upstream and downstream ecological opportunities, focusing on consumer electronics and IoT; Intel focuses on equipment materials and the PC and server industries chain.
Among the leading VC institutions, many dollar funds that did not invest in semiconductors have joined the semiconductor investment army one after another. U.S. dollar funds can be seen in many projects of Yunxiu Capital. Sequoia, IDG, Qiming, Source Code, Red Dot, and Hillhouse are becoming more and more active.
Trade friction is a structural opportunity for China’s semiconductor development, providing an excellent market entry opportunity for domestic startups. The report pointed out that in the four major links of semiconductor design, manufacturing, packaging and testing, IC design companies are still the focus of semiconductor investment this year. , materials, EDA, etc. have received more capital attention.
Among emerging applications, 3D sensing, AIoT, and 5G have created a large number of incremental markets. Specifically, VCSEL, ToF and other directions in 3D sensing have attracted much attention; new opportunities such as WiFi 6, UWB, and Cat.1 appear in AIoT;
5G radio frequency companies are very popular; companies in the direction of PA and filters have grown rapidly this year.
The Bluetooth headset market in the downstream market continues to be hot, driving the performance of upstream chips and raw materials to explode. After fast charging has become a new hot spot in consumer electronics this year, it has also accelerated the rapid commercialization of silicon-based gallium nitride chips. In 2021, the demand for fast charging chips is expected to exceed 1.1 billion.
Chip production capacity is tight this year. The performance of many chip design companies has exploded, but they are suffering from lack of production capacity, and the tight production capacity of 8-inch wafers will continue until 2021.
However, the localization rate of semiconductor equipment materials is less than 5%, and the chips are “stuck” very seriously, which still means huge investment opportunities; Huawei has been completely cut off from supply and cannot be taped out, which has led to Huawei’s layout of root technologies, from semiconductor equipment and Materials, EDA and other directions will accelerate domestic substitution. Chip manufacturing and packaging and testing companies such as SMIC, Hefei Changxin, and Yongsi Semiconductor are also vying for quotas by investors.
As a boutique investment bank in the technology industry that is deeply involved in the semiconductor field, Yunxiu Capital put forward four main investment hotspot logics this year:
1. Pay attention to Pre-IPO projects:
The registration system of the Science and Technology Innovation Board and the ChiNext Board has opened a new door for the IPO of high-tech companies such as semiconductors. With the pursuit of capital, the valuation of Pre-IPO projects is relatively high. Therefore, it is not only necessary to pay attention to the current financial performance of the Pre-IPO project, but also to look at its growth and evaluate the company’s valuation level at the time of exit.
2. Pay attention to the field of “stuck neck”:
Under the trade friction, China has a strong demand for the localization of the upstream semiconductor industry chain that has been “stuck”, so there are opportunities in every subdivision in the “stuck” field. At the same time, the future growth opportunities of key devices and software such as CPU, DSP, FPGA, and EDA are also worthy of attention.
3. Focus on emerging applications:
Opportunities for emerging applications depend on the strategic planning of major downstream customers, and the commercialization prospects of new technologies are inseparable from the support of major customers.
4. Pay attention to top entrepreneurial teams:
Whether the chip tycoon can successfully start a business depends to a large extent on whether it is an established team. Chips are complex projects that require a team of experienced veterans. For the star team of innovative technology, the best combination is academic elite + chip veteran.