Connect with us

International Circuit

China’s chip design tool maker acquires Hong Kong software firm

China’s leading electronic design automation (EDA) developer Empyrean Technology said it will acquire a loss-making Hong Kong software firm for US$10 million in sign that the nation’s self-sufficiency drive in chips is accelerating despite tighter US sanctions.

The Beijing-based company, seen as one of China’s best hopes in cutting reliance on imported chip design tools, said in a stock exchange filing this week that its Shenzhen subsidiary would buy Hong Kong-based XinDA Design Automation for US$10 million cash.

Founded in 2018 by Ken Tsang, a former engineer with US EDA company Cadence Design Systems, XinDA specialises in software for designing digital and mixed-signal circuits and embedded memories, according to the company’s website.

Empyrean, which listed on the Shenzhen stock market earlier this year, said the deal will “complement shortcomings in digital design and wafer fabrication EDA tools”, and help it build “internationally leading” tools, even though XinDA made a loss of 1.3 million yuan (US$180,518) in 2021.

The expansion of Empyrean, which held a 5 per cent share of China’s EDA market in 2020 and reported revenue of US$80.4 million last year, reflects the sense of urgency among Chinese chip companies to improve their research and development capabilities as Washington tightens access to advanced chip technologies.

The EDA market is dominated by Cadence and Silicon Valley-based Synopsis, as well as No 3 player Mentor Graphics which was founded in the US but acquired by Germany’s Siemens in 2017.

In 2019, Washington began restricting the export of US chip design tools to China, but in August the Bureau of Industry and Security blocked the sale of advanced EDA software for Gate-All-Around Field Effect Transistors, a new transistor structure that enables chip designs to go beyond 3-nanometre.

Separately, Empyrean said it bought 42 former public rental apartments in Shanghai for 111.1 million yuan to use as dormitories for key personnel. The investment, which took advantage of local government subsidies on public housing sold in Pudong, was aimed at “attracting and motivating” key personnel and would help the company retain key talent in Shanghai over the long term, according to the filings.

The Hong Kong deal and Shanghai apartments jointly cost Empyrean the equivalent of US$25 million, just under a third of its 2021 revenue. However, the company is sitting on a pile of cash after its initial public offering in July. It intended to raise just 2.6 billion yuan but actually raised 3.6 billion yuan thanks to strong interest from investors.

At the same time, Empyrean’s software is not able to support most advanced chip nodes. The company said in its prospectus that its digital circuit EDA tools can design 5-nm chips, while its analogue circuit tools can only handle the 28-nm node.

China’s major tech hubs, including Shanghai and Shenzhen, have unveiled plans to encourage the development of local EDA firms. In January, Shanghai announced new policy measures to support the growth of its IC industry, including subsidies of around 30 per cent of the total investment in EDA development projects. South China Morning Post

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2023 Communications Today

error: Content is protected !!