Semiconductor software design start-up X-Epic secures new investment of US $ 30 million as part of China’s pursuit of self-sufficiency

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X-Epic, a newcomer to critical semiconductor design software, has raised more than 200 million yuan ($ 30.6 million) in a new Series A fundraiser, the company announced on Tuesday. The company’s third round of investment this year comes at a critical time as China seeks self-sufficiency in the semiconductor industry amid trade restrictions on related technologies of American origin.

X-Epic, which stands for “Accelerating Pioneering EDA Innovation Center,” manufactures electronic design automation (EDA) software, a significant set of software tools used by chip designers, an area currently dominated by three American companies – Cadence, Synopsys and Mentor Graphics. X-Epic was founded by a former Cadence engineer in March and is based in Nanjing, the capital of Jiangsu Province.

With the new funding, X-Epic has raised around $ 60 million this year following two more investment rounds that ended in October and November, according to statistics from PitchBook, which tracks transactions in the markets of private capital.

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“X-Epic was founded less than a year ago and is already enjoying tremendous recognition from the market and industry,” said Wang Libin, Founder and CEO of X-Epic, in a statement. press release posted on the company’s official WeChat account. He added that the company is accelerating the development of “EDA 2.0” technologies for the digital economy, making chip design easier and lowering technical barriers.

Can China catch up in electronics design automation to boost its semiconductor efforts?

Semiconductors are one of the most critical technologies where China lags behind the United States. China is estimated to be around five to 10 years behind the vanguard of companies like Taiwan Semiconductor Manufacturing Company (TSMC), but the domestic sector attracts heavy investment even though some analysts believe an independent approach to the industry is doomed to fail.

The Chinese capital market’s appetite for the once niche semiconductor industry has been aroused by a state-led move towards self-sufficiency in so-called basic technologies.

However, EDA software is only one segment of chip production. Equipment and raw wafers are also essential parts of the process, but these areas remain difficult for China to pursue independently, according to a report by U.S. investment bank Morgan Stanley.

While EDA software helps in the design of integrated circuits (ICs), the production then has to be outsourced to global foundries such as TSMC from Taiwan. Mainland China is also looking to build the capacity of domestic foundries such as Semiconductor Manufacturing International Corporation (SMIC), which was recently blacklisted by the United States for alleged links with the Chinese military-industrial complex.

It “takes years of basic research before it becomes a major player in the global semiconductor value chain,” according to the Morgan Stanley report, because it is difficult to acquire and accumulate knowledge by simply injecting money.

As China seeks to advance in EDA software, several start-ups have recently emerged in this space. The country’s EDA market is expected to reach $ 3.9 billion by 2027, according to a report from Reportlinker.com.

The rise of X-Epic this year has been a particular bright spot in the industry. In November, the company launched EpicElf, a programmable solution to speed up digital chip design verification, an important part of the chip design process.

“We highly recognize X-Epic’s research and development capabilities and the competence of its management and operations teams,” said Yue Bin, founding partner of Gaorong Capital, who led the last round of funding. “We look forward to their breakthroughs in EDA technology. “

Gaorong was a new investor in this latest round, along with 5Y Capital and Shanghai Yuhan. Existing investors from X-Epic, China V Fund, Hillhouse Capital, ZhenFund and Dashu Changqing, have also made additional investments due to optimistic views on the long-term development of the company.

Wang, the CEO, started at Cadence as an engineer when it opened its first China office in Shenzhen in 2000. He worked there for 15 years in engineering and sales. In 2015, Li joined rival company Synopsys, where he spent five years before founding X-Epic, according to a report from Ijiwei.com, a media specializing in the semiconductor industry.

In August, X-Epic also hired industry veterans EDA TC Lin as chief scientist and YT Lin, who previously worked at Cadence and Synopsys, as vice president of research and development.

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