Xiangdixian Computing Technology, a Chinese chip designer, is facing financial difficulties and has laid off over 400 employees. The company, founded in September 2020, was once valued at $2.1 billion but has struggled to meet expectations in China’s GPU market. Despite denying rumors of dissolution, Xiangdixian is undergoing restructuring and seeking new investors. The company’s troubles highlight challenges in China’s semiconductor industry, including corruption allegations and dependence on Western technologies.
According to a report in Asia Times, Xiangdixian Computing Technology, a Chongqing-based chip designer established in September 2020, told its staff members in an internal meeting on August 30 that it had to terminate their employment contracts due to a lack of cash.
During its honeymoon with investors, the company was evaluated at the ridiculous amount of $2.1 billion, but investors, it seems, in any country, will never learn or do any serious due diligence.
As the air slipped out of the ballon, the company began shedding people in April, an early sign of trouble.
On August 30, it was reported that Xiangdi, as it is known in Chiana, held an all-staff meeting and announced its dissolution, and terminated more than 400 employees, who lost their contracts and jobs on the spot.
Then, on September 1, Xiangdixian issued a statement to clarify what it said were false rumors such as “full dissolution.” Xiangdixian said that although the company faced certain market adjustment pressure, it did not take measures to dissolve or liquidate. Organizational structure and staffing optimization are underway; external funding opportunities are being sought.
The company has been focusing on making GPUs since its establishment, but, said the company, China’s GPU market development has not yet met the company’s expectations.
The company was founded by Tang Zhimin, who previously worked for Loongson Technology and Hygon Information Technology, two Chinese companies that design microprocessors. Although he has managed many state-owned chip makers, the government isn’t coming to the company’s rescue in a shareholder dispute. (Shareholders are reportedly also suing Zhimin for allegedly failing to raise over $70 billion in Series B financing that he had promised.)
China has had 13 GPU start-ups in the past four years, mostly funded by government investment via so-called private companies. Speculation now is that the government has decided there are too many and that is impacting the development of an ecosystem. Also, the performance of the devices being shown aren’t that impressive and don’t justify sucking up resources.
Xiangdixian was a OEM customer of Imagination Technologies’ GPU IP.