Chinese tech giant Xiaomi-backed fund raised $1.44 billion to pursue its electric vehicle and semiconductor ambitions

By Greg Gao

(JW Insights) Mar 7 -- An equity investment fund backed by China’s consumer electronics giant Xiaomi raised RMB10 billion($1.44 billion) recently, with leading investors including Xiaomi, software company Kingsoft(金山软件), and a handful of government-backed investment vehicles, according to a Kingsoft regulatory filing announcing the fund. 

The fund, Beijing Xiaomi Zhizao Equity Investment Fund Partnership, mainly focuses on the automotive and semiconductor industry supply chain, including auto parts, manufacturing equipment, and automobile chips. Most investments of the fund are related to automobiles, including automotive lithium batteries, automotive LED lighting, automotive grade resistors, silicon carbide, and chassis. The completion of the new fundraising round will accelerate Xiaomi’s layout in the automobile industry chain, an analyst from JW Insights pointed out.

Xiaomi is the fund’s largest backer, contributing about a third of the fund’s capital via two subsidiaries - Xiaomi Wuhan and Xiaomi Beijing, according to the announcement. A subsidiary of Kingsoft, where Xiaomi’s CEO and founder Lei Jun is also the co-founder and chairman, would contribute RMB500 million($71.7 million) to the fund.

Other investors include entities backed by the Tianjin and Beijing governments. Many investors are Xiaomi’s partners. Up to now, the investment scale of all partners has exceeded RMB9 billion($1.3 billion).

In 2017, Xiaomi launched the Xiaomi Changjiang Industrial Investment Fund jointly with the Hubei Provincial Yangtze River Economic Belt Industry Guidance Fund. Integrated circuits have become one of the principal investment fields of the fund. As of October 2022, the fund has invested in more than 150 companies, totaling more than RMB15 billion($2.15 billion).

In addition to Shunwei Capital, which is mainly engaged in ecological strategic investment, Xiaomi has three investment funds, one is Xiaomi Changjiang Industrial Investment Fund (focusing on IC); the other is Xiaomi Zhizao Equity Investment Fund (on automobiles); The third is Xiaomi Ventures (on early stage investment).

Xiaomi’s CEO Lei Jun gave an update on its electric vehicles development during China’s “Two Session” on March 5, saying that the project is progressing beyond expectations. The company’s EV prototypes recently completed winter testing, and production is expected to commence in the first half of 2024.