5Y News | EDA Technology Breakthrough Xinhuazhang Announces Completion of Series A Funding, Fully Deploying R&D for EDA 2.0

五源资本·December 9, 2020

We believe the window of opportunity for new startups has arrived in the EDA space, one of the core platforms in the semiconductor industry.

Xinhuazhang, a leading EDA (electronic design automation) intelligent software and systems company, recently announced the completion of its Series A financing round. Gaorong Capital led the round, with 5Y Capital and Shanghai Yuhan also participating. Existing shareholders — Cloudview Capital, Hillhouse, ZhenFund, Dashu Changqing, and Huazhuo Industry Investment — continue to firmly believe in Xinhuazhang's long-term prospects and followed on in this round. The Series A raised over RMB 200 million, which will primarily fund the recruitment and retention of global R&D talent and cross-disciplinary researchers, supporting the company's comprehensive push into EDA 2.0 technology research and product development.

Wang Libin

Chairman and CEO, Xinhuazhang

What was your original motivation for starting this company?

Wang Libin: China's chip industry is in a period of rapid growth. Various technological gaps are being filled one by one, and some high-end chips have even reached the global forefront. EDA, as a core foundational technology for integrated circuits, should also grow here in China.

The Xinhuazhang logo consists of two interlocking rings, symbolizing our commitment to bridging the physical and digital worlds, building a powerful intelligent technology ecosystem, and opening a brilliant new chapter for the chip industry. The color gradient from blue to cyan reflects our aspiration as a newcomer in EDA to surpass those who came before us. To truly excel, we must integrate EDA with future intelligent ecosystems — that gives us a far greater direction. Our vision is "Defining the Intelligent Future from the Chip," and building EDA 2.0 for the future. That was our founding purpose.

What distinguishes Xinhuazhang's thinking in the EDA space, and what's the biggest market misunderstanding about you?

Wang Libin: Many industry peers believe that since international EDA giants spent two or three decades getting where they are, Xinhuazhang will need the same amount of time to catch up. This view is quite one-sided. We live in an era of rapid scientific and technological advancement. The technological starting point and accumulated knowledge today are incomparable to what existed twenty or thirty years ago. We don't need to doggedly chase established companies on their original track. Instead, we can leverage new technologies combined with our own innovative strengths to change lanes and surpass them.

Some people also think domestic EDA companies are purely about import substitution. That's not the case. Import substitution is an opportunity for Xinhuazhang, absolutely not the end goal. It gives us a faster growth trajectory to develop intelligent EDA 2.0, and to make future-oriented EDA technology emerge from China. That is the unwavering goal of our founding team.

The mission of EDA 2.0 is to move EDA from automation to intelligence, lowering the barrier to using EDA and designing system-level chips. In one sentence: making chip design simpler and more accessible.

Why did you choose to work with 5Y Capital?

Wang Libin: Our partnership with 5Y stems from their deep research into hardcore technology. They truly understand what we're building, share our ideals and vision, and are willing to accompany Xinhuazhang's growth over the long term. This is especially crucial for an EDA startup. EDA demands heavy investment and is technology-intensive. Achieving the EDA 2.0 vision requires sustained, long-term commitment to talent and technology. We're delighted that 5Y's team has embraced this technical philosophy.

Liu Kai

Partner, 5Y Capital

This is your first investment in the EDA space. What's the investment thesis?

Liu Kai: Over 50% of global semiconductor industry output value is in China. From upstream R&D and manufacturing to downstream applications, China is indisputably the largest industrial chain. Especially as Chinese tech companies in smartphones, electric vehicles, and other fields gradually become global leaders, the need for full supply chain self-sufficiency grows ever stronger. We believe the window of opportunity for new startups in EDA — as one of the core platforms — has arrived. With the maturation of cloud computing, artificial intelligence, and other foundational technologies, the growth paradigm for a new generation of semiconductor companies is already clear. We believe Xinhuazhang is among the most outstanding startups in this space, with the potential to become a Chinese company capable of defining technology on a global scale.

What impressed you most about the Xinhuazhang team?

Liu Kai: Wang and the Xinhuazhang team bring years of R&D and management experience in EDA design. Despite having spent years as executives at foreign companies, they had the courage to leave it all behind and start from scratch. That entrepreneurial spirit is truly admirable. Although EDA is an extremely high-barrier field to enter, the team's vision and execution left a deep impression on us. We believe China's technology environment is now fully capable of nurturing its own full-stack semiconductor technology service providers. We look forward to seeing that dream realized.

As a core foundational science and technology for developing the digital economy, EDA's technological advancement directly impacts digital efficiency gains across every industry. Since its founding in March 2020, Xinhuazhang has been committed to "Defining the Intelligent Future from the Chip." Making EDA 2.0 for the future emerge from China remains the technical philosophy that the team steadfastly upholds. Through innovative software and hardware EDA frameworks and algorithms, the company integrates cutting-edge technologies including artificial intelligence, machine learning, and cloud computing to lower the design barrier for system-on-chip (SoC) solutions and shorten product development cycles. The more intelligent EDA 2.0 that Xinhuazhang is currently developing will empower chip innovation, thereby supporting the rapid development of the digital economy era.

About Xinhuazhang

"Xinhuazhang" signifies opening a brilliant new chapter for the chip industry. Founded in March 2020 by a global team of ambitious EDA elites, the company is dedicated to the R&D, production, sales, and technical services of next-generation EDA intelligent software and systems. It supports development across integrated circuits, 5G, artificial intelligence, cloud services, and supercomputing, providing partners with independently developed, secure, and reliable chip industry solutions and services. Learn more at www.x-epic.com.

5Y Capital (formerly Morningside Capital) currently manages approximately USD 3 billion across dollar and RMB dual-currency funds. We believe that if the "crazy" you in others' eyes starts to be believed in, the world becomes a better place.

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