(Yicai) Feb. 27 -- Chinese carmaker Nio and its intelligent-driving chip subsidiary GeniTech have reached an agreement with investors in the unit’s first funding round that will value it at nearly CNY10 billion (USD1.5 billion).

The backers, which include Hefei State-Owned Capital Enterprise Investment, Hefei Haiheng, IDG Capital, China Fortune-Tech Capital, and Yuanhe Puhua, will pay CNY2.3 billion (USD329.2 million) in cash for newly issued shares of GeniTech, better known as Shenji, Nio said yesterday. 

That will give them a collective 27.3 percent stake. Shanghai-based Nio will retain a controlling interest of 62.7 percent, while the remaining 10 percent will stay with the unit’s employee stock incentive program.

The new funding will help Shenji go on developing and promoting high-end and highly competitive chips, thereby supporting Nio's long-term strategy in the autonomous driving and embodied intelligence sectors, its parent firm noted.

Last June, Nio spun off its chip business to establish Shenji. In November, the unit teamed up with Axera Semiconductor and OmniVision Integrated Circuits Group to form a joint venture with a registered capital of CNY100 million (USD14.6 million).

Shenji is the first company in China to have developed five-nanometer automotive-grade chips and achieved large-scale commercialization. In 2024, it launched the Shenji NX9031 chip, which has actual computing power about four times that of Nvidia's Orin-X, with a memory bandwidth of 546 gigabytes per second, which is about twice that of Nvidia's Thor-U, according to Nio’s data.

More than 150,000 NX9031 chips have been used in Nio-branded cars, including the ET9, ES6, ES8, and EC6, since their release.

Research and development of the NX9031 cost CNY2.3 billion to CNY3 billion, the same as building about 1,500 battery swap stations, according to Nio Chief Executive William Li. NX9031 chips offer a cost advantage of about CNY10,000 (USD1,450) per vehicle, which is almost five times that of Nvidia's Orin-X, Li said, adding that the cost advantage over domestic rivals may not be as big.

Li has mentioned several times that Shenji plans to sell and license the NX9031 to other companies. At the start of the year, he also said in a letter to staff that he was proud that Nio had the best chips.

Nio aims to achieve full-year profitability on the basis of non-generally accepted accounting principles in 2026, Li said at an all-hands meeting held before the Chinese New Year holiday. Analysts believe that using Shenji to attract outside funding and share R&D costs may be a key part of Nio's strategy in reaching that goal.

Nio’s shares [HKG: 9866] closed 2.5 percent lower at HKG39.60 (USD5.06) each in Hong Kong today. Its New York-listed stock [NYSE: NIO] fell 1.9 percent to USD5.09 yesterday.

Editor: Futura Costaglione