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Semiconductors
TechTech Trends

Semiconductors and EVs will buck against the slump in 2023 after funding halved for China’s tech start-ups last year

  • Funding for Chinese tech start-ups fell 46 per cent last year to US$110 billion, but improved business environment suggests more deals this year
  • The biggest funding rounds were in semiconductors and new energy, strategically important areas expected to maintain momentum through 2023

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Aion LX electric car by Guangzhou Automobile Group seen at the 2020 Beijing International Automotive Exhibition on September 26, 2020. Photo: SCMP/ Simon Song
Coco Fengin Beijing
Funding for China’s technology and internet start-ups halved last year amid pandemic controls and regulatory uncertainty, but the new energy and semiconductor industries are expected to be stand-out performers this year after landing the biggest deals of 2022.

Investment in China’s new economy sector, made up of tech-driven industries, slipped 46 per cent to 745 billion yuan (US$110 billion) last year, according to market intelligence firm ITjuzi. Data from CB Insights shows a similar trend, with venture funding in the country down by more than half to US$47 billion in 2022.

Big Tech companies, once major drivers of tech and internet funding, have grown more prudent. Tencent Holdings and ByteDance backed 93 and 21 companies last year, respectively, down significantly from the 259 and 64 deals they made in 2021, according to data compiled by local tech blog LeiNewspaper.

“The capital market was hesitant under the shadow of the pandemic,” said ITjuzi analyst Zhi Jiaming.

A combination of China’s economic slowdown, Covid-19 restrictions that were only eased last month, and a regulatory crackdown on the tech sector have dampened investor confidence. Beijing pledged in 2020 to prevent the “disorderly expansion of capital”, which was followed by two years of unprecedented regulatory crackdowns on the country’s biggest tech firms, covering business activities from content and data security to mergers and acquisitions.

The business environment is expected to improve this year. The Central Economic Work Conference, an annual meeting of China’s top leadership that concluded on December 16, said that the government will look to internet platforms to play a role in reviving the slowing Chinese economy.

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