Yesterday, BYD announced a shareholder meeting on June 16 for the proposed spinoff for its semiconductor unit. The news came on the back of the board’s approval for the spinoff and mainland listing plan for BYD semiconductor held earlier in May.

News of the spinoff reversed the stock’s 4-month decline from its all-time high. Since the new BYD call LUEW listed on 24th May, it has surged +51.1% from the stock’s +13.9% gain…

Demand growth in chips and batteries to support BYD’s revenues

With the global shortage in semiconductor chips, manufacturers stand to benefit, as the limited supply struggles to fuel the growing demand, which could potentially increase prices. Meanwhile, the world continues to transition towards electric vehicles (EV), giving BYD an additional boost as one of the earlier leaders in EVs.

According to a Bloomberg article, EV sales in China is expected to climb by more than 50% this year alone, and on pace to continue its swift expansion. From the spiking demand in EVs, BYD’s battery manufacturing arm should see increased revenues, as EV battery sales more than doubled in just the first 4 months of 2021.

As countries continue to reduce their carbon footprint, incentives are often given to manufacturers and consumers, promoting the switch to cleaner automobiles. With higher demand, economies of scales are often achieved, reducing production costs further, which then brings up the question if this is the turning point for the automotive industry.