--- title: "Li Auto's in-house chip unit raises US$229 million and a billion-dollar valuation" date: 2026-10-25 category: Capital & Markets site: NeuroAI canonical: https://neuroai.site/a/na-capital-li-auto-machev-chip language: en --- # Li Auto's in-house chip unit raises US$229 million and a billion-dollar valuation > Li Auto's chip subsidiary Shanghai Mahexin Technology signed a 1.625 billion yuan first-round financing in October 2026, valuing the four-year-old project at roughly 16.6 billion yuan. Car makers used to buy their brains from suppliers. One Chinese automaker spent four years building its own, and this month turned that bet into a separate company that outside investors are now funding. ## Key takeaways - Li Auto (理想汽车) announced on October 16, 2026 that its chip subsidiary Shanghai Mahexin Technology (上海马赫心科技) signed a first-round equity financing of 1.625 billion yuan (≈ US$229 million). - Li Auto invested 1.0 billion yuan through a subsidiary; external investors contributed 625 million yuan. Post-money valuation is about 16.63 billion yuan (≈ US$2.34 billion). - Lead external investors are Hangzhou Jingtao (杭州经韬), BlueRun Ventures (蓝驰创投), and Huaye Tiancheng (华业天成), with Qiji Creation (奇绩创坛) participating. - Hangzhou Jingtao holds an option to add up to 500 million yuan (≈ US$70 million) by December 31, 2026; if exercised, the maximum post-money valuation reaches 17.1 billion yuan (≈ US$2.4 billion). - The core asset is the Machi M100 (马赫M100) AI chip — 5nm automotive-grade, 1280 TOPS per chip, in mass production since May 2026 and riding in Li Auto's L9, L8, and L6. ## The deal, in numbers According to China Securities Journal on October 16, 2026, Li Auto announced that Mahexin signed its first-round equity financing totaling 1.625 billion yuan. Li Auto contributed 1.0 billion yuan via a wholly owned subsidiary; external investors contributed 625 million yuan. The base post-money valuation is about 16.63 billion yuan. Hangzhou Jingtao received an option to invest up to an additional 500 million yuan by year-end; if fully exercised, the maximum post-money valuation reaches 17.1 billion yuan. Even then, Li Auto retains about 74.01% control and continues to consolidate the unit's financials. ## From internal project to standalone company The company itself is new — established in August 2026 — but the underlying project is not. Li Auto began exploring in-house chips in 2021, formally started development in November 2022, taped out in 2024, and brought the chip to volume production in May 2026 with the new Li L9. The team, led by CTO Xie Yan (谢炎), is about 200 people handling the core AI compute architecture, with integration and backend work outsourced. That sequencing matters: by the time outside money arrived, the chip was already shipping in customer cars. The financing is less a bet on a prototype and more a decision to turn an internal cost center into an independent business that can also sell to others. ## Why spin out a chip unit The Machi M100 is a general-purpose AI chip built on a 5nm automotive-grade process, rated at 1280 TOPS per chip. Li Auto has described it as the first dynamic-dataflow AI chip of its kind. The new L9 carries two of them for a combined 2560 TOPS. Spinning the unit out and bringing in external capital does two things. It shares the heavy R&D and fabrication cost — chip programs are expensive and slow to pay back — with outside investors. And it opens a path to sell the chip, silicon-carbide modules, and range-extender components to non-Li Auto customers, turning a captive supplier into a potential revenue source. As one industry observer noted, the move pushes the chip business from an internal cost center toward an independent operating entity accountable to outside shareholders. According to Li An, chief scientist at BrainNet (脑机网), when an automaker spins its chip team into a separate company, the harder question is whether outside customers will trust a rival's supplier — a commercial risk that no valuation captures. The technical milestone is real, but the market test is still ahead. ## The wider backdrop The timing is not accidental. China's passenger-car market has been under margin pressure in 2026, with industry profitability well below the average for downstream manufacturers, so relying on vehicle sales alone to fund rising R&D is harder. Spinning out high-value technology — chips, smart-driving systems, powertrain components — and bringing in external capital lets a car maker convert the future value of those assets into present cash, while using external supply to lower unit costs. Li Auto is not alone. Several Chinese automakers have built or are building in-house chip and smart-driving capabilities, and a few have begun opening them to outside customers. The trend reflects a belief that the next decade of automotive competition will be decided as much by silicon and software as by sheet metal. ## Honest limitations The financing terms — 1.625 billion yuan total, the 1.0 billion / 625 million split, the 16.63 billion base and 17.1 billion maximum valuations, and Li Auto's ~74.01% retained stake — are reported by China Securities Journal and corroborated by business media. I have not seen the primary financing agreement, so the figures rest on those reports. The 1280 TOPS and 5nm specifications are company-stated and reported; I have not independently benchmarked them. Importantly, the company has disclosed it has not yet generated operating revenue, and the additional-investment option may not be exercised — so the 17.1 billion yuan figure is a conditional ceiling, not a done deal. None of this is investment advice. ## What readers can do now - Treat the 17.1 billion yuan valuation as a ceiling with strings: it depends on an option being exercised by December 31, 2026. - Watch for the unit's first external (non-Li Auto) customer win — that is the real test of whether an in-house chip can become a standalone business. - If you follow auto stocks, separate the chip narrative from car sales: this financing helps spread R&D cost but does not change near-term vehicle margins. --- Published by NeuroAI (https://neuroai.site/) — https://neuroai.site/a/na-capital-li-auto-machev-chip Free to quote with attribution and a link to the original.