Case Details

Xiangdixian Computing Technology Company Limited (象帝先计算技术（重庆）有限公司) (XDXCT) was a computer chip technology start-up established in Chongqing, Sichuan, China. Incubated by the Chongqing city government and once dubbed China's "NVIDIA," XDXCT was designated as one of the city's computer chip unicorn companies, with a valuation of CNY15bn according to the Chongqing city government. It predominantly researched and designed computer chip products, such as graphics processing units (GPUs) for graphics cards and artificial intelligence (AI), and computer processing units (CPUs).

During its Round B financing, XDXCT entered into a valuation adjustment mechanism (VAM) agreement with investors, targeting a CNY500mn raise. When the company failed to meet the agreed conditions, it found itself legally and financially unable to compensate investors, leading to frozen bank accounts, mounting legal disputes, and an abrupt halt to operations. The case traces XDXCT's rise and collapse against the backdrop of China's semiconductor industry, examining how unicorn valuations are determined, the legal and structural risks embedded in VAM agreements, and the broader regulatory and geopolitical pressures shaping China's chip sector.

The case examines the factors that drive companies toward VAM financing over alternative methods such as equity raising and bank loans, how VAM agreements shape a company's valuation, and the risk management and governance lessons that emerge from XDXCT's collapse. Students are asked to assess whether the company's failure stemmed from its underlying business performance or the structure of its VAM agreement, and to consider how investors and investee companies alike can better protect themselves when entering into such arrangements.