Mining machine manufacturer Yibang is involved in another lawsuit to claim hundreds of millions of yuan from Xiaomi's investment in chip company

Wu Blockchain learned that Ebang, a mining machine manufacturer that is preparing to go public in the United States, has officially sued VeriSilicon, a chip company invested by Xiaomi, alleging that the 10nm Samsung wafers provided by the other party had quality problems, causing losses of approximately 175 million yuan.

According to people familiar with the matter, recently, Hong Kong Bit Co., Ltd., a subsidiary of mining machine manufacturer Ebang in Hong Kong, formally sued VeriSilicon (Hong Kong) Co., Ltd., a wholly-owned subsidiary of VeriSilicon Microelectronics (Shanghai) Co., Ltd., in the Hong Kong High Court.

It is reported that the 2,589 10nm Samsung wafers provided by the defendant to the plaintiff had quality defects, causing the plaintiff to suffer losses of approximately US$25.07 million, or approximately RMB 175 million. Ebang was sued by a customer in 2017 for product quality issues, and it is not yet possible to confirm whether this batch of 10nm chips was used in the Ebit mining machine.

VeriSilicon mainly provides chip design and mass production services and is a company that Xiaomi invested in to be listed on the Science and Technology Innovation Board. After failing to list in Hong Kong, Ebang is preparing to list in the United States in the near future. This lawsuit may have a certain impact on the two companies that are planning to list.

Ebang sells mining machines under the brand name Ebit and was the third largest mining machine manufacturer after Bitmain and Canaan in 2017. However, its market share subsequently declined and it is inferior to rising stars such as Shenma and Xindong.

On December 4 this year, Yibang announced that it would be listed in the United States. In the first six months of 2018, the company's revenue was 2.1 billion yuan and its profit reached 135 million US dollars, but its revenue and gross profit in the third quarter of 2018 "dropped sharply".

On December 19, Yibang received a criminal "Notice of Case Filing" and learned that the Chaoyang Branch of the Beijing Municipal Public Security Bureau had filed a case against Zhejiang Yibang and Yunnan Yibang for suspected contract fraud. Yibang then issued an emergency statement.

In September this year, the Shanghai Stock Exchange Science and Technology Innovation Board accepted the listing application of VeriSilicon Microelectronics (Shanghai) Co., Ltd. VeriSilicon Microelectronics has strong shareholders, including the National Integrated Circuit Industry Investment Fund, Hubei Xiaomi Yangtze River Industry Fund Partnership , IDG, Intel, etc.

In the first half of this year, VeriSilicon achieved revenue of 608 million yuan and net profit attributable to the parent company's owners of 4.7419 million yuan. In the previous three years (2016 to 2018), the company's net profit attributable to the parent company's owners was in a state of continuous loss. The amount claimed by Ebang accounts for about 28% of its revenue in the first half of the year, and is 43 times its profit.

Yibang has been involved in several lawsuits involving huge amounts of money. In December 2017, Yibang sold a mining machine worth 13 million yuan to a customer, but was sued by the customer for 53.9 million yuan due to the delivery time, product performance and product specifications not being met.

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