Chinese AI and chip firms surge on Hong Kong debut as tech race with US intensifies

Chinese technology companies made a striking entrance on the Hong Kong Stock Exchange this week, as markets rallied and investor appetite for mainland innovation grew louder against the backdrop of intensifying US–China tech competition.

Three mainland tech firms, Zhipu AI, Shanghai Iluvatar CoreX, and Shenzhen Edge Medical, all closed sharply above their IPO offer prices on Thursday, raising a combined HK$9.3 billion (US$1.19 billion) in what analysts are calling a strong vote of confidence in China’s tech ambitions.

Reports from sources stated that the selling price of these companies on their first trading day had exceeded their offered prices. Zhipu AI, the first large language model company in the country to go public through an IPO, began trading at 3.3% above its offer price of HK$116.20 per share, then finished the day up 13.2% at around HK$131.50 per share.

The next in line is Shanghai Iluvatar CoreX, a designer of general-purpose GPUs, which initiated its first day trading at around 31.6% surpassing its offer price of HK$144.60 and closed its trading day with a rise of 8.4% at HK$156.80 followed by Shenzhen Edge Medical Co., Ltd., a medical technology company that designs, develops, and manufactures surgical robots, which began trading at 36.4% that exceeded its offer price of HK$43.24 and closed its trading day with a surge of 30.9% at HK$56.60.

Collectively, these results totaled approximately HK$9.3 billion, equivalent to $1.19 billion, demonstrating strong performance. Following this outcome, officials in China decided to accelerate the listing process for chip and AI firms to establish local alternatives that can rival the advanced technology displayed in the US. This move indicated that the US-China tech competition is becoming more intense.

Several tech firms demonstrate heightened interest in Hong Kong 

As this competition ignites tension in the market, reports have pointed out that xFusion, a major Chinese provider of computing infrastructure, has hired Citic Securities as the investment bank and “guidance institution,” or sponsor, to prepare for an initial public offering (IPO) process on the mainland. 

Reports indicate that ChangXin Memory Technologies, China’s leading producer of Dynamic Random-Access Memory (DRAM) chips, and Kunlunxin, the AI chip design subsidiary of Chinese technology giant Baidu, were also thinking about going public.

Meanwhile, following its listing, Zhipu AI managed to collect approximately HK$4.35 billion for HK$116.20 per share. This outcome raised the company’s valuation to HK$51 billion. When reporters inquired about the firm’s intentions with the fund, Zhipu AI stated that it plans to allocate a significant portion of these funds to research and development.

After the firm made this assertion, Marco Sun, the chief financial market analyst at MUFG (China), stated that the minor gains in IPOs, particularly for Zhipu AI, should not be viewed as a decrease in interest for AI technology. “Investments made early on have not yet been turned into profits,” Sun said, adding that “The story of AI in China is just starting out, so it’s premature to make any judgments.” 

Later, Janice Hu, the Head of UBS in China and Chairperson of UBS Securities, conducted an analysis and discovered that AI and high-tech firms listed in China have secured a valuation of approximately $5 trillion. That compares with roughly $30 trillion in the United States, pointing out that China lacks a significant player worth $1 trillion. Hu commented on the situation, alleging that it is just a matter of time before such a player emerges.

OpenAI describes Zhipu AI as an emerging competitor in the country 

Zhipu AI, established in 2019, is currently recognized as a significant contributor to China’s AI efforts. This outlook was adopted after OpenAI described the company as an emerging competitor within Beijing’s push to foster AI developed in China globally in a June statement.

Dan Ouyang, a partner at the law firm Baker McKenzie, commented on the development, noting that the listing marks an important milestone for the company. He mentioned, “As a leader in the AI industry, this listing will give the company a lot of money to support its next stage of growth,” citing Zhipu AI’s recent move. 

On the other hand, reports from reliable sources reveal that Shanghai Iluvatar CoreX collected about HK$3.48 billion. 

Consequently, the company’s valuation rose to HK$36.8 billion mainly due to the price of its shares. Shanghai Iluvatar CoreX claimed that it will allocate a significant portion of these funds for research and development in chips, accelerators, and software. 

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