The Chinese semiconductor sector is experiencing an unprecedented wave of interest and investment, following the strong emergence of MetaX Integrated Circuits Shanghai Co. in the stock market. This launch confirms the growing enthusiasm among local competitors seeking to enhance the computing power of artificial intelligence in China.
Details of the public offering and its record success
MetaX began trading its shares in Shanghai after successfully raising $585.8 million in its initial public offering (IPO). The public offering saw a record crowding in the retail portion, with subscription requests exceeding the offer by about 2986 times. This excessive demand even surpassed that of Moore Threads Technology Co., which had exceeded its offering by about 2750 times, reflecting the immense confidence in the future of local Chinese chips.
The AI chip market is heating up
MetaX specializes in manufacturing graphics processing units (GPUs) for AI developers, similar to Moore Threads. The company aims to compete with global leader Nvidia Corp. in the Chinese market, especially given the restrictions imposed by the United States on selling the latest Nvidia chips to China, creating a golden opportunity for local players.
Moore Threads' shares, after their launch, saw a rise exceeding 500% in just eight trading sessions, with their value multiplying five times on opening day. Investors expect MetaX to follow a similar path.
Valuation and future potential
MetaX opened trading at 104.66 yuan per share, reaching a market value of 41.8 billion yuan ($6 billion), which is significantly below the current valuation of Moore Threads at 341 billion yuan.
In this context, Xu Dawei, a fund manager at Jintong Private Fund Management, stated that "MetaX could have a potential increase ranging from 10 to 12 times" using Moore Threads and Cambricon valuations as benchmarks. He noted that MetaX's listing "could lead to a recovery in tech stocks and generate more excitement around new and secondary listings."
A glimpse of the company and its products
* Roots: MetaX's roots trace back to the American chipmaker AMD, where three of its founders, including Chairman and CEO Chen Weiliang, previously worked.
* Products: The company designs and sells graphics processing units for AI workloads and graphics rendering in games and other applications.
* Leadership in AI: The Xiyun C500 series, which focuses on AI and which the company claims rivals Nvidia's A100 chip, accounted for nearly 98% of the company's total revenue in 2024.
* The new generation: The new generation of chips, named C588, has significantly narrowed the performance gap with Nvidia's H100 chip, according to MetaX.
* Market share: Last year, MetaX captured about 1% of the AI chip market in China.
Trends in Chinese IPOs
Bloomberg data shows that Chinese IPOs have been strong this year, with an average first-day trading jump of 250%. This is partly attributed to Chinese officials' efforts to limit issuances to prevent liquidity drain in the broader market, coupled with a decreased risk appetite in the secondary market, making new offerings a reliable opportunity for gains in the first few days of trading.
Other chip manufacturers, such as Changxin Memory Technologies Inc. and Yangtze Memory Technologies Co., are looking to list in China, with each seeking a valuation between 200 and 300 billion yuan.