@@Amid the sharp decline of Chinese AI-related stocks and the cooling investment enthusiasm in the Hong Kong IPO market, Alibaba is pushing forward with the listing of its AI semiconductor subsidiary, T-Head. This is a large IPO that could raise up to 3 billion dollars (about 40 billion won), and it is expected to be closely watched as to whether the Chinese AI semiconductor industry will receive some level of valuation recognition in the market that has seen a decline in investment sentiment.
According to Bloomberg and Reuters, Alibaba officially announced on the 10th (local time) its plan to push forward with the listing of T-Head on the Hong Kong stock exchange. Following the Hong Kong Stock Exchange's approval for spin-offs, Alibaba submitted a confidential listing application on September 11th, and is currently proceeding with the related procedures.
The specific size and schedule of the public offering have not been finalized. Financial media International Financing Review (IFR) reported the possibility of raising at least 2 billion dollars, while South China Morning Post (SCMP) reported that an IPO of 2 to 3 billion dollars could be underway.
The listing of T-Head is taking place amid recent declines in Chinese AI-related stocks and changes in the atmosphere of the Hong Kong IPO market. On the 10th, when the listing plan was announced, Alibaba's Hong Kong stock fell by 2.9%, and the decline since the beginning of the year reached about 30%. As the weakness in US tech stocks has affected the Chinese market, evaluations of the enterprise value of AI-related companies are becoming more cautious.
In the new listing market of Hong Kong, investors are also showing selective movements. SCMP reported on the 12th that all six companies listed on the Hong Kong stock exchange this week set their offering prices at the lower end or near the lower end of their desired range. Some companies saw their stock prices fall immediately after the listing. This is an analysis that suggests it is becoming difficult for companies to sell shares at the prices they expected, in contrast to the IPO boom at the beginning of the year.
In this situation, the listing of T-Head is expected to serve as an opportunity to confirm the value of Alibaba's semiconductor business. Chinese financial information provider Wind analyzed that T-Head, which has been included in Alibaba Cloud business and thus difficult to evaluate independently, could become a new benchmark for judging whether Alibaba as a whole is undervalued if it were to list separately.
Founded in 2018, T-Head is a subsidiary of Alibaba that develops semiconductor products for data centers, including AI accelerators and central processing units (CPUs) for servers. In September, it unveiled its AI accelerator 'Zhenwu V900,' which has three times the computational performance of its previous products. Alibaba is trying to reduce its reliance on external semiconductor suppliers such as NVIDIA by utilizing its own semiconductors in cloud computing and AI model operations.
T-Head has also stated that it is securing external customers beyond internal demand. Its annualized revenue is around 10 billion yuan (about 20 billion won), and more than 650 customer companies are using its related chips in industries such as automobiles, finance, and manufacturing. It is expected that during the actual listing process, the extent of dependence on Alibaba's affiliated companies among this revenue will be a major evaluation target.
In China, Baidu's AI semiconductor subsidiary Kunlunxin also submitted a confidential listing application for a Hong Kong IPO in January. This is a move by Chinese big tech companies to present their semiconductor businesses as independent investment targets and secure development funding amid ongoing restrictions on the export of advanced AI chips from the United States.
Alibaba plans to maintain its subsidiary status even after the T-Head listing. The plan is to have the semiconductor business evaluated separately through the listing, and to promote independent fundraising and customer acquisition. The actual listing and timing will be decided based on the approval of the Hong Kong Stock Exchange and Chinese authorities, as well as market conditions.Yoo Dae-jin, AITimes reporter ydj@aitimes.com
