Chinese AI and Chip Firms Surge in Hong Kong Debut as Tech Race with US Heats Up in 2024
- Why Are Investors Betting Big on China’s AI and Chip Stocks?
- How Does China’s Tech Valuation Stack Up Against the US?
- What’s Driving the Regulatory Push for Faster Listings?
- Can China Cultivate Its Own $1 Trillion Tech Titan?
- FAQ: Understanding China’s Tech IPO Boom
Three Chinese tech giants—Zhipu AI, Shanghai Iluvatar CoreX, and Shenzhen Edge Medical—made explosive debuts on the Hong Kong stock exchange, collectively raising $1.19 billion. Their strong performance signals growing investor confidence in China’s tech ambitions amid an intensifying rivalry with the US. Zhipu AI, a leading AI language model developer, saw shares jump 13.2%, while GPU designer Iluvatar CoreX and surgical robot Maker Edge Medical posted gains of 8.4% and 30.9%, respectively. The surge has prompted Chinese regulators to fast-track listings for domestic chip and AI firms to counter US technological dominance. Meanwhile, companies like xFusion and ChangXin Memory are eyeing IPOs, as analysts debate whether China can produce its first $1 trillion tech titan to rival American giants.
Why Are Investors Betting Big on China’s AI and Chip Stocks?
The Hong Kong market witnessed a tech frenzy as three mainland companies defied global economic headwinds with stellar IPO performances. Zhipu AI, often called "China’s OpenAI," opened 3.3% above its HK$116.20 offering price before closing 13.2% higher at HK$131.50—a remarkable show of faith in a company that didn’t exist five years ago. Not to be outdone, Shanghai Iluvatar CoreX, which designs general-purpose GPUs (think Nvidia competitors), blasted off with a 31.6% opening pop before settling at an 8.4% gain. The real dark horse? Shenzhen Edge Medical, whose surgical robots had shares soaring 30.9% to HK$56.60. "These aren’t just stocks—they’re proxy bets on China’s technological sovereignty," remarked the BTCC research team, noting the combined HK$9.3 billion ($1.19B) haul could fund R&D to narrow the US lead.
How Does China’s Tech Valuation Stack Up Against the US?
UBS China chair Janice Hu dropped a bombshell comparison: While US high-tech firms boast $30 trillion in market cap, China’s entire AI and advanced tech sector totals just $5 trillion—with no single $1 trillion player. "We’re watching a high-stakes game of catch-up," Hu observed, pointing out that Zhipu AI’s post-IPO valuation of HK$51 billion ($6.5B) is barely 1/15th of OpenAI’s estimated worth. The gap becomes starker when you consider that Iluvatar CoreX’s entire R&D budget (HK$3.48B raised) equals what Nvidia spends in six weeks. Yet momentum is building—ChangXin Memory (DRAM chips) and Baidu’s AI chip unit Kunlunxin are now IPO-bound, with xFusion hiring Citic Securities to prep its market debut.
What’s Driving the Regulatory Push for Faster Listings?
Behind the scenes, Beijing is turbocharging approvals for semiconductor and AI firms—a MOVE one Ministry of Industry insider likened to "building lifeboats during a tech cold war." The urgency stems from Huawei’s recent 7nm chip breakthrough despite US sanctions, proving domestic alternatives can thrive. Zhipu AI plans to plough 70% of its HK$4.35B proceeds into large language model development, while Iluvatar CoreX will focus on next-gen accelerators. "They’re not just companies; they’re strategic assets," noted Baker McKenzie’s Dan Ouyang. Even Wall Street is taking notice—MUFG’s Marco Sun cautioned that early-stage losses (Zhipu’s R&D burns $200M annually) don’t indicate weak demand: "China’s AI story is on page one of a thousand-page novel."
Can China Cultivate Its Own $1 Trillion Tech Titan?
The trillion-dollar question (literally) hangs over every investor’s head. While no Chinese tech firm cracks the top 10 globally by market cap, the ecosystem is evolving rapidly. Consider this: Edge Medical’s 30.9% single-day surge mirrors Da Vinci Surgical’s early trajectory, and Iluvatar’s architecture already supports 5,000+ AI models. "What’s missing isn’t innovation but scale," argued UBS’s Hu, citing ByteDance’s TikTok as proof China can birth category leaders. With the Hong Kong exchange streamlining listings (average approval time down to 45 days from 90 in 2022), the pipeline looks robust—six more AI/chip IPOs are rumored for Q2 2024. As one hedge fund manager quipped, "In this race, even the tortoises are moving at hare speeds."
FAQ: Understanding China’s Tech IPO Boom
How much did these three companies raise collectively?
The IPOs of Zhipu AI, Shanghai Iluvatar CoreX, and Shenzhen Edge Medical raised a combined HK$9.3 billion (approximately $1.19 billion USD) on their Hong Kong debut.
Which company had the largest first-day gain?
Shenzhen Edge Medical led with a 30.9% surge, closing at HK$56.60 after pricing its IPO at HK$43.24 per share.
What are these firms planning to do with the raised capital?
Zhipu AI will focus on AI model development, Iluvatar CoreX on GPU/accelerator R&D, and Edge Medical on surgical robot production—all prioritizing technological self-sufficiency.
How does China’s tech valuation compare to the US?
Per UBS data, China’s public AI/high-tech firms total $5 trillion in market cap versus $30 trillion for US counterparts, with no Chinese company yet reaching $1 trillion valuation.
