Alibaba to spin off chip unit T-Head in Hong Kong IPO
Alibaba said the Hong Kong Stock Exchange will allow it to list its T-Head chip unit, a step toward a public offering as China pushes homegrown AI chips.
The announcement
Alibaba said late on Tuesday that the Hong Kong Stock Exchange will allow the company to spin off its semiconductor subsidiary T-Head, and that it plans a public offering of T-Head shares in Hong Kong. The listing is subject to approval from the Hong Kong Stock Exchange and the China Securities Regulatory Commission.
Alibaba had already filed confidentially on Sept. 11 to list T-Head on the Hong Kong Stock Exchange. The filing did not disclose a date or a proposed size for the listing.
- Confidential filingSept. 11
- V900 performance vs M8903 times
- Alibaba shares, year to datedown about 29%
The chip at the center
In late September, Alibaba announced its next-generation AI chip, the Zhenwu V900, which it said delivers 3 times the performance of its predecessor, the Zhenwu M890, released in May. The V900 is the centerpiece of Alibaba's push to build its own AI chips.
Investors barely moved on the news. Alibaba's Hong Kong-listed shares traded 1% lower on Wednesday morning, and the stock is down about 29% so far this year.
A tougher path to market
China's financial regulators have increased scrutiny of technology IPOs and the rush of capital into the sector in the last few months. Baidu has reportedly delayed the listing of its AI chip entity Kunlunxin, and Chinese memory chip company YMTC has also pushed back its listing, according to news reports this month.
That leaves T-Head with two approvals still to clear before any shares can be sold, and no date or size has been set. Until both regulators sign off, the listing remains a plan rather than a done deal.
What to watch
Investors will watch whether the Hong Kong Stock Exchange and the China Securities Regulatory Commission approve the spin-off, and what size the offering takes once a date is set. A standalone listing would give the market a direct way to value Alibaba's chip business, separate from its e-commerce and cloud operations.
The listing also tests demand for Chinese AI chip stocks after a year in which Alibaba shares have fallen about 29%. The V900's reception, and whether T-Head can turn its chips into a listed business, will shape how the spin-off is priced.
