By the end of 2025, the domestic AI chip sector has experienced an unprecedented wave of listings and market enthusiasm:$Cambricon (688256.SH)$The stock price once surpassed$Kweichow Moutai (600519.SH)$，$Moore Threads Technology (688795.SH)$and$MetaX Integrated Circuits (688802.SH)$On their first day of listing on the STAR Market, they surged by 468.78% and 568.83%, respectively,$BIREN TECH (06082.HK)$while their Hong Kong listing debut saw a robust increase of 75.82%.
Recently, there have been reports that$BABA-W (09988.HK)$Alibaba may spin off its chip subsidiary Pingtouge Semiconductor for an independent IPO. Additionally,$BIDU-SW (09888.HK)$it was disclosed that Kunlun Chip, another of its chip subsidiaries, has confidentially filed an application for listing with$HKEX (00388.HK)$the relevant authorities.
Following the news, Alibaba and Baidu's stock prices surged significantly. After the announcement, Alibaba’s American Depositary Receipts (ADRs) rose by over 5%, while Baidu’s H-share price has cumulatively increased by more than 30% since it officially announced the plan to spin off Kunlun Core in early December 2025.
In addition, $TENCENT (00700.HK)$Enflame Technology, in which Tencent holds the largest equity stake and serves as the largest client, also plans to go public on the STAR Market. Recently, its IPO application has been accepted.
In a short period of time, domestic AI chip companies are entering the capital markets with a 'clustered charge.' While these AI chips appear to be riding the wave of computational demand into the capital markets, they represent two, or even three, distinct types of industrial entities pursuing different paths to capitalization. Enflame Technology, as a 'deeply integrated independent chip company tied to industry giants,' differs both from fully indigenous independent chip companies and those spun off from major corporations, adding diverse examples to the competitive landscape with its unique growth model.
Underlying Commonalities Among the Three Types of Entities Going Public
Whether it is chip businesses spun off from tech giants, original independent chip companies, or deeply integrated independent entities like Enflame Technology, this surge in listings is primarily driven by highly consistent factors such as industry trends, policy incentives, and capital demands.
Generative AI has triggered exponential growth in computational demand, while reliance on high-end computing chips remains persistently high. Policy mandates for self-reliance and controllability have created unprecedented substitution opportunities for domestic AI chips, especially given $NVIDIA (NVDA.US)$and$Advanced Micro Devices (AMD.US)$the restricted export market for advanced chips. The growth potential of domestically substituted chips has become a consensus in the capital markets, as evidenced by the high valuations assigned to the aforementioned chip stocks.
Chip R&D is a high-investment, long-cycle, and high-risk track. Activities such as tape-out, ecosystem development, and production capacity expansion all require continuous substantial capital inflows. Sole reliance on initial investors' funding or depending on parent companies with extensive service ecosystems for support is not a sustainable solution. Going public is undoubtedly an inevitable choice for these firms to establish their own financing channels and alleviate R&D pressures.
Whether it is Kunlun Core or Pingtouge, which rely on giant ecosystems, Suizhi bound to Tencent, or completely independent companies like Cambricon, all have completed technical validation and entered practical application scenarios. An IPO would not only enhance brand influence through capital but also drive products from 'scenario adaptation' towards 'large-scale commercial use,' accelerating market breakthroughs.
The semiconductor industry faces a significant talent gap, and market-based equity incentives are key to attracting and retaining talent. By binding core personnel through employee stock ownership platforms and further solidifying talent advantages post-IPO via stock options and other methods, companies can secure their competitive edge.
Core Differences in the Listing of Three Types of Entities
Kunlun Core and Pingtouge, both spun off from tech giants, were initially positioned as cost centers complementing their group's ecosystem. Their primary role was to provide customized computing power support for their parent company’s cloud services, large models, and core internet businesses. The primary motivation for their spin-off listings is to transform from 'cost centers' into 'independent growth engines.' On one hand, this move aims to reduce dependency on the group’s cash flow and achieve independent financing capabilities; on the other hand, it unlocks the valuation potential of hard-tech assets, reshaping the parent company’s perception in the capital markets. For instance, rumors of Pingtouge's IPO directly drove Alibaba's U.S.-listed shares up by over 5%, while Kunlun Core’s listing contributed to a 30% asset value increase for Baidu, illustrating this logic.
Meanwhile, independently established chip companies like Cambricon, Moore Threads, Muxi, and Biren have operated as market-driven entities since inception. Without the backing of stable resources from a parent conglomerate, these firms have long been in a state of high R&D expenditure and insufficient revenue. An IPO serves the dual purpose of securing ongoing R&D funding and alleviating cash flow pressures while leveraging the brand effect of the capital markets to attract major clients and overcome the growth bottleneck typical during the early stages of commercialization.
Suiyuan Technology demonstrates a unique 'binding synergy advancement' rationale: although not a spin-off business from Tencent, it is deeply integrated within Tencent’s ecosystem—where Tencent acts as the largest shareholder and primary client, providing financial support, application scenarios, and order placements. Its listing aims to reduce excessive reliance on a single dominant client while expanding its customer base, as well as strengthening synergies with Tencent by harnessing the power of the capital markets to accelerate technological iteration.
Divergence in Valuation Logic Among Three Types of Entities
Behind the capital market euphoria, there exists a clear divergence in the valuation logic applied to different types of chip enterprises.
For spin-offs from tech giants such as Pingtouge and Kunlun Core, the core of their valuation may lie in 'ecosystem synergy value' and 'technology spillover potential.' Their initial operations are deeply tied to their parent companies’ cloud and AI businesses, ensuring stable revenue and profit sources in the early stages of listing, forming the 'ballast' of their valuation. The market places greater emphasis on whether their technology can transition from serving internal needs to external markets, achieving true independent commercialization.
The level of its valuation may depend on the potential of its products to compete with giants like NVIDIA and local competitors in the open market, as well as the imaginative space for its IP licensing and technical services. The market views it as the 'discounted value' of a tech giant's technological prowess; thus, the stronger the parent company’s technological foundation, the higher the premium its spin-off chip company often receives.
For independent startups like Cambricon, Moore Threads, Muxi, and Biren, their valuations may depend on expectations regarding technological advancements and commercialization speed: within the grand narrative of domestic substitution, companies with proprietary core architectures and advanced process design capabilities are regarded as 'core assets,' and even if they incur substantial short-term losses, they can still achieve high valuations. The forward-looking nature of their technological roadmap and comparative performance metrics serve as key supports for their valuations.
Since most companies have yet to become profitable, their valuations rely more heavily on revenue growth rates and expectations for future market share. Once the technology is successfully implemented or major client breakthroughs occur, valuations may soar; conversely, if the commercialization process repeatedly falls short of expectations, valuation bubbles are more likely to burst.
For 'deeply integrated' firms like Enflame Technology, their valuation logic is the most complex and may depend on the potential for both binding security and independent growth: Tencent, as a cornerstone shareholder and client, provides strong credit endorsement and a business safety net, leading to a revaluation of this portion of the business with a certain premium for certainty; however, the market will closely monitor its progress in expanding non-Tencent clients post-IPO.
Each acquisition of a significant external client is seen as a sign of reducing dependency risk and demonstrating independent competitiveness, which could trigger an upward revision in valuation.
Spin-off transactions and the 'value unlocking' effect on the valuation of tech giants themselves
Tech giants spinning off their chip businesses into independently listed entities also has profound implications for their own valuations, helping to unlock their value.
Prior to the spin-off, the chip business operated as$BIDU-SW (09888.HK)$、$BABA-W (09988.HK)$a research and development cost center within giants like NVIDIA, where substantial capital expenditures could weigh down the group's overall profitability while the value of cutting-edge technologies was not fully reflected in market capitalization.
After the spin-off listing, the independent chip company gains public market valuation, transforming this value from a 'cost item' within the group to a visible 'asset item,' directly creating new wealth for parent company shareholders. The immediate surge in Alibaba and Baidu stock prices reflects the market's real-time revaluation of these 'hidden tech assets.'
After the spin-off, the chip business will have its own financing drive, no longer relying on the parent company's financial support to sustain its continuous and high-intensity R&D investments. This reduces the profit and cash flow pressure on the parent company. It also makes the financial data of parent companies like Alibaba and Baidu—especially profitability metrics—more transparent and optimized, allowing the capital markets to focus more closely on the operational efficiency and growth prospects of their core businesses such as internet platforms, cloud computing, and large-scale AI models. This represents a strategic optimization of the financial structure.
An independently operated chip company can engage in external collaborations more flexibly, even serving competitors of the parent company. This can expand its technological influence and ecosystem scale, transitioning from being a 'proprietary component' to becoming a 'universal component.' For the parent company, this means that the chip technology it has invested in could become one of the industry’s de facto standards, securing a favorable position within a broader industrial ecosystem and achieving strategic benefits that extend beyond its own business scope.
Conclusion
The 'clustered push' by domestic AI chip companies is far from being a simple capital feast. It reveals the most pragmatic paths for capitalization and development chosen by different industry players based on their unique characteristics, in an era where computing power is becoming localized.
From the value release of 'unbundling' from tech giants, to valuation battles among independent manufacturers in the market, to exploring a balance in the 'deep integration' model, each type of IPO case is redefining the growth logic and valuation models of China's hard-tech companies.
The outcome of this wave of IPOs will not only determine the fate of a group of chip companies but will also profoundly influence the strategic landscape and value reassessment of China's tech giants.
Editor/melody