As Chinese semiconductor companies pursue a series of large-scale initial public offerings (IPOs), one firm has emerged offering subscription priority to customers who purchase its chips. The move is seen as a result of intensifying competition among Chinese companies, as the Chinese government pushes to build a self-reliant domestic semiconductor supply chain.
Meanwhile, with major Chinese artificial intelligence (AI) companies going public one after another, fundraising in Hong Kong's equity issuance market reached its highest level in five years in the first half of this year.
Intensifying China AI Chip Market...Kunlunxin Attaches Chip Purchase Condition to IPO
Kunlunxin Technology, an AI chip company majority-owned by Chinese search engine firm Baidu, is pursuing a listing targeting a corporate valuation of $50 billion (approximately 77 trillion won), according to U.S. tech publication The Information on Saturday. According to people familiar with the matter, Kunlunxin is giving subscription priority to investors who commit to purchasing its chips. The investor group Kunlunxin approached about chip purchases includes investment funds under Chinese local governments dedicated to AI and semiconductor investment, and these investors were asked to purchase chips worth at least three to seven times their planned subscription amount, The Information reported.
While not common, U.S. tech companies sometimes ask the investment banks (IBs) underwriting their listings to use their services. SpaceX also required IBs seeking to participate in its IPO to subscribe to its AI model, Grok. However, demanding such conditions is unusual in China's tech industry. The Information assessed that "the fact that the company set as an investment condition the purchase of a massive volume of chips that would be difficult to handle for any firm that does not operate its own data center clearly demonstrates just how fierce competition in China's AI chip market has become."
Kunlunxin has been dealt a blow after being dropped from the "First Safe and Trusted Certification List" announced by the Chinese government in May. The list, which serves as a procurement standard for government agencies and state-owned enterprises, included Huawei, MetaX, Moore Threads and Alibaba's T-Head, but excluded Kunlunxin. The main reason for Kunlunxin's failure to make the certification is reportedly the issue of where its chips are produced. Kunlunxin had previously relied mainly on Samsung Electronics for chip production, which hindered its bid to earn the "purely domestic chip" title. Kunlunxin is currently in negotiations with Chinese state-owned foundry company SMIC to resolve this issue and bring production back home, The Information reported.
The heat is expected to continue in the second half of the year. Major candidates including Kunlunxin, optical communications module maker Zhongji Innolight, and Luxshare Precision, China's largest electronics contract manufacturer, are preparing to list in Hong Kong. Already-listed companies are also active in pursuing additional fundraising. According to sources, CATL recently raised an additional $5 billion through a share placement since its listing last year. Zhipu AI, an AI model developer that listed in January this year, is also considering an additional fundraising worth billions of dollars as early as next month.
Alibaba's T-Head Also Pursues IPO...Hong Kong Market Bustling
If Kunlunxin succeeds in its listing, it will become the sixth Chinese AI chip design company to debut on the public market since December 2025. Alibaba is also planning an IPO for its semiconductor subsidiary T-Head. T-Head increased its registered capital threefold to $148 million in June, raising capital for the first time in three years, and is accelerating its listing preparations by carrying out a major corporate restructuring.
As Chinese AI companies grow rapidly, the Hong Kong equity issuance market is also bustling. Fundraising in Hong Kong's equity issuance market in the first half of this year totaled about $44 billion, combining IPOs, additional issuances and block deals, according to Bloomberg on Saturday. This represents a 29% increase from the same period last year and the highest level in five years.
Hong Kong accounted for the largest share, about 36%, of the $122 billion raised across the Asia-Pacific region. Despite the Hang Seng Index falling nearly 12% this year, the possibility of tighter listing regulations by Chinese authorities, and inflation concerns from the Middle East war, demand for large-scale fundraising has not waned.
