China's semiconductor sector is set for another blockbuster market debut this Wednesday, as MetaX Integrated Circuits Shanghai Co. begins trading. The launch comes hot on the heels of the spectacular rally seen in shares of its peer, Moore Threads Technology Co., earlier this month, and is being closely monitored by investors hunting for the next big gain in the red-hot artificial intelligence chip space.
A Record-Breaking IPO and Investor Frenzy
The initial public offering for MetaX raised a substantial $585.8 million. It witnessed unprecedented demand, with the retail portion of the IPO being oversubscribed by a staggering 2,986 times. This level of interest even surpassed the frenzy around Moore Threads, whose IPO was oversubscribed 2,750 times. This explosive demand highlights the intense investor appetite for Chinese companies positioned in the critical AI hardware sector, especially those viewed as potential domestic alternatives to global leaders.
Priced at 104.66 yuan per share, MetaX will debut with a market capitalisation of approximately 41.8 billion yuan ($6 billion). This valuation is notably lower than Moore Threads' current market cap of 341 billion yuan, potentially leaving more room for growth in the eyes of analysts. The company's price-to-sales ratio stands at 56.4, which is conservative compared to peers like Cambricon Technologies Corp. and Advanced Micro Devices Inc., which average 127.4.
Positioning as a National Champion in AI Chips
Similar to Moore Threads, MetaX designs and sells graphics processing units (GPUs) tailored for AI developers and for graphics rendering in gaming. The company has deep roots in the global chip industry, with three key founding team members, including Chairman and CEO Chen Weiliang, having previously worked at US chip giant AMD.
MetaX's growth is fueled by its AI-focused products. In 2024, its Xiyun C500 series, which the company claims is comparable to Nvidia's A100 chip, accounted for nearly 98% of its total revenue. MetaX asserts that its newer C588 generation has significantly narrowed the performance gap with Nvidia's top-tier H100 GPU. According to its prospectus, MetaX captured about 1% of China's AI chip market last year.
Investors are betting on these firms emerging as viable local competitors to Nvidia, whose most advanced chips are restricted from being sold to China by US export controls. "If we use Moore and Cambricon's market caps as a yardstick, then MetaX might have a 10-12 times upside potential," said Xu Dawei, a fund manager at Jintong Private Fund Management in Beijing. He added that the listing could spearhead a rally in tech stocks and generate more excitement for new listings.
A Booming Market for New Listings
The success of MetaX is part of a broader trend of strong Chinese IPOs this year. On average, new listings in China have popped by 250% on their first trading day, according to Bloomberg data. This surge is attributed partly to regulatory controls on the pace of new issuances to protect market liquidity. Furthermore, softer sentiment in the secondary market and year-end profit-taking have driven funds towards new offerings, seen as a reliable way to secure quick gains.
The momentum is evident. Just a day before MetaX's debut, radio frequency chipmaker Beijing Onmicro Electronics Co. more than doubled on its first trading day after an IPO that was 2,899 times oversubscribed. The pipeline for future semiconductor listings remains robust, with firms like ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co. potentially seeking valuations between 200 billion and 300 billion yuan each.
The activity isn't confined to the mainland. In Hong Kong, AI companies like MiniMax and Zhipu, backed by tech titans Alibaba and Tencent, are also preparing for market debuts, potentially as soon as January. The stage is set for MetaX's trading debut, with the market watching to see if it can replicate the explosive gains of its peers and further fuel the AI chip investment boom in China.
