MetaX shares rocket 700% in debut as China AI chips push gathers speed

Highlights:

• Debut follows IPO 4,000 times oversubscribed by retail investors
• AI chip firms in funding rush as China seeks to cut US reliance
• Price surge triggers bubble fear

MetaX Integrated Circuits shares jumped 700% on their market debut on Wednesday, as investors sought to benefit from a government push to reduce reliance on AI chips from US majors Nvidia and Advanced Micro Devices.

Founded by former AMD executive Chen Weiliang, MetaX raised roughly $600 million in an initial public offering last week, days after bigger rival Moore Threads debuted with a 400% pop.

MetaX shares opened at 700 yuan apiece in Shanghai versus an IPO price of 104.66 yuan, before surging as far as 895 yuan in early trade, stirring persistent AI bubble concern.

"It's another IPO tale in China that turns a crow into a phoenix," said fund manager Yang Tingwu at Tongheng Investment.

The price surge "creates huge arbitrage opportunities" for pre-IPO investors, Yang said, and "we're likely witnessing the stock's peak level for the next five years".

Makers of artificial intelligence chips are rushing to sell shares to capitalise on interest generated by a government drive to boost local production in competition with the US.

"AI and semiconductors are key areas of competition in the Sino-US tech rivalry," Guotai Haitong Securities said in a report ahead of MetaX's listing.

"Against the backdrop of geopolitical tension, AI chipmaking has huge growth potential" as China seeks to achieve self-sufficiency.

Researcher Frost & Sullivan forecast China AI chip sales to top $189 billion by 2029 versus $54 billion in 2026.

Policymakers push AI self-sufficiency

MetaX, which makes graphics processing units (GPUs), raised 4.2 billion yuan ($596 million) last week in a share sale that was more than 4,000 times oversubscribed by retail investors.

The IPO priced the money-losing startup at 50 times its 2024 sales.

That compared with a multiple of 34 for Nvidia and 14 for AMD, MetaX said in a pre-listing statement.

MetaX, which controls 1% of China's AI chip market, projects sales to more than double this year due to the tech self-reliance drive, and expects to break even as early as next year.

"Chinese policymakers are greenlighting IPOs for AI chipmakers to support home-grown advanced technology," said fund manager Yuan Yuwei at Trinity Synergy Investments in Hong Kong.

"Domestic chipmakers lag US rivals, but if they can raise tens or hundreds of billions to spend on talent, you cannot rule out their breakthrough."

Moore Threads, dubbed by analysts as "China's Nvidia", raised $1.1 billion in its Shanghai IPO in late November.

On Monday, AI chip startup Biren Technology gained approval to sell shares publicly in Hong Kong, while rival Kunlunxin, owned by Baidu, also plans an IPO in the city.

Another AI chipmaker, Enflame, has hired Citic Securities to prepare for a flotation.

Significant technology gap

MetaX flagged a number of risk factors in its IPO prospectus, including supply chain disruption from US technology restrictions as well as its significant technology gap with Nvidia and AMD.

Nvidia is considering adding production capacity for its H200 AI chips due to strong orders from Chinese clients, after US President Donald Trump this month greenlighted export of Nvidia's second-fastest AI chips to China.

In the home GPU market, MetaX competes with Moore Threads as well as Hygon Information Technology and Biren Technology.

In the so-called ASIC chip business, it vies with Cambricon, Huawei Technologies' HiSilicon, Baidu's Kunlunxin and Alibaba Group's T-Head.

"MetaX's technology lags Moore Threads, and it faces stiff competition from Huawei and Alibaba," said Yuan of Trinity Synergy Investments.

There will be room to improve, "but under the current circumstances, there's definitely froth in its share price."