China's Chip Makers Race to IPO Markets: Funding Technological Independence in Global AI Competition

Introduction

TL;DR

• Biren Technology plans to raise up to $624 million in a Hong Kong IPO launching January 2, 2026.
• Moore Threads achieved a historic 425% first-day surge on December 5, 2025, after raising $1.07 billion in Shanghai, marking the largest STAR Market IPO of 2025.
• The Chinese government is accelerating semiconductor self-reliance through regulatory relaxation, demand-creation policies, and multi-billion-dollar direct funding.
• These listings represent a fundamental shift in the global AI chip landscape, where technological independence has become a national survival imperative for China.

Context

The rush to public markets by Chinese semiconductor firms reflects a broader geopolitical reality: US export controls on advanced chips have forced China to pursue radical technological independence. What began as a policy initiative in 2015 under “Made in China 2025” has evolved into a coordinated, state-backed industrial strategy mobilizing hundreds of billions of dollars. IPOs are no longer peripheral fundraising events—they have become crucial validation points for Beijing’s semiconductor ambitions and signals of investor confidence in domestic alternatives to Nvidia and other American suppliers.

Part 1: Biren Technology’s $623M Hong Kong IPO

1.1 IPO Details and Investor Demand

Fundraising Scale and Timeline

Biren Technology, based in Shanghai, will become the first major listing of 2026 when trading commences on January 2, 2026. The company is offering 247.7 million shares at a price range of HK$17–HK$19.60 per share, targeting gross proceeds of HK$4.85 billion (~$624 million).

The bookbuilding process has already secured commitments from 23 cornerstone investors, representing a diverse global investor base. These institutions collectively pledged $372.5 million worth of shares to be held for a minimum of six months, signaling long-term conviction rather than speculative positioning.

Why it matters: Cornerstone investor participation is a barometer of institutional confidence. The participation of Singaporean Prudential, China’s Ping An Insurance, and international hedge funds indicates that foreign capital sees strategic value in Chinese domestic AI chips—despite geopolitical tensions and technology access constraints.

1.2 Company Profile and Technology Position

Founding and Market Positioning

Biren was incorporated in 2019 and has emerged as one of China’s “Four Little Dragons” in the GPU industry. The company’s founding team includes Zhang Wen, former president of AI face-recognition firm SenseTime, and Jiao Guofang, a veteran of Qualcomm and Huawei, bringing both software expertise and semiconductor manufacturing acumen.

The company’s flagship BR100 chip, launched in 2022, claimed performance parity with Nvidia’s H100 GPU—the gold standard for enterprise AI training and inference. While independent benchmarks remain limited, this positioning reflects Biren’s strategy to market itself as a credible Nvidia alternative to Chinese enterprises locked out of US supply chains.

Funding History and Valuation

Biren’s funding trajectory illustrates how deeply embedded state backing has become:

• Cumulative capital raised: Over 5 billion yuan (~$700M)
• Pre-IPO valuation (H1 2025): 14 billion yuan ($2 billion)
• H1 2025 funding round: 1.5 billion yuan from government-backed funds in Guangdong and Shanghai provinces
• Broader shareholder base: Includes Qiming Venture Partners, IDG Capital, Hillhouse Venture, the Russia-China Investment Fund, and New World Group

The presence of provincial government funds alongside top-tier venture capital illustrates the hybrid public-private funding model that characterizes Chinese semiconductor development.

US Export Restrictions and Manufacturing Constraints

In 2023, Biren was added to the US Department of Commerce’s Entity List, barring the company from accessing TSMC, the world’s leading advanced chipmaker. This constraint fundamentally shapes Biren’s long-term strategy: the company must either develop alternative manufacturing pathways or operate under the constraints of less-advanced nodes. This is precisely why R&D funding is critical—the company must innovate within asymmetric constraints.

Why it matters: Unlike Nvidia or AMD, which operate within a global technology ecosystem with unrestricted access to the best tools and foundries, Biren operates under a constrained technology stack. Yet it continues to attract billions in funding. This paradox can only be explained by one factor: the political imperative to achieve technological independence overrides traditional venture capital return optimization. Investors are not betting purely on company fundamentals; they are betting on national strategy.

1.3 Capital Allocation Strategy

Biren has committed to deploying approximately 85% of IPO proceeds toward R&D and intelligent computing solutions development. The remaining 15% will support manufacturing infrastructure and working capital. This allocation reflects the company’s R&D-intensive position: with manufacturing constraints due to US sanctions, the primary lever for competitive differentiation is algorithmic and architectural innovation.

Part 2: Moore Threads’ Historic 425% First-Day Surge

2.1 Market Debut Performance

A Historic Valuation Signal

On December 5, 2025, Moore Threads Technology debuted on Shanghai’s STAR Market with a performance that stunned even seasoned investors. The company priced its IPO at CNY 114.28 per share but opened at CNY 650, representing a 425–468% first-day surge—the largest for any major Chinese IPO (>$1 billion) since the 2019 market reforms.

To contextualize this performance:

• IPO size: CNY 7.576 billion (~$1.07 billion), the largest STAR Market IPO of 2025
• Retail oversubscription: ~2,750x, indicating overwhelming retail demand
• Institutional oversubscription: Performance suggests institutional demand was similarly excessive

This opening performance is historically significant because it is not exceptional in Chinese markets dominated by retail investors with volatile sentiment. Rather, it reflects a rare alignment of retail enthusiasm, institutional validation, and policy support for a single sector.

Why it matters: The 425% surge is not primarily a valuation story—it is a confidence story. Chinese investors voted with their capital that a domestic Nvidia alternative is strategically critical and technologically viable. This has implications beyond Moore Threads: it signals to other founders, investors, and policymakers that the semiconductor market is primed for consolidation around nationally-backed champions.

2.2 Financial Performance and Growth Trajectory

Revenue Acceleration

Despite its unprofitable status, Moore Threads demonstrates accelerating commercial traction:

This growth trajectory—if sustained—would position Moore Threads as a billion-dollar-revenue company by 2027, a critical milestone for proving the viability of the Chinese GPU market.

Losses and Path to Profitability

• 9M 2025 Net Loss: CNY 724 million
• Loss Improvement: 19% reduction YoY, indicating margin expansion
• Profitability Target: 2027

The company remains loss-making, but the trend is directional. Improving unit economics alongside 242% revenue growth suggests the company may achieve operating leverage—i.e., break even at meaningful scale.

Valuation Multiple Analysis

The IPO was priced at a PSR (Price-to-Sales) of 123x based on 2024 revenue. This is materially higher than peer averages (111x). For context:

• Pre-profitability US SaaS companies typically trade at 10-20x revenue
• Nvidia at IPO traded at much lower multiples
• Moore Threads’ premium reflects a “technology independence premium” in the Chinese market

Why it matters: High valuations are sustainable only if growth persists and paths to profitability are credible. Moore Threads’ 242% revenue projection and loss margin improvements suggest the market is pricing in both continued growth and near-term profitability. If the company achieves 2027 profitability at $500M+ revenue, the IPO valuation would be justified. If growth slows, the downside is severe. This is a binary bet on Chinese semiconductor viability.

2.3 Competitive Positioning

Moore Threads is directly branded as “China’s Nvidia alternative” in the market. The company’s MUSA architecture is its primary technical differentiator, though detailed performance comparisons remain limited in public data. The company’s willingness to raise capital at such high valuations and the market’s reception suggests that institutional investors believe the company can achieve functional parity with Nvidia within 3–5 years, even if peak performance metrics remain inferior.

Part 3: The Broader Chip IPO Wave

3.1 Kunlun Chip (Baidu’s AI Semiconductor Division)

Strategic Importance

Baidu, China’s leading search and AI company, is contemplating an IPO for Kunlun Chip (formerly Kunlunxin), its internal semiconductor division established in 2012. The unit has now matured into a semi-independent operating entity and represents one of the few Chinese companies with internally-developed, high-performance AI accelerators.

Valuation and Revenue

• Estimated valuation: At least $3 billion (based on 2025 fundraising)
• 2024 revenue: CNY 2 billion; net loss: CNY 200 million
• 2025 projected revenue: CNY 3.5–5 billion
• IPO timeline: Q1 2026, likely in Hong Kong

If Kunlun achieves the upper range of its 2025 projection (CNY 5 billion), it will have grown 150% YoY, comparable to Moore Threads’ momentum.

3.2 Other Planned Listings

Several additional semiconductor companies are preparing IPO launches:

This wave is unprecedented in scale. The Chinese semiconductor industry is consolidating around publicly-traded champions, channeling capital from public markets rather than relying on state funds and venture capital alone.

Why it matters: The IPO wave serves a dual purpose: it raises capital and creates valuation transparency that attracts further institutional attention. Each successful listing reduces the stigma and raises the benchmark for the next, creating a self-reinforcing cycle of capital flow into Chinese semiconductors.

Part 4: The Government Policy Apparatus

4.1 Regulatory Relaxation

The most significant policy shift has been relaxation of listing requirements for unprofitable technology companies. Previously, Chinese exchanges required consistent profitability. Current policy allows listings if a company:

• Demonstrates cutting-edge technical capabilities
• Has secured meaningful venture capital investment

This represents a Schumpeterian acknowledgment that innovation requires tolerance for near-term losses. Moore Threads and Biren can focus on R&D rather than premature profitability, a competitive advantage versus a hypothetical constrained-budget scenario.

4.2 Demand Creation: Domestic Purchasing Mandates

China is not merely providing capital—it is creating anchor demand for domestic chips through government procurement policies:

• Datacenter Purchasing Mandate: Any new datacenter project funded by national or provincial government budgets must exclusively use domestically-designed AI chips
• Sectoral Coordination: Electric vehicle makers, telecommunications operators, and cloud providers are encouraged to prioritize domestic chip suppliers

These purchasing mandates are functionally equivalent to tariff barriers. While imports are not legally prohibited, the primary buyer (government) is restricted to domestic suppliers. This creates a guaranteed addressable market for Biren, Moore Threads, and Kunlun Chip.

4.3 Direct Capital Investment

The Big Fund III

China’s National Integrated Circuit Industry Investment Fund (Big Fund III) is a CNY 71 billion (~$10B) state-backed investment vehicle. In Q3 2025, it committed CNY 450 million to Piotech Jianke for 3D integration technology, signaling a strategic pivot from broad semiconductor support to targeted bottleneck solutions.

Federal AI Capital Expenditure

In 2025 alone, government sources account for approximately CNY 400 billion of the projected CNY 600–700 billion ($84–98B) total AI capital expenditure. This means over 50% of Chinese AI infrastructure investment is government-directed, an unprecedented concentration of capital.

4.4 National Five-Year Plan (2026–2030)

Currently under development is the 15th Five-Year Plan (2026–2030), which explicitly designates semiconductors and AI as strategic tech priorities under the banner of “new-quality productive forces”.

Key targets:

• Full smart computing infrastructure self-sufficiency by 2027
• Enhanced domestic manufacturing, design, and materials capabilities
• Reduced dependence on foreign tools and foundries

This represents the highest level of policy commitment—not merely ministry-level support but CCP Central Committee-level strategic direction.

Why it matters: The policy stack (regulatory relaxation + demand mandates + direct investment + five-year planning) is not ad hoc. It reflects coordinated industrial policy at the highest state level, treating semiconductors as a national security priority equivalent to military procurement.

Part 5: Global AI Competition Context

5.1 US Export Controls and Strategic Implications

Current Restrictions

The US has progressively tightened export controls on AI chips destined for China:

• Advanced GPU bans (Nvidia A100, A800, H800, H100)
• Foundry constraints (TSMC and other fabricators restricted from serving Chinese clients)
• Design tool restrictions (Cadence, Synopsys licenses controlled)

These controls—escalating since 2017 and intensifying under both Trump and Biden administrations—are designed to maintain American technological supremacy in AI.

Chinese Strategic Response

Rather than seeking accommodation, China has adopted a radical self-sufficiency approach:

1. Vertical Integration of Chip Design: Biren, Moore Threads, Kunlun, and others are developing proprietary ISAs and architectures not dependent on foreign standards
2. Advanced Packaging as Alternative to Lithography: 3D integration bypasses traditional 2D scaling, potentially reducing reliance on cutting-edge photolithography tools (currently dominated by ASML and under US control)
3. Open-Source Software Ecosystems: Huawei’s CANN and community-driven AI frameworks aim to reduce dependence on Nvidia’s CUDA
4. Domestic Supply Chain Closure: Investments in memory (HBM), substrate materials, and packaging equipment to eliminate foreign bottlenecks

5.2 Market Size and Growth Forecasts

The addressable market for Chinese semiconductor companies is substantial and expanding:

• 2025 China Semiconductor Market: ~$217.55 billion
• 2030 Projected Market: ~$310.78 billion
• Projected CAGR: 7.39%

Within this market, AI chips represent the fastest-growing segment. Even assuming Moore Threads and Biren capture only 5–10% of incremental AI chip spending, they would reach multi-billion-dollar annual revenues within a decade.

Why it matters: The market size is not hypothetical—it is already here. Chinese tech companies, cloud providers, and government agencies require AI chips. The only question is whether they will procure from Nvidia or from domestic suppliers. As US export controls tighten, the margin of choice narrows. By 2027–2028, many Chinese enterprises will simply lack the option to purchase from Nvidia, forcing them toward domestic alternatives.

Part 6: Investment Thesis and Risks

6.1 Bull Case

Structural Advantages

• Policy Certainty: State-level commitment across regulatory, fiscal, and procurement dimensions
• Anchor Demand: Government mandates create guaranteed customer base
• Talent Gravitational Field: Success of Moore Threads IPO attracts A+ engineers from US tech companies
• Ecosystem Maturation: Complementary investments in software, packaging, and foundry alternatives create positive externalities for portfolio companies

Market Opportunity

• Captive Market: Over 5 billion Chinese internet users represent a domestic AI market larger than the US
• Data Center Buildout: Chinese cloud providers (Alibaba, Tencent, Baidu) are aggressively building AI infrastructure, creating hardware demand independent of government mandates
• Geopolitical Tailwind: Increasing decoupling between US and Chinese tech ecosystems reinforces “buy Chinese” momentum

6.2 Bear Case

Technical Gaps Persist

• Performance Delta: Huawei’s AI chips (910B, 910C) remain materially inferior to Nvidia’s peak offerings in some workloads
• Software Ecosystem Immaturity: CANN lacks the maturity and third-party support of CUDA, creating switching costs
• Manufacturing Bottlenecks: 3D integration is promising but unproven at scale; advanced packaging remains dominated by foreign suppliers

Valuation and Profitability Risks

• Moore Threads PSR of 123x is unsustainable if revenue growth slows below 50% annually
• Both Biren and Moore Threads remain deeply unprofitable; path to profitability depends on scaling at margins Chinese companies have historically struggled to achieve
• IPO Euphoria May Dissipate: If technical improvements fail to materialize or US restrictions tighten further, valuations could face severe correction

Geopolitical Escalation

• Asymmetric US Response: The US could escalate restrictions on allied foundries (TSMC, Samsung) or on material inputs (rare earth elements), forcing Chinese companies to develop entirely native foundry capabilities—a 5–10 year project
• Talent Drain Risk: If US immigration policy shifts to retain Chinese engineers, China’s semiconductor advantage could erode

Why it matters: This is a binary outcome scenario. Either Chinese domestic chips achieve functional parity within 3–5 years and capture dominant market share domestically (upside: 10–20x returns for early investors), or technical bottlenecks persist and valuations collapse as growth expectations reset (downside: 50%+ losses). The IPO wave reflects confidence in the upside, but historical precedent (Huawei’s smartphone ambitions in US markets, state-backed tech champions in other nations) suggests outcomes are asymmetrically uncertain.

Conclusion

The IPO wave among Chinese semiconductor companies represents far more than a funding event—it signals a fundamental realignment in the global AI chip market structure. Three conclusions emerge:

1. State Strategy Has Moved to Market Mechanism

China’s technological independence is no longer an abstract policy goal; it is now being priced and validated by public equity markets. The 425% Moore Threads surge and Biren’s $624M capital raise are market votes that domestic alternatives are viable and strategically critical. Conversely, these metrics provide policymakers with clear signals about which companies merit continued support.

2. The Next Decade Will Likely See a Multipolar AI Chip Market

Nvidia’s current dominance faces an unprecedented challenge—not from superior US competitors (who are rare) but from a coordinated, state-backed Chinese ecosystem with access to domestic demand, capital, and talent. Within 5–10 years, the global AI chip market will likely feature regional champions: Nvidia in the West, Chinese vendors in Asia, and perhaps European or Japanese players in their respective markets.

3. US Export Controls Are Proving Counterproductive

By restricting Chinese access to US technology, Washington inadvertently accelerated Chinese semiconductor development and reduced American companies’ access to the world’s largest potential chip market. This is a classic case of strategic backfire—the restrictions that were meant to preserve US dominance may instead accelerate US market share erosion.

The Biren and Moore Threads IPOs are not endings but beginnings. They mark the moment when Chinese semiconductor development transitioned from state-funded ambition to market-validated reality.

Summary

• Chinese chipmakers (Biren Technology, Moore Threads, Kunlun Chip) are rapidly accessing public capital markets to fund R&D and manufacturing capacity
• Biren plans a $624M Hong Kong IPO on January 2, 2026; Moore Threads achieved a historic 425% first-day surge on December 5, 2025, raising $1.07B
• The Chinese government is coordinating regulatory relaxation, demand creation through procurement mandates, and direct capital investment through funds like Big Fund III
• These IPOs signal investor confidence that domestic AI chips will achieve functional parity with Nvidia within 3–5 years
• Geopolitical and technical risks remain substantial, but the scale of capital being deployed suggests China is committed to achieving near-complete semiconductor self-sufficiency by 2027–2030
• The global AI chip market is likely to shift from US monopoly to regional multipolarity within the next decade

Recommended Hashtags

#AISemiconductors #ChipIndependence #MooreThreads #BirenTech #ChinaTech #NvidiaAlternative #GeopoliticsTech #SemiconductorIPO #AIChips #TechSelfReliance

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