"Chip developer Moore Threads pulls off a phenomenal IPO. And many other companies in the People's Republic are poised to launch. But there are also warnings of overheating.
Nvidia's Chinese competitors are riding a wave. Beijing-based chip developer Moore Threads had an enormously successful IPO on Friday. It was the second-largest on the Chinese mainland this year. The share price of the company, founded by former Nvidia developers, temporarily increased sixfold on its first day of trading. By the close of trading, the price had still increased fivefold, and the market capitalization reached the equivalent of around 34 billion euros. For comparison: This would place the company in the middle of the DAX index, between the chemical company BASF and the pharmaceutical company Bayer.
Just on Thursday, Cambricon, another Chinese AI chip developer, surprised stock markets in China and elsewhere. According to the Bloomberg news agency, the company plans to expand its production of AI chips in the Cambricon's market capitalization is expected to more than triple next year. As a result, Cambricon's stock rose by almost three percent on Thursday. The effects extended to Europe, where the share prices of several chip manufacturers increased. Cambricon currently has a market capitalization of nearly 70 billion euros, almost as much as Rheinmetall and more than Mercedes or BMW.
A window of opportunity is opening for chip manufacturers. The US has banned Nvidia from selling its latest AI chips in China. The sanctions imposed by Washington on Cambricon, Moore Threads, and other Chinese chip developers have largely deterred these companies. At the same time, Beijing has signaled that its interest in Nvidia's return is low and that it now considers its domestic chip industry sufficient.
Chinese tech giants like Alibaba and ByteDance, and AI developers like Deepseek and Moonshot AI, are instead being encouraged to purchase domestically produced AI chips, thereby creating the demand that these startups need. According to Chinese media, Deepseek founder Liang Wenfeng has even invested in Moore Threads. ByteDance is considered Cambricon's largest customer.
At the same time, the government itself is pumping large sums into the industry. The largest investor is the so-called Big Fund, which entered its third phase last year and has been endowed with the equivalent of around €40 billion for five years. In addition, many local governments have established further investment vehicles to promote semiconductor companies. According to a Chinese database, Moore Threads is eight percent state-owned, while Cambricon is nearly 16 percent state-owned.
Cambricon and Moore Threads are two of the most prominent names on the stock market. Riding their coattails, other AI chip developers are preparing for IPOs. MetaX, an AI chip developer founded by AMD veterans, is poised to launch in Shanghai, while Kunlunxin, part of the Baidu Group, is preparing in Hong Kong. Several others have already submitted their IPO documents.
Furthermore, the privately held Huawei Group is developing its own AI chips and is considered as the greatest hope. Many other tech companies, such as Xiaomi, and automakers, such as Volkswagen's partner Xpeng, have also entered the AI chip race, though in the case of automakers, their focus is on autonomous driving.
However, as much as these companies are riding a wave of success, the development is not without hurdles and risks. Much depends on whether the Chinese semiconductor manufacturer SMIC can actually ramp up its production as reliably as necessary to meet the demand from chip developers. According to reports from the end of August, SMIC is in the process of doubling its production of seven-nanometer chips next year. Huawei is also beginning production of its own AI chips. In any case, these companies are lagging significantly behind Nvidia and the Taiwanese manufacturer and global market leader TSMC; some analysts estimate the gap at around seven years.
Furthermore, there are also warnings of an AI bubble in China. While Moore Threads is "one of those groundbreaking IPOs that will go down in history and be remembered," Bloomberg quoted Shao Qifeng, Chief Investment Officer at Ying An Asset Management, cautioned, however, that such IPOs are not always a good sign. "In some sectors, they can be an indication of overheating."
This is because most chip developers are either not profitable or are trading at valuations that are hardly justified by their actual business. For example, Moore Threads, valued at €34 billion, generated revenue of less than €100 million in its first nine months – roughly the same as the revenue of the Bayer Group a day – and incurred an almost equally large loss during that period. However, because revenue increased by 180 percent and the loss was reduced by a fifth, the company sees itself well on its way to becoming profitable in just two years. Cambricon, on the other hand, could become profitable this year.” [1]
1. KI-Chip-Welle aus China kommt. Frankfurter Allgemeine Zeitung; Frankfurt. 06 Dec 2025: 23. Von Gustav Theile, Shanghai
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