China Chip Designer Moore Threads Soars 500% in Shanghai IPO

Shares of Moore Threads Technology Co shot up by slightly over 500% on the company’s listing in Shanghai on Friday.

The company, which designs graphics processing units (GPUs) for artificial intelligence computing and is blacklisted by the US, soared largely on speculation that it will benefit from Beijing’s drive to boost domestic chip manufacturing.

The stock opened at 650 yuan ($91.91), more than five times its initial public offering (IPO) price, and later hovered around 600 yuan.

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“The price is beyond my understanding,” William Xin, chairman of Spring Mountain Pu Jiang Investment Management Co, who did not apply for shares in the IPO, told Reuters.

That’s because while demand for AI chips will be huge in China, Moore Threads has yet to make a profit.

It faces an uncertain future and tough competition in an expensive arms race, Xin said. “A stock cannot defy gravity and fly into the stratosphere.”

Beijing has stepped up approval of IPOs by semiconductor firms in a push towards tech self-sufficiency, with Washington restricting advanced chip exports to China by companies such as Nvidia in a bid to curb its development of AI and military capabilities.

Moore Threads could become a key force in accelerating China’s efforts to replace foreign chips with local technology, brokerage Sinolink Securities said in a report ahead of the listing.

“The era of AI is driving rapid expansion in GPU demand,” said Fan Zhiyuan, an analyst at Sinolink Securities, which had set a target price of 182.25 yuan for Moore Threads.

The company last week raised nearly 8 billion yuan ($1.13 billion) selling shares publicly at 114.28 yuan apiece.

Other chipmakers plan listings

Moore Threads’ performance on Shanghai’s STAR Market is being closely watched amid worries about stretched tech valuations.

China’s SSE STAR Chip index currently trades at 118 times earnings, compared with a multiple of 12 for the Shanghai Composite Index.

The strong debut for the Beijing-based company founded in 2020 by former Nvidia China executive Zhang Jianzhong bodes well for homegrown semiconductor firms eyeing listings as they ride on China’s efforts to reduce reliance on foreign chip suppliers.

The Shanghai Stock Exchange has accepted a slew of IPO applications this year from chipmakers, including MetaX Integrated Circuits (Shanghai), SJ Semiconductor and Xiamen UX IC.

Kunlunxin, the AI chip unit of Chinese internet search giant Baidu, is planning an IPO in Hong Kong, Reuters reported on Friday, citing three people familiar with the matter.

Other Chinese tech giants such as Huawei and Alibaba, have also stepped up investments in AI chip development, as China restricted Nvidia’s chip sales in the country.

Valuation seen as froth ‘based on dreams’

Moore Threads’ valuation “is not based on earnings, but on dreams,” said Wang Yapei, Shanghai-based fund manager at Zijie Private Fund, which did not buy shares in the IPO.

“But it’s the kind of froth welcomed by policymakers who hope tech firms can plough long-term money into research and development.”

Moore Threads, whose IPO was priced at 123 times 2024 sales, expects 2025 sales to jump as much as 242% to 1.5 billion yuan, as it joins several other Chinese start-ups seeking to fill Nvidia’s void.

The chipmaker is “racing while bleeding,” said Abraham Zhang, chairman of venture capital firm China Europe Capital, referring to Moore Threads’ combined loss of 5 billion yuan over the past three years.

The IPO gave the company badly-needed capital, but “the company is racing against time for technology breakthroughs and commercialisation before burning through cash.”