Chinese AI Chip Provider Cambricon Seeks $400m In STAR Market IPO

Chinese AI chip unicorn Cambricon Technologies aims to raise up to 2.8 billion yuan ($400 million) in an initial public offering (IPO) on the STAR Market, according to a filing seen by Chinese media.

The $2.5-billion company, which used to be a major supplier of Huawei’s AI smartphone chips, would become the first AI chip provider to list on the Nasdaq-style market if the listing pushes through.

Cambricon will join 91 other companies listed on the Nasdaq-style market with a combined market capitalisation of nearly 1.44 trillion yuan ($207 billion) as of March 3.

The company, which focuses on the development of computer chips tailored for AI applications, was created in March 2016 by Chen Yunji and Chen Tianshi, two Chinese brothers working in a research lab at the Chinese Academy of Sciences (CAS).

It is one of the most valuable AI chipmakers in China but was blacklisted by the US government in October 2019, along with facial recognition giants SenseTime, Megvii, and Yitu, which banned it from purchasing components from US-based companies.

Chinese media reports said Cambricon will use the proceeds of its IPO to expand its cloud-based algorithm training and interference, further develop its edge computing, and boost the company’s cash flow.

The company was valued at $2.5 billion after it closed hundreds of millions of US dollars in a Series B round of financing in June 2018. Its investors include Lenovo, China International Capital Corporation (CICC), TCL Capital, and the Chinese Academy of Sciences.

Alibaba, through its venture capital arm, owns 2.08 per cent of Cambricon, according to the prospectus. iFlytek, a Chinese state-backed voice recognition giant, also revealed in March a 1.19 per cent stake in Cambricon.

Its filing showed that operating income in 2019 hit 443.94 million yuan ($2.76 million), up 279.35 per cent from the previous year.

Last month, Chinese cybersecurity major Qi An Xin Group filed a prospectus with the STAR Market to move towards an IPO for 4.5 billion yuan ($634 million). Qi An Xin’s listing plan comes after the company raised 1.5 billion yuan in a pre-IPO round at a valuation of 23 billion yuan ($3.22 billion).