Alibaba gets Hong Kong go-ahead to spin off T-Head, its AI chip unit

Alibaba Group said Tuesday that the Hong Kong Stock Exchange has confirmed it may proceed with a spin-off and separate listing of T-Head, its wholly owned chip design unit, according to the company's exchange filing. T-Head confidentially submitted its listing application on Sept. 11.

The move would give investors a direct way to buy into one of China's homegrown answers to Nvidia. Alibaba is one of several Chinese companies, including Huawei, developing their own semiconductors to power artificial intelligence as U.S. restrictions limit China's access to American chips, CNBC reported. The listing could raise $2 billion to $3 billion next year, International Financing Review reported, according to The Standard.

The filing leaves the biggest details open. Alibaba said the size and structure of the offering, and how far its stake in T-Head will fall, have not yet been finalized. The plan calls for a global offering made up of a Hong Kong public offering and a placing with institutional and professional investors, and T-Head is expected to remain an Alibaba subsidiary afterward. The company described T-Head as a leading provider of full-stack data center chips in China.

Alibaba laid out why it wants the unit to stand alone. It said a separate listing should help investors value the rest of the group, let T-Head be judged on its own merits and attract investors who want dedicated exposure to its business. It also said a listing would raise T-Head's profile with customers, suppliers and partners and let it tap equity and debt markets on its own.

The exchange also granted a waiver. Alibaba will not give its existing shareholders an assured entitlement to T-Head shares, a protection normally required in Hong Kong spin-offs. The company said offering that entitlement would force T-Head to conduct a public offering in the United States and register with the Securities and Exchange Commission, which it called unduly burdensome.

T-Head's products give the deal its pitch. Founded in 2018, the unit unveiled its Zhenwu V900 AI chip in September, which Alibaba said delivers three times the performance of its predecessor, the M890, and can be scaled into clusters of up to 500,000 chips, The Standard reported. Alibaba expects the V900 to enter mass production in the first quarter of 2027.

The market backdrop is uneven. Alibaba's Hong Kong shares traded 1% lower Wednesday morning and are down about 29% this year, CNBC reported. Baidu has reportedly delayed the listing of its AI chip unit Kunlunxin, and Chinese regulators have stepped up scrutiny of tech IPOs. The T-Head filing lands days after Anthropic set a price range for its own IPO, as we reported. More coverage is on the Capital Sector page.

The spin-off still needs approval from the exchange's Listing Committee and a completed filing with the China Securities Regulatory Commission, and Alibaba said there is no assurance it will take place or when.