- The stock dropped as much as 10% to HK$881.50, from its offer price of HK$980.
- The weak debut was attributed to investor concerns over hefty spending on AI infrastructure and stretched valuations across the semiconductor supply chain.
- Zhongji InnoLight's shares sank 9.5 percent to HK$886 in early trade.
- The firm, which makes high-end optical components for AI data centres, dropped more than 8.5 percent to HK$895 at around 10:17 am (0217 GMT).
- Zhongji InnoLight is one of several Chinese firms blacklisted by the US Department of Defense in June over alleged military ties.
- Zhongji InnoLight warned investors that the blacklist “may subject us to increased scrutiny and potential further government actions”.
- China and the United States are locked in a race for dominance in the fast-moving AI field, fuelling huge global expansion of data centres -- warehouse-like facilities crammed with computer servers.
- Thursday's listing is the latest in a recent run of blockbuster debuts from Chinese AI-related companies in Hong Kong, indicating optimism for China's ambitions in the sector.
- Zhongji InnoLight is expected to maintain around 30-percent market share in the global AI transceiver market due to its strong R&D and effective supply chain management, according to Nomura analysts.
Zhongji InnoLight, a Chinese optical components maker, saw its shares tumble 10% to HK$881.50 during its Hong Kong debut on Thursday, following a HK$53.4 billion ($6.8 billion) IPO, the largest in the city since Alibaba's listing in 2019.1
The stock's decline reflects broader investor concerns regarding AI spending and inflated valuations in the semiconductor sector. The company, which specializes in high-end optical components for AI data centers, faced a 9.5% drop shortly after trading began, highlighting the volatility in the AI market.2
Analysts from Nomura noted that Zhongji InnoLight is expected to maintain a 30% market share in the global AI transceiver market, attributing this to its strong R&D and effective supply chain management. However, the company has also been affected by geopolitical tensions, as it was blacklisted by the US Department of Defense over alleged military ties, which it has denied. The firm warned that this could lead to increased scrutiny and potential government actions.59
Despite the rocky start, the listing is part of a trend of significant IPOs from Chinese AI-related companies, reflecting optimism about China's ambitions in the rapidly evolving AI sector. China and the United States are engaged in a fierce competition for dominance in AI, driving the expansion of data centers worldwide.8
“The stock dropped as much as 10% to HK$881.50 from its offer price of HK$980, reflecting investor jitters over hefty spending on AI infrastructure. Zhongji InnoLight, blacklisted by the US Department of Defense, warned that this may lead to increased scrutiny and potential government actions.”
