Iluvatar CoreX seeks to raise $850m as China’s AI-chip rally lifts its shares

Iluvatar CoreX, a Shanghai chipmaker, is seeking to raise about $850 million from investors as its share price has more than tripled since January, driven by US export controls on Nvidia chips that have created a captive market for Chinese AI-chip makers. The company, which listed in Hong Kong six months ago, is in talks to sell at least 50,000 chips to ByteDance this year, capitalizing on demand for domestic alternatives to Nvidia's restricted products.

A year ago, Iluvatar CoreX was a Shanghai chipmaker that sold mostly to the Chinese state. This week it is trying to raise about $850m from investors who cannot seem to get enough of it, according to Bloomberg, riding a share price that has more than tripled since January. The rally is really the whole story. Iluvatar only listed in Hong Kong six months ago, where it pulled in roughly $475m, and a raise this size would take what it has drawn from public markets close to $1.3bn. It is not hard to see why the moment is now. With Nvidia’s best chips walled off by US export controls https://thenextweb.com/news/china-ai-chip-asic-gpu-nvidia-export-controls , Chinese buyers are casting around for anything homegrown that comes close, and the money has started chasing them. None of this would be happening without the export rules. Two years of tightening restrictions have done what Beijing’s subsidies could not, handing local chipmakers a captive market simply by making the obvious foreign option unavailable. That demand is no longer hypothetical. Iluvatar is in talks to sell ByteDance https://thenextweb.com/news/bytedance-iluvatar-corex-ai-chips at least 50,000 chips this year, most of them for inference, the lighter work of running models rather than training them. Inference is the shrewd place to start. It asks less of a chip than training does, so a part that would fall behind on the hardest jobs can still be genuinely useful, and useful is plenty when the alternative is nothing. Its calling card is the TianGai-100, a GPU line it pitches squarely against Nvidia’s A100 and A800. Those were the parts that used to sit at the heart of Chinese AI, until Washington decided they should not. The results still have a way to travel before they match the hype. Revenue came in at about 1 billion yuan, or roughly $148m, last year, with close to all of it earned from selling GPUs. For most of its life the company sold to the state, which kept the lights on but left it small. Winning a customer the size of ByteDance, the owner of TikTok and Douyin, is exactly what would break it out of that box. ByteDance, for its part, is hedging in every direction it can. It has been working with Qualcomm on custom silicon https://thenextweb.com/news/qualcomm-bytedance-custom-chip-design-talks too, and when China’s biggest tech firms want off Nvidia this badly, even a second-tier supplier starts to look like a national asset. That is roughly what Iluvatar is for now, a tier-two name in the same bracket as Biren and Enflame, none of them yet at the scale of China’s leading ASIC makers. Beijing has leaned on its champions to buy domestic wherever they can, which turns what might have been a slow drift into something closer to policy. Set against that, the logic of the raise is plain. Cheap equity now buys the research, the factory space and the inventory you need to fill an order for tens of thousands of chips at once. The risks are just as plain. A business leaning this hard on a few buyers and a single product line has a long way to fall if demand cools or a bigger rival pulls ahead, and a stock that has climbed this fast rarely stays calm for long. There is also the plain question of whether the chips are good enough. Matching Nvidia on a spec sheet is one thing, matching it in the messy reality of a data centre, where software and support count as much as raw speed, is quite another. Even the headline number keeps moving. The $850m target is up from the roughly $800m floated only days earlier, which tells you how quickly the shares have been running. None of it has cooled the appetite. A company that was quietly supplying government buyers a year ago is being handed the capital to try to become a national champion, largely because the market has decided China needs one. Get the TNW newsletter Get the most important tech news in your inbox each week.