Maximum fundraising of HK$7 billion, Montage Technology seeks Hong Kong IPO

Chinese chip design company Montage Technology is seeking to raise up to approximately US$902 million (about HK$7 billion) through a Hong Kong IPO, which would make it one of the largest IPOs in the Hong Kong market recently. This move also highlights the trend of Chinese tech firms leveraging capital markets to accelerate expansion amid the AI boom.

On Friday, January 30, Montage Technology filed documents with the Hong Kong Stock Exchange, planning to issue about 65.9 million shares at a maximum price of HK$106.89 per share. This price represents at least a 41% discount to its latest closing price of RMB 162.18 on Shanghai’s A-share market. The company expects its shares to begin trading on the Hong Kong Stock Exchange on February 9.

The IPO has received strong support from cornerstone investors including Alibaba and J.P. Morgan, who have committed to subscribe for US$450 million. Other cornerstone investors include UBS, Scottish asset manager Aberdeen Group Plc, and Korea’s Mirae Asset Securities. According to sources cited by Bloomberg, sovereign wealth funds and long-term funds have shown great interest, with subscription demand several times the size of the offering, demonstrating global institutional investors’ strong confidence in this chipmaker benefiting from growing demand for data centers and AI accelerators.

Founded in 2004, Montage Technology focuses on designing chips that accelerate data flows for data centers and AI accelerators. The company stated that the IPO proceeds would be mainly used for recruitment, investments, and acquisitions. CICC, Morgan Stanley, and UBS are joint sponsors of the IPO.

AI Demand Drives Strong Performance Growth

Montage Technology's IPO comes during a period of explosive growth. According to its recent announcement, it is expected that net profit for fiscal year 2025 will reach RMB 2.15 billion to RMB 2.35 billion, an increase of 52.29% to 66.46% year-on-year. Excluding non-recurring gains and losses, net profit is expected to be RMB 1.92 billion to RMB 2.12 billion, with maximum growth close to 70%.

The company attributes the strong performance growth to vibrant industry demand driven by the AI sector, particularly the significant increase in the shipment volume of connectivity chips. With the global acceleration of AI infrastructure construction, data centers' demand for high-performance connectivity chips continues to rise, becoming the main driver of the company’s growth in 2025.

According to analyst forecasts compiled by Bloomberg, this growth momentum is expected to continue, with net profit in 2026 possibly further rising to RMB 3.3 billion. Over the past year, Montage Technology’s Shanghai-listed shares have more than doubled, and the company is currently valued at about US$29 billion.

Hong Kong IPO Market Sees a Strong Start

Montage Technology’s IPO further heats up the Hong Kong IPO market. According to data compiled by Bloomberg, driven by the financing needs of China’s AI-related companies amid the US-China tech rivalry, the Hong Kong market raised US$5 billion in January, setting a record for the highest fundraising in any January.

Besides Montage Technology, another chipmaker Axera announced on Friday its plan to raise HK$2.96 billion through a Hong Kong IPO and intends to list on February 10. Axera’s IPO is arranged by CICC, Guotai Junan, and Bank of Communications, and has already started accepting subscriptions from retail and institutional investors.

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