Alibaba announced tonight that it plans to spin off T-Head for a separate listing on the Hong Kong Stock Exchange’s Main Board. In fact, it confidentially filed its application on September 11. Founded in 2018, the chip company covers the full stack, including GPUs, CPUs, storage, and networking. Institutional estimates put its valuation at $20 billion to $30 billion—not exactly cheap.
The reaction in U.S. stocks has been fairly muted: BABA was down just 0.52% intraday, at $104.84. But the entire AI sector is being sold off, and the Philadelphia Semiconductor Index fell 2%, so BABA has held up relatively well. Separating out the chip assets could let them benefit from semiconductor-sector valuations, but the size of the offering hasn’t been decided yet, so pricing will probably take some time to work out.
The reaction in U.S. stocks has been fairly muted: BABA was down just 0.52% intraday, at $104.84. But the entire AI sector is being sold off, and the Philadelphia Semiconductor Index fell 2%, so BABA has held up relatively well. Separating out the chip assets could let them benefit from semiconductor-sector valuations, but the size of the offering hasn’t been decided yet, so pricing will probably take some time to work out.