On its first day of trading, AI silicon leader Xizhi Technology (01879) saw its stock price surge over 445%. Why is it favored by investors?

On April 28, Xi Zhi Technology officially listed on the HKEX. The company's stock price soared by over 445% on its first day of trading, making it the world's first AI silicon photonic chip stock to be highly sought after by secondary market investors. From the roadshow to the IPO, and then to the listing, the company only took 16 days. Behind its efficient issuance process was a strong lineup of cornerstone investors. During the IPO period, Xi Zhi Technology (01879) was favored by many institutional investors, with the Hong Kong public offering being oversubscribed by over 5780 times, making it one of the few new stocks in the Hong Kong stock market with an oversubscription ratio of over 5000 times this year. The lineup of cornerstone investors in this round includes industrial, sovereign, international long-term, and top professional capital, covering giants in the AI computing power industry chain such as Alibaba, CICC Capital, Lenovo, ZTE, as well as international sovereign funds and top long-term funds such as GIC, Blackrock, Fidelity International, Baillie Gifford, Schroders Global, Temasek, UBS, Future Asset Securities (Hong Kong), and domestic top private equity firms such as Hillhouse, Jinglin, and CPE, as well as technology industry multi-strategy funds like 3W and Aspex, and mainstream investment forces such as Ping An Asset Management, GF Fund, and ICBC Wealth Management. It is understood that Xi Zhi Technology is the first company in the world to achieve large-scale deployment of optical-electric hybrid computing power, and is the only independent scale-up optical interconnect solution provider in China to achieve large-scale commercialization. Based on revenue projections for 2025, the company ranks first in China as an independent scale-up optical interconnect solution supplier, and its cumulative shipments of optical computing chips also rank first in the world. The Hong Kong listing is the first step in the company's global capitalization, with net proceeds from this listing amounting to HK$2.377 billion, which will drive the company's global business layout. Following the trend, the strategic significance of listing in Hong Kong Xi Zhi Technology and the Hong Kong market can be said to be "mutually beneficial": Hong Kong urgently needs to attract more high-tech companies to list in order to consolidate its position as a global financial center and attract a diverse range of investors; Xi Zhi Technology can leverage Hong Kong's international platform to accelerate its expansion into global markets. For Xi Zhi Technology, listing in Hong Kong has two major advantages: First, optimizing the shareholder structure and attracting global investors. The company had already attracted many industrial and strategic investors in the early stages of financing. After listing, international sovereign funds such as Blackrock, Temasek, and UBS, as well as top long-term funds from the US and Europe, entered one after another. This adjustment significantly enhances the internationalization and stability of the equity structure, laying a solid foundation for long-term strategic execution. Second, leveraging the global financing platform to obtain funds for domestic business expansion and overseas market layout. Hong Kong, as a global hub for investment and financing, can efficiently connect mainland China, Hong Kong, and overseas capital, providing enterprises with convenient financing channels to quickly obtain the funds needed for development. The introduction of global investors also enhances brand influence and provides opportunities for global expansion. Currently, the Hong Kong market has shown a friendly and welcoming attitude towards high-tech companies, giving them higher valuation levels. For example, Biren Technology and ILUVATAR COREX were both recognized by investors after their listing, with their market values doubling. In addition, investors are particularly fond of early commercial targets, such as the big model target KNOWLEDGE ATLAS, whose market value has nearly doubled since its listing. As the world's first AI silicon photonic chip stock, Xi Zhi Technology has a significant advantage in the layout of optical interconnect and optical computing fields. In the Chinese scale-up optical interconnect market, only two companies have successfully commercialized, and Xi Zhi Technology is one of them; and it holds an absolute leading position among independent suppliers. As the only optical-electric hybrid computing target in the Hong Kong stock market, it is highly scarce, which is also a major factor in the global capital rush and the surge of oversubscription during the IPO period. Raising funds for R&D, a bright future awaits From the perspective of industry prospects, the optical computing and optical interconnect market is on the verge of breaking out. According to Frost & Sullivan data, by 2025, the penetration rate of optical computing chips in China's AI inference chips is less than 0.5%, and it is expected to increase to 20% by 2040; the scale of China's scale-up optical interconnect market is expected to reach 180.5 billion yuan by 2030, with a compound annual growth rate of up to 99.6% in the next five years. The industry is still in the early stages of commercialization, with ample room for growth. Xi Zhi Technology is a pioneer in the field of optical-electric hybrid computing power for optical computing and optical interconnect. Dr. Shen Yichen and Dr. Meng Huaiyu, the founders of the company, had foresight to lay out optical interconnect and optical computing as early as 2017, before the AI wave had erupted, and it was not until 2023 that the rapid development of generative AI highlighted the significant gap in computing power under Moore's Law. With the first mover advantage, Xi Zhi Technology has built a full stack of self-developed technological loop and an irreplicable moat. On the commercialization front, the company has achieved solid results. By now, products that have been commercialized include: Scale-up EPS, Scale-up OCS, and intelligent transceivers supporting NexusBench in the optical interconnect product line; and PACE, OptiHummingbird, Gazelle, and PACE 2 (Xi Zhi Tianshu) in the optical computing product line. The company is at the forefront of product implementation and market expansion. The proceeds from this IPO will further accelerate this process. The net proceeds of HK$2.377 billion, with 70% (approximately HK$1.66 billion) planned to be invested in R&D over the next five years: 35% focusing on optical interconnect business, with a focus on core technologies such as high-end silicon photonics chip design and high-speed optical-electric transmission; another 35% will be allocated to the field of optical computing, concentrating resources on iterating and developing the next generation of optical-electric hybrid computing cards. Xi Zhi Technology's commercialization roadmap is clear and specific: within the next two years, it will focus on the commercial deployment of Scale-up EPS and Scale-up OCS products, introduce and commercially deploy products based on near-packaged optics (NPO), and continue to promote the auxiliary commercialization of Scale-out PIC products; within the next three to five years, with the optical interconnect products based on co-packaged optics (CPO) and the PACE series optical computing products led by PACE 3 reaching sufficient levels of performance, stability, and programmability, they will enter a more advanced stage of commercialization, opening up vast income opportunities. This IPO is the first step in Xi Zhi Technology's global capitalization strategy, helping it to gain a first-mover advantage in the global optical-electric hybrid computing market. In terms of market performance, Xi Zhi Technology recorded a significant increase on the first day of trading due to its strong fundamentals and performance expectations. Currently, there are no comparable optical-electric computing targets in the Hong Kong stock market. Compared to other companies in the AI sector on their first day of listing, Xi Zhi Technology is clearly more favored by investors and is expected to open a path towards increasing valuation.