Alibaba Group (NYSE:BABA) is reportedly preparing an initial public offering for its chipmaking arm, T-Head Semiconductor.
According to a report from Bloomberg, which cited people familiar with the matter, Alibaba plans to first restructure T-Head into a standalone business with partial ownership held by employees, before exploring a potential initial public offering.
The timing of any IPO has not been determined, and the process remains at an early stage, Bloomberg said. The potential valuation of the unit also remains unclear.
Founded in 2018, T-Head Semiconductor, known as Pingtouge in China, is Alibaba Group’s wholly owned chip design unit. The business develops processors across the full chip design stack, including chips for data centers, artificial intelligence workloads and Internet-of-Things devices, primarily to support Alibaba’s cloud and AI operations.
Following the report, Jefferies analysts said the potential listing aligns with Alibaba’s broader AI and cloud strategy. “We view T-Head as a natural extension to Alibaba’s full stack cloud infrastructure (i.e. chips, models and cloud) and deeply integrated with its AI infrastructure,” the analysts wrote.
They added that Alibaba’s multi-chip approach means T-Head serves multiple business segments, and they reiterated Alibaba as their sector top pick.
Alibaba’s US-listed shares surged 6.4% to about $180 on the report.