Chinese artificial intelligence (AI) chip startup Biren Technology has successfully raised approximately 1.5 billion yuan ($207 million) in a new funding round and is actively preparing for an initial public offering (IPO) in Hong Kong. This significant financial boost and strategic IPO plan underscore China's concerted efforts to foster domestic alternatives to U.S. semiconductors, particularly as Washington tightens export restrictions on advanced chips. Beijing has explicitly prioritized the development of homegrown champions in graphics processing units (GPUs), which are indispensable for the advancement of artificial intelligence.

The recent 1.5 billion yuan funding round was primarily led by state-linked investors, including state-backed funds from Guangdong province and the Shanghai government. Biren Technology initially sought a listing on mainland China last year but has since redirected its focus to Hong Kong. This shift is partly due to stricter regulatory requirements on the mainland, which include less tolerance for loss-making companies. The company is reportedly preparing to file for its Hong Kong listing in the third quarter of the current year, potentially as early as August. Prior to this latest funding injection, Biren was valued at approximately 14 billion yuan.

The urgency for China to develop robust domestic GPU capabilities has escalated as the U.S. continues to tighten export restrictions on advanced semiconductors. The latest measures, implemented in April, notably led to U.S. chip giant Nvidia halting sales of its H20 AI chips to Chinese customers. Despite these challenges, the potential market for Chinese AI chip companies remains substantial. Investment bank Morgan Stanley projected in a May client note that domestic GPU makers could achieve sales of 287 billion yuan by 2027, potentially capturing 70% of the Chinese market, a significant increase from 30% last year.

Founded in 2019, Biren Technology boasts a strong leadership team, including co-founders Zhang Wen, formerly a president at SenseTime, and Jiao Guofang, who previously held positions at Qualcomm and Huawei. The company first garnered attention in 2022 with the unveiling of its initial product batch, which included the BR100 chip. Biren claimed that the BR100 chip could rival the performance of Nvidia's advanced H100 AI processor. However, in 2023, Biren was added to the U.S. 'Entity List,' a move that has prevented it from utilizing leading global foundries like Taiwan Semiconductor Manufacturing Company (TSMC) for chip manufacturing.

Since being placed on the 'Entity List,' Biren Technology has experienced significant internal upheaval, including the departure of some senior executives, such as co-founder Xu Lingjie. The company continues to operate at a loss and generates limited revenue, recording 400 million yuan in sales in 2024. Despite these adversities, Biren's general-purpose GPU products have been deployed across numerous intelligent computing centers. Its key partners include major entities such as China Mobile, China Telecom, ZTE, and the Shanghai AI Laboratory. It is noteworthy that some of these partners, including China Mobile and China Telecom, have also been subject to U.S. restrictions, with the Federal Communications Commission investigating them for potential evasion of U.S. sanctions. Furthermore, Biren faces intense competition within the Chinese AI chip sector from established players like Huawei and peers such as Tencent-backed Enflame and Metax.