- JPMorgan’s asset management arm, Alibaba, CPE and Montage Technology are set to be cornerstone investors in printed circuit board maker Dongshan Precision’s Hong Kong listing, which could raise up to $1.8 billion including a greenshoe. Cornerstone investors are expected to take about half the deal, with orders possibly opening Tuesday.
- That structure is the difference between this and the deals that failed. Firmus Grid pulled a roughly $5 billion IPO when investors balked at its valuation, and AirTrunk postponed a Singapore listing to next year. Hong Kong’s cornerstone process converts the demand question into a negotiation with named parties before books open rather than a market test after.
- The valuation has already reset. Dongshan has lost more than half its value since a June peak and carries a market capitalisation of 224 billion yuan, about $33.5 billion, so it is listing after a de-rating rather than attempting to price one in.
- Conditions are poor. US semiconductor shares have just endured an eight-session rout, the longest since 2008, wiping roughly 16% from the sector benchmark, while the Nasdaq 100 had its worst week since April 2025.
What Happened?
Dongshan makes printed circuit boards and optical transceivers, both critical AI components, and already trades in Shenzhen. Hong Kong is on course to surpass 2021 in annual share sale proceeds, largely on jumbo offerings from companies in the AI supply chain, including Victory Giant Technology’s $3 billion raise and Shenzhen Kinwong’s $650 million debut last month. Deliberations continue and the cornerstone lineup, size and timing may change.
Why It Matters?
Two markets are producing opposite outcomes for AI listings and the explanation is partly structural and partly about what is being sold. Hong Kong’s cornerstone convention secures binding commitments from identified investors before public bookbuilding, so roughly $900 million of this deal is spoken for before anyone tests broader appetite. Firmus went to market without that cushion and was refused twice within 48 hours. The structure does not create demand, but it removes the possibility of a public failure, which matters a great deal when sentiment can turn in a day. The other difference is what each company offers. Dongshan manufactures components with existing revenue and has already fallen more than 50% from its peak; Firmus sought to triple its valuation on a pipeline that was 5% built, and Nscale is now seeking $3 billion having constructed under 1% of targeted capacity. The deals clearing this month share a characteristic: a price that already reflects bad news. Iambic listed at roughly 30 times revenue and got done; Firmus asked 588 times and did not. Alibaba’s participation is the detail worth carrying. A company building its own AI infrastructure is investing in a maker of circuit boards and optical transceivers that it needs, which is the same backward integration visible in Nvidia funding neoclouds, Amazon contracting for copper from unbuilt mines and Meta and Alphabet underwriting three-quarters of US corporate clean power deals. The Chinese and American AI buildouts have arrived at identical financing structures, with buyers capitalising their own suppliers because the supply does not otherwise exist at the scale required.
What Next?
Whether orders open Tuesday and the deal prices at the top of its range is the immediate test, and the cornerstone commitment makes outright failure unlikely while leaving pricing open. Watch whether Hong Kong’s run of AI supply chain listings continues, since it is the only venue currently absorbing them at scale. For the sector, the semiconductor benchmark’s 16% decline over eight sessions is the backdrop against which every subsequent deal will be priced, and Nscale’s attempt is the next Western test.
Affected Tickers and Coins: 002384, BABA, JPM, 688008, 300476, 603228
Source: Bloomberg
