Alibaba said on Tuesday that its chip unit, T-Head, has confidentially filed an application for a listing in Hong Kong, after the Hong Kong stock exchange confirmed that the Chinese technology group may proceed with a proposed spin-off of the business.

T-Head, also known as Pingtouge, submitted its listing application form, known as a Form A1, to the Hong Kong Stock Exchange on 11 September, seeking approval for its H shares to be listed and traded on the exchange’s Main Board. Alibaba disclosed the filing in an exchange announcement on Tuesday, about two months after the confidential submission.

How the spin-off would work

Alibaba said the proposed spin-off is intended to be carried out through a global offering of T-Head’s H shares, including a public offering in Hong Kong and private placements to institutional and professional investors. T-Head would remain a subsidiary of Alibaba after the listing is completed.

The deal is not yet done. It still needs approval from the Hong Kong Stock Exchange’s Listing Committee, a filing with China’s securities regulator, and final decisions by Alibaba and T-Head. The size and structure of the offering, and Alibaba’s stake in the unit after the listing, have not been set, according to Bloomberg.

Why Alibaba is listing its chip arm

T-Head is Alibaba’s in-house chip design unit and supplies data-centre processors in China, including server chips and chips designed for artificial intelligence work. A separate listing would give the unit independent access to capital markets and a clearer valuation of its own, rather than being valued only as one part of Alibaba’s wider e-commerce, cloud and technology businesses.

The move comes as competition in AI chips intensifies and as Chinese technology groups look to raise capital for the costly work of designing advanced processors. Reports earlier this year had already pointed to Alibaba preparing T-Head for a possible listing, and Tuesday’s announcement confirms that the plan has moved into the formal process.

What happens next

Media reports have suggested the offering could raise $2 billion or more, although Alibaba has not confirmed a size, a price or a timetable, and the confidential filing means few details are public at this stage. The next steps are the Listing Committee’s decision and the regulatory filing in mainland China, and investors will watch for the publication of a formal listing document for the first detailed look at T-Head’s finances. Alibaba’s US-listed shares were slightly lower in early trading on Tuesday.