By Stone Jin
Chinese artificial intelligence start-up StepFun is set to complete a fundraising round worth almost $2.5 billion, according to people familiar with the matter, as the company accelerates preparations for a Hong Kong initial public offering.
Corporate records show the company completed a shareholding restructuring in April, converting itself from a limited liability company into a joint stock company — a standard step for Chinese groups preparing to list publicly.
People close to the transaction said StepFun has also dismantled its “red-chip” structure, an offshore holding arrangement commonly used by Chinese technology companies seeking overseas listings. The removal of the structure is widely regarded as an important precursor to a Hong Kong IPO.
The fundraising round is notable for the concentration of strategic investors from the consumer electronics supply chain, highlighting growing competition to embed AI models directly into hardware products.
Supply chain groups pile in
Among the investors are smartphone and electronics groups including Huaqin Technology (603296.SH), Longcheer Technology (603341.SH), OmniVision (603501.SH), and ZTE (000063.SZ) (0763.HK), according to people familiar with the fundraising.
Huaqin and Longcheer are among the world’s largest original design manufacturers for smartphones, providing handset design and manufacturing services for major brands. OmniVision supplies image sensors used in smartphone cameras and other components, while ZTE has already worked closely with StepFun on AI-enabled smartphone functions deployed in devices including the Nubia Z80 Ultra.
The participation of industrial investors reflects a broader shift across China’s technology sector, as AI developers and hardware manufacturers seek tighter integration between large language models and consumer devices.
Over the past year, smartphone makers, PC manufacturers and wearable device companies have intensified efforts to commercialise generative AI products, while model developers compete to secure distribution channels and consumer access points.
Race for AI devices
The move comes amid growing expectations that AI services will increasingly migrate from cloud-based applications to on-device assistants and AI agents integrated into consumer hardware.
Market speculation has also intensified around overseas competitors. Reports suggest OpenAI is accelerating development of its first AI agent-focused smartphone, with mass production potentially beginning as early as the first half of 2027.
Against that backdrop, strategic investment ties between AI model developers and hardware supply chains are increasingly being viewed as a way to align technology capabilities, manufacturing resources and distribution channels.
Another significant investor in StepFun is Hong Kong Investment Corporation, often described as Hong Kong’s equivalent of Singapore sovereign wealth fund Temasek.
The government-backed investment platform has so far invested in only one large-model company: StepFun. Its participation is expected to strengthen the company’s credentials ahead of a potential Hong Kong listing.
IPO preparations accelerate
The latest fundraising, combined with the restructuring of the company’s corporate architecture and the entry of strategic industrial investors, suggests StepFun is moving rapidly towards a public offering.
Hong Kong has been positioning itself as a listing venue for Chinese AI and technology companies at a time when geopolitical tensions and tighter U.S. scrutiny have complicated offshore fundraising options for mainland groups.
For Chinese AI companies, access to capital has become increasingly important as competition intensifies among domestic model developers seeking to build computing infrastructure, attract engineering talent and establish commercial partnerships.
StepFun’s latest financing round underlines how China’s AI race is becoming increasingly intertwined with the country’s manufacturing ecosystem, as technology groups seek to translate advances in large language models into consumer-facing products.
Source:
IPO Early Insights
