StepFun, the Shanghai-based artificial intelligence company founded by former Microsoft executives, is filing for a Hong Kong initial public offering as early as this week, according to people familiar with the matter. The company is targeting a valuation of up to $12 billion and aims to raise as much as $500 million from the listing, according to The Wall Street Journal, which first reported the news. If completed at that valuation, the listing would rank among Hong Kong’s largest technology IPOs in recent years and would cement the city’s position as the preferred public market for China’s AI sector.
The filing comes just weeks after StepFun closed a $2.5 billion funding round in May 2026, bringing its total capital raised to upwards of $3.5 billion. That fundraise was itself one of the largest private AI rounds in Chinese history, surpassing the IPO proceeds that rivals MiniMax and Zhipu AI netted when they went public earlier this year on the Hong Kong Stock Exchange.
A Different Kind of AI Company
StepFun occupies a distinct position in China’s crowded AI landscape. Unlike most of its peers, which compete primarily in the consumer chatbot and enterprise software markets, StepFun has built its business around embedded AI infrastructure, integrating its models directly into devices, vehicles, and industrial systems. This approach makes it less visible to consumers but arguably more deeply embedded in the hardware ecosystem that underpins China’s AI buildout.
The company’s models are currently running in more than 40 million smartphones, and through a partnership with Geely, the Chinese automotive group, StepFun is targeting deployment in over one million vehicles. Geely’s connection to StepFun runs deeper than a commercial partnership: Yin Qi, the chairman of Geely’s technology arm, also serves as StepFun’s chairman. This relationship gives StepFun a guaranteed anchor customer in the automotive sector and a direct channel into one of the most competitive battlegrounds in Chinese AI — the connected car.
StepFun was founded in 2023 by Jiang Daxin, a former Microsoft Research Asia scientist who also served as a global vice president at Microsoft. The company has assembled a team with deep roots in China’s academic and corporate research establishment, which has helped it secure partnerships with a range of hardware and software players across the ecosystem.
Embedded AI as a Business Model
The embedded AI model that StepFun has built is structurally different from the API-based or subscription-based models that dominate the Western AI industry. Rather than selling access to a general-purpose model, StepFun positions itself as an infrastructure layer — a connector between base model capabilities and the specific requirements of device manufacturers, automakers, and industrial operators.
This approach has several advantages. It creates stickier customer relationships, since replacing an embedded AI system is far more disruptive than switching a software subscription. It also allows StepFun to generate revenue from hardware sales cycles rather than competing directly on price in the increasingly brutal Chinese AI API market, where DeepSeek’s V4 price cuts have triggered a new wave of margin compression across the sector.
StepFun has also been deliberate about reducing its dependence on foreign hardware. The company has established optimization partnerships with domestic chip designers including Biren, Cambricon, and Moore Threads, ensuring that its models can run efficiently on Chinese silicon. This positions StepFun favorably within Beijing’s broader push to build a self-sufficient AI supply chain, and makes it a natural beneficiary of the government’s $295 billion AI infrastructure plan that prioritizes domestic technology suppliers.
Preparing for the Public Markets
StepFun’s path to a Hong Kong listing has required careful structural preparation. Like several of its peers, the company operated under a “red chip” or offshore holding structure, a common arrangement among Chinese startups that raised international venture capital through Cayman Islands entities. In April 2026, StepFun unwound this structure, redomiciling its corporate organization onshore in preparation for a China-focused listing. This move, which was reported at the time as part of a broader trend among Chinese AI startups, was a prerequisite for listing on either the Hong Kong Stock Exchange or mainland Chinese markets.
The timing of the IPO filing reflects a favorable window in Hong Kong’s AI stock market. MiniMax and Zhipu AI, which listed earlier this year, demonstrated that retail and institutional investors in Hong Kong are willing to assign substantial valuations to Chinese AI companies. Zhipu AI in particular has surged to a market capitalization of approximately HK$540 billion ($69 billion), providing a benchmark that makes StepFun’s $12 billion target appear relatively modest by comparison.
What the Listing Signals
StepFun’s IPO, if successful, would be the latest in a series of Chinese AI listings that are reshaping the Hong Kong stock market. The concentration of AI companies on HKEX reflects both the difficulty of accessing US capital markets under current geopolitical conditions and the genuine depth of investor appetite for Chinese AI exposure in Asian markets.
For StepFun specifically, the listing would provide the capital needed to scale its embedded AI deployments, deepen its automotive partnerships, and invest in the next generation of its base models. The company’s differentiated positioning, focused on infrastructure rather than consumer-facing applications, may prove to be a durable advantage as the Chinese AI market matures and consolidates around a smaller number of well-capitalized players.
The IPO also adds to a broader picture of China’s AI sector reaching a new phase of institutional legitimacy. As MiniMax and Zhipu AI joined the Hang Seng Tech Index earlier this week, the inclusion of AI companies in benchmark indices signals that the sector is no longer treated as speculative but as a core component of the Chinese technology economy.
