Initiation: End-to-end AI and computing stack

Research evidence excerpt

Initiation: End-to-end AI and computing stack

Macquarie Equity Research MetaX

Risks to our target price

• Sector at a relatively early commercialisation stage, with intensifying domestic

competition. More domestic GPGPU and ASIC players have emerged to gain share in

the China AI chip segment, including Cambricon, Biren, Iluvatar, Moore Threads, and

Enflame. MetaX remains in the process of entering domestic cloud and large language

model customers. We believe competition may intensify and could lead to intensified price

competition and difficulty in acquiring new customers in the sector.

• Impact from potential PRC government loosening of import controls on foreign GPUs.

We highlight in our industry report that MetaX’s core products have a performance gap

relative to global leaders such as NVIDIA. We believe MetaX, which relies on the domestic

supply chain, may also face a manufacturing efficiency gap relative to global peers. We also

believe that if the PRC government loosens import controls on foreign GPUs, this could

have a meaningful impact on the company’s fundamental performance.

• Further policy tightening from the US government. MetaX was included on the US

BIS (Bureau of Industry and Security) Entity List in October 2023. This list covers non-US

companies and entities that are subject to additional licence requirements for the export

of specified items. The US Department of the Treasury issued the Outbound Investment

Rule (OIR) in October 2024, which prohibits investment by a US person in entities on the

BIS Entity List and in sectors including semiconductors and microelectronics, quantum

information technologies, and AI systems. We believe further tightening of US government

policy could affect domestic AI chip companies, including MetaX.

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