China’s emerging GPU leader, well-positioned for rapid growth: Initiate at Buy

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China’s emerging GPU leader, well-positioned for rapid growth: Initiate at Buy

Executive summary

We initiate coverage on Iluvatar CoreX (9903 HK) with a Buy rating and a PO of

HK$1,013. Iluvatar is one of the leading domestic GPGPU vendors in China, offering a

full-stack AI computing platform spanning training and inference chips (TG and ZK

series), as well as system-level solutions. We see the company benefiting from structural

growth in AI accelerator demand driven by inference applications and localization trends,

while its expanding customer base and early CSP engagement support improving

shipment visibility. In addition, its more diversified supply-chain setup provides better

execution visibility relative to domestic peers. We estimate Iluvatar to post a 145%

revenue CAGR in FY25-28E and its NPM to gradually improve from -97.1% in FY25 to

32.3% in FY28E.

Structural AI accelerator growth driven by inference and localization. We believe

China AI accelerator demand is entering a multi-year growth cycle. AI workloads are

increasingly shifting from training toward inference, as LLMs move from development

to real-world deployment, and inference workloads are becoming more compute-

intensive, driving sustained demand for AI accelerators. Meanwhile, localization has

become a structural trend amid limited access to advanced overseas GPUs and growing

policy support for domestic semiconductor ecosystems. We forecast China's AI

accelerator market size to expand from US$32.3bn in 2025 to US$89.8bn in 2028E,

implying a 41% CAGR. With established products across both training and inference

workloads, Iluvatar is well positioned to benefit from the tailwinds, in our view.

Promising commercialization with customer expansion and product roadmap. We