Chinese AI server maker xFusion Digital Technologies has cleared a key review by the Shenzhen Stock Exchange for its planned $1.2 billion initial public offering (IPO) on ChiNext, the exchange's growth board, Reuters reported, citing a regulatory filing.

The exchange's listing committee said in a filing dated November 12 that xFusion had met the requirements for share issuance, listing and information disclosure, marking a significant step towards its proposed public listing.

According to the company's May prospectus, xFusion plans to raise 8 billion yuan ($1.2 billion) through the IPO. CITIC Securities is sponsoring the proposed listing.

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However, the listing committee sought clarification on the company's gross margin trend and whether its operating performance growth could be sustained, according to the filing.

The committee also raised questions about changes in demand for computing capacity, capital expenditure by downstream customers and xFusion's technological capabilities. It further examined the company's net operating cash flow and the concentration of its customer and supplier base.

The exchange also asked whether xFusion had adequately disclosed the risks associated with these factors.

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The filing stated that there were no further matters for the company to address following the review.

xFusion develops computing infrastructure, including artificial intelligence servers, according to its prospectus.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)