(Yicai) May 6 -- Shares of Hec Technology Holding surged by their daily trading limit after the Chinese electronic and new materials supplier said its new artificial intelligence computing power subsidiary has signed a deal with a corporate client worth up to CNY19 billion (USD2.8 billion).

Hec Tech [SHA: 600673] closed 10 percent higher at CNY38.94 (USD5.70) a share today. The broader Shanghai stock market climbed 1.2 percent.

Hec Cloud Computing Technology, which Hec Tech set up last month, will provide AI computing power services to the client over the next five years, the Guangdong province-based parent firm announced late yesterday. The deal will likely be worth between CNY16 billion and CNY19 billion.

Under the agreement, Hec Cloud will procure and deploy high-performance computing servers based on the technical specifications provided by the client, Hec Tech said. After the project is accepted, the unit will provide full-cycle operation and maintenance services in a computing power leasing model over the following five years, charging a monthly fee for the computing power services, it added.

The fulfillment of the contract aims to meet the client's demand for computing power clusters, Hec Tech noted.

The deal is a key milestone for Hec Tech's entry into the intelligent computing service sector, according to the company. It is also expected to enhance the firm's relevant market influence, core competitiveness, and brand impact.

The implementation of the project requires significant upfront investment by Hec Tech to procure high-performance servers and other hardware equipment, the company said, adding that it plans to raise funds through internal resources, financial institutions, and other means. However, future operating performance may be negatively impacted if financing expenses are not effectively controlled, it pointed out, without disclosing how it plans to mitigate such risks.

Hec Tech, in collaboration with its parent firm Dongyangguang and external investors, spent CNY28 billion in cash to fully acquire Chindata China from Bain Capital last September, marking its entry into the computing power service industry. Following the acquisition, Hec Tech held a 30 percent stake in the firm, while Dongyangguang owned 35 percent.

On Feb. 24, Hec Tech announced that it is planning a major asset restructuring, intending to increase its stake in Chindata to 100 percent through the issuance of new shares.

Chindata, which was spun off from the Chinese operations of Chindata Group, is a leading third-party hyperscale computing infrastructure AIDC/IDC operator. It has big data centers across key regions such as the Capital Economic Circle, Yangtze River Delta, Greater Bay Area, and major hubs for the Eastern Data Western Computing initiative, while also being a core computing power service provider for leading tech firms like TikTok-owner ByteDance.

Editor: Martin Kadiev