Chinese chipmaker Enflame 4,073 times oversubscribed in Shanghai IPO amid Nvidia race

Chinese AI chipmaker Enflame Technology witnessed an unprecedented retail frenzy during its 6.12 billion yuan (US$910.9 million) initial public offering (IPO) in Shanghai's tech-focused Star Market. The company, backed by Tencent Holdings, experienced the retail portion of its IPO being oversubscribed by an astounding 4,073 times.

Approximately 7 million online investors placed orders for 42.1 billion shares, resulting in an allocation rate of just 0.025 per cent, making it one of the lowest in mainland China for the year. This surge in demand highlights Enflame's significance as a key player in Beijing's pursuit of semiconductor self-sufficiency. As the last of the four "little dragons" in the AI chip sector, Enflame's odds of securing shares are lower than its competitors MetaX (0.033 per cent) and Moore Threads (0.036 per cent).

Retail investors are eagerly betting on Enflame to replicate the impressive first-day gains of its rivals, with projections of 693 per cent and 425 per cent respectively. The chipmaker, priced at 142.18 yuan per share, aims to raise 6.12 billion yuan to finance the development and production of its fifth and sixth-generation AI chips.

Investors, like 35-year-old A-share investor Kevin Chen, are placing their bets on Enflame's future success. Chen expressed confidence in China's hard tech sector, similar to his investments in ChangXin Memory Technologies and Unitree Robotics, although he acknowledged low expectations for securing an allocation. Enflame also attracted strategic investors, including Tencent, GigaDevice, Xiaomi, Tongfu Microelectronics, and ZTE, which led the pack with a 4.06 per cent stake through a subsidiary with a 36-month lock-up.