Tencent-backed Enflame triples in Shanghai debut as China AI chip bets surge

Chinese AI chipmaker Shanghai Enflame Technology witnessed a remarkable 200% surge in its debut on the Shanghai STAR Market on Friday. The company raised 6.12 billion yuan in its initial public offering (IPO), with its stock opening at 410 yuan against the offer price of 142.18 yuan. The stock climbed to a peak of 475 yuan before settling around 430 yuan.

The surge in Enflame's stock coincides with a wave of listings by Chinese firms aiming to manufacture AI computing chips domestically. Beijing is actively pursuing homegrown alternatives to US suppliers like Nvidia. Shen Meng, director at Beijing-based boutique investment bank Chanson & Co., noted that GPU-related businesses provide clearer growth prospects for investors compared to concept stocks with weaker fundamentals.

The US restrictions on Chinese access to advanced chips have heightened interest in domestic alternatives.

Enflame sold 43.04 million new shares, constituting 10% of its expanded share capital, on Shanghai's STAR Market. The offering valued the firm at around 61.2 billion yuan. After the IPO, Enflame's market value skyrocketed to approximately 185 billion yuan, more than tripling its valuation at the IPO price.

Tencent, Enflame's largest shareholder, holds a 17.95% stake and was the company's major customer prior to the listing. Sales linked to Tencent accounted for 83.79% of Enflame's 2025 revenue. The company has yet to generate profits, with its net loss narrowing to 1.16 billion yuan in 2025 from 1.51 billion yuan the previous year. Revenue, however, rose by 37% to 990.2 million yuan.

Enflime forecasts revenue between 2.3 billion yuan and 3 billion yuan for the first nine months of 2026, along with a net loss of 700 million yuan to 860 million yuan. The company expects to achieve profitability by 2026 or 2027, contingent on revenue growth and margins. The funds raised will primarily be utilized for the development of its fifth and sixth-generation AI chips, associated software, and large-scale computing systems.