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

Enflame Technology, a Chinese artificial intelligence chipmaker and rival to Nvidia, experienced an extraordinary surge in its share price following its debut on the Shanghai stock exchange. The company's stock rose by 188 percent, reaching a market capitalisation of 176.4 billion yuan (approximately US$26.3 million). The opening price of 410 yuan was significantly higher than its initial issue price of 142.18 yuan, reflecting strong investor interest in domestic AI chip champions.

Enflame was the final member of China's "four little dragons" in the sector to go public, making its impressive performance all the more noteworthy. Despite the broader market decline, with the Star 50 Index falling 1.3 percent and the CSI 300 Index dropping 0.9 percent, Enflame's gains stood out. The company raised around 6.12 billion yuan through the sale of 43.04 million shares, valuing the firm at approximately 61 billion yuan before trading commenced.

The initial public offering (IPO) was oversubscribed by a staggering 4,073 times, with about 7 million online investors submitting orders for 42.1 billion yuan worth of shares. The allocation rate for individual investors was a mere 0.025 percent, the lowest on the mainland market this year. This strong market response underscores Enflame's significance, alongside competitors Moore Threads, Biren Technology, and MetaX, in Beijing's efforts to achieve semiconductor self-sufficiency amidst US restrictions on advanced chip exports.

Early investors in Enflame have witnessed a substantial increase in their paper wealth. Tencent, the company's largest institutional backer with a 20 percent stake, saw the value of its investment rise to nearly 35 billion yuan. Other notable investors include memory chipmaker GigaDevice, smartphone and electric vehicle manufacturer Xiaomi, chip packaging firm Tongfu Microelectronics, and telecommunications giant ZTE.

Founded in 2018, Enflame has rapidly expanded its business in response to surging domestic demand for AI computing power. The company anticipates revenue to reach between 2.3 billion and 3 billion yuan in the first nine months of 2026, marking a year-on-year increase of up to 455 percent according to its prospectus. However, Enflame remains unprofitable, as it continues to invest heavily in research and development.

Chairman Zhao Lidong expressed optimism, stating that the company is on track to achieve profitability as early as 2026 or 2027, contingent on orders, product delivery schedules, staff costs, and R&D plans.