Global Market: Tencent-backed Enflame soars 200% in blockbuster Shanghai IPO debut

Chinese artificial intelligence chipmaker Shanghai Enflame Technology surged about 200% in its Shanghai debut on Friday, after the Tencent-backed company raised 6.12 billion yuan ($912 million) in its initial public offering, highlighting strong investor demand for domestic AI computing technology, accprding to report by Reuters.

Enflame stock triples from IPO price

Enflame shares opened at 410 yuan, compared with an IPO price of 142.18 yuan, and climbed as high as 475 yuan before easing to around 430 yuan. At that level, the company's market value stood at roughly 185 billion yuan, more than three times the approximately 61.2 billion yuan valuation implied by its IPO price, according to company filings, the report stated.

The strong debut came despite broader weakness in Chinese equities. The Shanghai STAR Market fell more than 2%, while the CSI 300 Index was down 1.43%.


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The report stated that Enflame's debut comes amid a wave of Chinese listings by companies developing computing chips for artificial intelligence, as Beijing encourages the development of domestic alternatives to U.S. suppliers such as Nvidia.

Domestic AI chip demand grows

Investor interest in Chinese AI chipmakers has increased as U.S. restrictions limit China's access to some advanced semiconductor technologies. Reuters cited market analysts as saying GPU-related companies have attracted particular attention because of their perceived growth potential compared with some other AI-themed stocks.

Enflame is among a group of Chinese AI chip startups often referred to as the country's four leading GPU challengers, alongside Moore Threads, MetaX and Biren Technology.

The company sold 43.04 million new shares in the IPO, representing 10% of its enlarged share capital, on Shanghai's technology-focused STAR Market.

Tencent remains key shareholder and customer

Tencent is Enflame's largest shareholder, holding a 17.95% stake after the IPO. The technology giant was also the company's largest customer before the listing.

According to Enflame's prospectus, sales associated with Tencent accounted for 83.79% of the company's revenue in 2025, underscoring the chipmaker's significant reliance on its largest shareholder for business.

The concentration also highlights one of the key risks facing Enflame as it seeks to expand its customer base and establish itself as a major domestic supplier of AI computing technology.

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Enflame remains loss-making

Despite rapid revenue growth, Enflame has yet to achieve profitability. Its net loss narrowed to 1.16 billion yuan in 2025 from 1.51 billion yuan a year earlier, while revenue increased 37% to 990.2 million yuan.

The company expects revenue of between 2.3 billion yuan and 3 billion yuan in the first nine months of 2026. It forecasts a net loss of between 700 million yuan and 860 million yuan over the same period.

Enflame expects to reach break-even or become profitable in 2026 or 2027, depending on the pace of revenue growth and improvement in profit margins, according to its filing.

Funds to support next-generation AI chips

Enflame plans to deploy most of the IPO proceeds toward research and development of its fifth- and sixth-generation AI chips, as well as related software and large-scale computing systems.

The fundraising and strong market debut give the company additional financial resources as Chinese technology firms accelerate efforts to build domestic AI infrastructure and reduce reliance on overseas semiconductor suppliers.

Reuters reported that the listing reflects the broader investor enthusiasm surrounding China's push to develop home-grown AI chip capabilities, particularly as geopolitical and trade restrictions reshape access to advanced computing technology.