Enflame’s IPO is open. Shanghai Enflame Technology, an AI-chip startup backed by Tencent, has won approval from a committee lined up to raise about six billion yuan ($888m) from the STAR board of the Shanghai Stock Exchange, according to Bloomberg. It’s the last of China’s “four little dragons,” a team of AI chip makers Beijing is counting on to break its reliance on Nvidia.
Enflame plans to sell 10 to 15 percent of its shares and pour the proceeds into its next two generations of cloud AI chips and the software that surrounds them. Founded in Shanghai in 2018 by former AMD engineer Zhao Lidong, the company was valued at $2.8bn before listing, according to the Hurun index.
Question for Tencent
Enflame’s biggest power is also its biggest threat: Tencent. The tech giant owns about 20 percent of the company and, by Bloomberg’s account, bought about 84 percent of its revenue by 2025, up from about 38 percent a year ago. Tencent is a sponsor and a consumer at the same time.
That has upsides. Tencent is financing Enflame’s roadmap with orders, which is the first way that 1 percent of the Chinese market fleet has developed silicon at all. The company says Tencent’s demand “far exceeded” what it could provide.
But a chipmaker that depends on one client for most of its sales is exposed when that client’s priorities change, and the relationship is already putting pressure on Enflame’s prices. It is also deep in the red: cumulative losses have reached about 4.29 billion yuan (about $600m) over three years, although annual losses are shrinking.
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Why is China happy anyway
Investors are buying the big story. As US export controls choke off Nvidia’s best chips, Beijing is looking for domestic substitutes, and last year relaxed STAR board rules to allow a list of loss-making hardware firms. The result is a wave of AI-chip floats riding on the same logic as China’s $295bn plan to build data centers that locks Nvidia out.
Enflame’s three “dragons,” Moore Threads, Biren, and MetaX, are all already listed on the STAR board and trading above their offering prices, with Moore Threads up 425 percent on its December debut. That favorable backdrop is part of why Enflame can raise nearly $900m while still losing money.
The same drive is pushing vendors like ByteDance into home chips, and inventing workarounds like photonic computing.
That listing really checks out
Enflame has real products, not slideware: its latest chip has 144GB of on-chip memory, and the previous model shipped tens of thousands of units. But it still trails Huawei and the now-profitable Cambricon at home, as it relies on one anchor client and Nvidia chips continue to find side doors back in China.
So the float is a survey. Prices and demand will show how much Chinese institutions are really guilty of the country’s AI-chip independence, and whether that conviction is justified if you look closely at the paper that carries $600m in losses and a single customer list.
China needs a credible public champion for its chip ambitions. Enflame is one of the strongest candidates, and it’s very dependable.
