Enflame Shares Nearly Triple on Shanghai Debut
▼ Summary
– Shares of Shanghai Enflame Technology surged nearly 180% on their first day of trading on the Star Market, closing at a market value of approximately 170.9bn yuan.
– The initial public offering raised about 6.12bn yuan, with retail investors bidding for shares at rates exceeding 4,000 times the available supply.
– Enflame was founded in 2018 by former AMD executives Zhao Lidong and Zhang Yalin to produce AI chips that operate outside Nvidia’s ecosystem.
– Tencent holds a 20% stake in the company and accounted for 84% of its revenue in 2025, while the firm reported a net loss of 1.16bn yuan.
– Despite never turning a profit, the founders’ fortunes increased significantly due to the stock’s performance, though they remain bound by long lockup periods.
Shanghai Enflame Technology shares surged on their debut, closing 179% above the IPO price on Friday. The Tencent-backed artificial intelligence chipmaker raised approximately 6.12 billion yuan ($911 million) in its initial public offering on Shanghai’s Star Market.
The stock opened at 410 yuan against an offer price of 142.18 yuan. It climbed as much as 234% to reach 475 yuan intraday before settling at 397 yuan. This performance valued Enflame at roughly 170.9 billion yuan ($25.5 billion). While various reports cited gains between 200% and 206%, the broader market declined, with the Star 50 Index dropping 1% and the CSI 300 Index falling 0.8%.
Intense Retail Demand and Allocation Challenges
Retail interest in the offering was unprecedented. Enflame’s exchange filing indicated that individual investors bid for 4,073 times the available shares. Approximately 7 million online investors placed orders totaling 42.1 billion shares. Consequently, individual investors received an allocation rate of just 0.025%, one of the lowest in mainland China this year. For comparison, robot maker Unitree saw an allocation rate of 0.018%.
CNBC reported even higher demand figures, stating that retail orders exceeded 6,000 times the available shares before Enflame reallocated more stock to that group. Bloomberg noted that the company sold 43 million shares in the IPO after receiving listing approval in June.
Leadership and Strategic Positioning
Founded in Shanghai in 2018, Enflame produces AI chips for training and inference. The company employs fewer than 900 people and has never achieved profitability. Its name derives from a Chinese mythical figure credited with inventing fire.
Co-founders Zhao Lidong and Zhang Yalin both previously worked at AMD. Zhao spent two decades in Silicon Valley and served as a vice president at Tsinghua Unigroup. Zhang rose through AMD’s Shanghai research center to lead core chip development. From inception, the founders avoided direct competition with Nvidia’s general-purpose graphics processors. Instead, they developed chips designed to operate outside Nvidia’s ecosystem. The share surge brought each founder’s wealth to $2.5 billion. Both are subject to long lockup periods and must meet specific targets before selling shares. Enflame did not respond to requests for comment.
Financial Performance and Tencent Dependency
Tencent holds a 20% stake in Enflame and serves as its largest customer. Sales to Tencent accounted for 84% of revenue in 2025, up from about 38% the previous year. These chips power large data centers supporting chatbots, recommendation systems, and generative AI applications.
Revenue increased to 990 million yuan in 2025 from 722 million yuan in 2024. However, the company posted a net loss of 1.16 billion yuan for 2025, narrowing from the 1.5 billion yuan loss recorded in 2024. Enflame forecasts a loss of no more than 860 million yuan for the first nine months of 2026, with revenue expected to more than triple year-over-year. Business Insider reported that the company aims to break even in 2026 or 2027. Proceeds from the IPO will fund the development of fifth- and sixth-generation AI chips intended to match high-end international competitors.
Analyst Perspectives and Manufacturing Constraints
Analysts at Huajin Securities, including Li Hui, highlighted Enflame’s status as a leading cloud AI chipmaker and its dual relationship with Tencent as key appeal factors. They noted, however, that the company trails peers in revenue scale and gross margin. Paul Triolo, head of technology at DGA, described Enflame’s alternative chip strategy as a “high-risk form of strategic independence.” He suggested the approach benefits Tencent and municipal data centers but may be less attractive in the open developer market.
Enflame continues to rely on overseas manufacturers for advanced chip production. Geopolitical tensions in late 2023 forced the company to downgrade some designs to maintain access to TSMC’s factories. To generate revenue, it has leaned on state-backed computing projects in cities like Wuxi and Qingyang.
Context Within China’s AI Chip Sector
Enflame is the final member of China’s “four little dragons” of AI chipmaking to list. The others are Moore Threads, MetaX, and Biren. MetaX soared nearly 700% on its December debut, while Moore Threads rose 425%. Biren jumped 76% in January. Reports on subsequent performance vary; CNBC stated all three remain above listing prices, whereas Bloomberg noted substantial declines. Moore Threads is down more than 60% from its peak, while MetaX and Biren have fallen over 40%. Other Chinese chip listings, such as memory maker CXMT, also saw significant surges, rising nearly 466% in July.
International firms led by Nvidia held nearly 60% of China’s AI accelerator market in 2025. US export controls and Beijing’s reduced appetite for imported advanced chips have blocked Nvidia’s exports to Chinese data centers. Models like Z.ai’s GLM-5.3-Flash now run entirely on domestic chips from Huawei, Enflame, and others. Morgan Stanley analysts described China as being in the early stages of a multi-year IPO upcycle for strategically important technologies. Goldman Sachs projects China’s semiconductor capital spending to reach $82 billion by 2030.
(Source: The Next Web)
