Tencent-backed Enflame Triples on Debut as China Pushes for Chip Self-sufficiency

Shanghai Enflame Technology surged on its first trading day Friday after the Chinese AI chip developer raised about 6.12 billion yuan ($911 million) in an initial public offering, underscoring strong investor appetite for domestic alternatives to Nvidia chips.

Shares opened at 410 yuan, nearly triple the IPO price of 142.18 yuan, before paring some gains to close around 430 yuan as Enflame sold 43 million shares amid retail demand more than 4,000 times the available allocation. In mainland China’s domestic stock exchanges, first-day pops where share prices double or triple are not uncommon, due to several structural and regulatory reasons that inflate the first-day demand for tech IPOs.

Tencent Holdings, which owns about a 20% stake in Enflame, has become its dominant customer, accounting for 84% of revenue last year. Tencent’s cloud and internet platforms deploy Enflame’s AI accelerators across large data centers, according to the company’s IPO prospectus. Those chips power chatbots, recommendation engines and generative AI tools, helping Enflame ride China’s AI computing boom while reducing reliance on U.S. AI chips.

But the company still produces chips at overseas foundries, according to the company’s IPO prospectus, because domestic chip manufacturers are not yet able to consistently produce Enflame’s advanced AI accelerators at the volumes and quality it requires. This reliance on foreign fabs highlights the gap between Beijing’s push for semiconductor self-sufficiency and the current state of China’s local chipmaking ecosystem.

Enflame remains unprofitable and expects another loss in the first nine months of 2026, according to its IPO prospectus, even as sales are on track to more than triple this year after expanding at an annual rate of over 80% from 2023 to 2025. The company plans to use IPO proceeds to develop its next-generation chips and software, aiming to reach breakeven or profitability by year-end as it scales to meet demand from Tencent and other customers.