(Sept 11): Shanghai Enflame Technology Co’s shares surged in their Shanghai debut after the chipmaker backed by Tencent Holdings Ltd raised about 6.12 billion yuan (US$911 million or RM3.71 billion) in an initial public offering (IPO).

The stock closed 179% higher at 397 yuan, compared with its IPO price of 142.18 yuan apiece after surging as much as 234% in early trading on Friday. The last of the so-called “four little dragons” of leading Chinese artificial intelligence (AI) chipmakers sold 43 million shares in the IPO, in which retail investors bid for 4,000 times the shares available to them.

Enflame, in which Tencent holds a 20% stake and remains a dominant customer, is following the IPOs of its “little dragon” peers at a time when investor enthusiasm for the industry is fading. While Moore Threads Technology Co, Biren Technology Co, and MetaX Integrated Circuits initially drew intense demand, they all have retrenched substantially since. Moore Threads, which surged 425% in its debut in December, has gradually retreated and is now down more than 60% from its record high. MetaX and Biren have also fallen more than 40% from their respective peaks.

Still, investor appetite for the sector remains strong. China’s AI spending boom is fuelling a wave of listings across the supply chain. Though smaller than industry leaders such as Huawei Technologies Co and Cambricon Technologies Corp, Enflame is among a handful of start-ups seeking to build China’s domestic AI-chip industry. Known for its AI accelerators used in cloud and data-centre workloads, the company has benefitted from growing demand for computing power.

“The appeal of the company lies in its position as one of China’s leading cloud AI chipmakers, as well as Tencent’s dual role as both a key customer and major shareholder,” Huajin Securities analysts including Li Hui wrote in a note. However, the company trails its peers in both revenue scale and gross margin, they added.

Tencent’s importance to Enflame has grown rapidly. Sales to the tech giant accounted for 84% of total revenue in 2025, up from around 38% the previous year. Tencent’s internet and cloud platforms serve as the key commercial base for Enflame’s chips, which are used in large data centres, powering applications like chatbots, recommendation systems and generative AI. 

Rapid growth has yet to translate into profitability. Its net loss narrowed to 1.2 billion yuan in 2025, from 1.5 billion yuan the previous year, and Enflame forecast a loss of no more than 860 million yuan for the first nine months of 2026. Revenue, meanwhile, is expected to more than triple year-on-year to a range of 23 billion to 30 billion yuan in the period, after growing at a compound annual rate of more than 80% between 2023 and 2025.

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