Chinese company Enflame, specializing in artificial intelligence (AI) chips, seeks to raise 6.1 billion yuan, equivalent to approximately US$908 million, with its initial public offering (IPO) on the Shanghai Stock Exchange. The company set the value of its shares at 142.18 yuan and intends to sell 43 million shares on the STAR Market, a division of the exchange focused on technology, according to information from July 31.
This move to go public takes place in a scenario where Beijing is intensifying its efforts to increase China’s self-sufficiency in semiconductor manufacturing, aiming to reduce dependence on external technologies. This approach strengthened after the United States imposed restrictions on the export of advanced chips and semiconductor production technologies to the Asian country, seeking to slow Chinese development in the field of AI.
How Enflame positions itself in the face of competition from Nvidia and other Chinese companies
With eight years in business and still operating unprofitably, Enflame will be the latest Chinese AI chip maker to enter the stock market. The pricing established for the IPO assigns the company a value of 61.8 times its projected sales for 2025, according to documents submitted to the stock exchange. This multiple is considered lower compared to national rivals such as Moore Threads and MetaX, which are valued at more than 160 times their forecast revenues for 2025. Nvidia, the American leader in the artificial intelligence chip segment, operates with a multiple of 25.4 times 2025 revenue, as pointed out in the same report.
The funds raised from the public offering will be used to finance the production of fifth and sixth generation AI chips, in addition to boosting the development of hardware and software projects focused on artificial intelligence. Among Enflame’s majority shareholders is Tencent, one of China’s largest technology companies, which also stands out as its main client. The expectation is that the acceptance of investor subscriptions will take place on September 2nd.
Enflame is part of a new wave of Chinese manufacturers that aim to compete with Nvidia in the AI chip sector. In a period of twelve months, other competitors such as Moore Threads, MetaX and Shanghai Biren Technology also carried out public offerings, reflecting China’s strategy of strengthening its domestic semiconductor industry.
