Enflame IPO: the final one among China's four AI chip giants.

      The Enflame IPO is underway. Shanghai Enflame Technology, an AI-chip startup supported by Tencent, has received approval from the listing committee to raise approximately 6 billion yuan ($888 million) on the STAR board of the Shanghai Stock Exchange, as reported by Bloomberg. It is the final member of China’s “four little dragons,” a group of domestic AI chipmakers that Beijing is relying on to reduce its dependence on Nvidia.

      Enflame intends to sell 10 to 15 percent of its shares and invest the funds into developing its next two generations of AI cloud chips and the associated software. Founded in Shanghai in 2018 by former AMD engineer Zhao Lidong, the company was last valued at around $2.8 billion prior to the IPO, according to the Hurun index.

      The Tencent dilemma

      Enflame’s greatest strength is also its greatest vulnerability: Tencent. The tech giant owns about 20 percent of the company and, according to Bloomberg, accounted for approximately 84 percent of its revenue in 2025, an increase from around 38 percent the previous year. Tencent serves as both an investor and a customer.

      This situation has its advantages. Tencent pre-funds Enflame’s development plans through orders, allowing a startup with a mere 1 percent share of China’s market to deliver advanced silicon. Enflame claims that Tencent’s demand has “far exceeded” its supply capabilities.

      However, a chipmaker that depends heavily on one client for the majority of its sales faces risks if that client’s priorities change, and this reliance is already pressuring Enflame’s pricing. The company is also in significant financial trouble, with cumulative losses totaling approximately 4.29 billion yuan (about $600 million) over three years, although its annual losses are decreasing.

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      Why China is optimistic

      Investors are focusing on the broader narrative. With U.S. export controls limiting access to Nvidia’s top chips, Beijing is seeking domestic alternatives, having relaxed STAR-board rules last year to allow loss-making hardware companies to go public. This has led to a surge of AI-chip listings, aligned with China’s $295 billion initiative to establish data centers that exclude Nvidia.

      Enflame’s fellow “dragons,” Moore Threads, Biren, and MetaX, have already listed on the STAR board and are trading well above their initial offer prices, with Moore Threads rising 425 percent since its December debut. This favorable environment is part of why Enflame can aim to raise nearly $900 million while still operating at a loss.

      This push is also prompting companies like ByteDance to turn to domestic chips and develop alternatives like photonic computing.

      What the listing truly reveals

      Enflame possesses tangible products, not just presentations: its latest chip features 144GB of on-chip memory, and a previous model has been delivered in the tens of thousands. Nevertheless, it still lags behind Huawei and the now-profitable Cambricon domestically, while relying on a single primary client and Nvidia chips that continue to find unofficial entry points into China.

      Thus, the IPO serves as a referendum. Its pricing and demand will indicate the level of confidence Chinese institutions actually have in the narrative of AI-chip independence in the country, and whether that confidence stands up to scrutiny regarding a balance sheet that shows $600 million in losses and a customer base that is essentially singular.

      China requires a credible public champion to fulfill its chip ambitions. Enflame is among the most formidable candidates and also the most reliant.