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Tencent bought 84 percent of Enflame's 2025 revenue before Friday's Shanghai debut
The AI chipmaker's shares closed 179 percent above the offer price on Shanghai's Star Market, and the revenue behind that valuation came almost entirely from Tencent, which owns 20 percent of the company and buys most of its chips.
The Product Desk · Product desk
What happened
- Shanghai Enflame Technology closed its first day on Shanghai's Star Market 179% above its offer price on Friday, after opening at 410 yuan against an IPO price of 142.18 yuan.
- Retail investors bid for 4,073 times the stock set aside for them, with about 7 million online investors ordering 42.1bn shares and getting an allocation rate of 0.025%.
- The company sold 43 million shares to raise about 6.12bn yuan, having won approval for the listing in June, Bloomberg reported.
- Enflame has never turned a profit; its net loss narrowed to 1.16bn yuan in 2025 from 1.5bn yuan a year earlier, and it expects to break even in 2026 or 2027, Business Insider reported.
Compiled by The Product DeskSomething wrong?How this is made
Why it matters
- exposure Anyone buying the stock on the strength of Chinese AI demand is underwriting a single account. Strip Tencent out and Enflame's revenue from all other customers fell by roughly two thirds in the year the headline number grew.
- constraint The fifth- and sixth-generation roadmap the IPO funds will be specified in practice by the buyer that also owns a fifth of the company. That limits how far the parts can be tuned for anyone else.
- constraint Domestic capital paid for the design work, and the fabrication decision stays with foreign foundries.
- contradiction One session produced three gain figures, so coverage citing CNBC's 206% or Business Insider's roughly 200% is describing a different moment of the day than the 179% close, and the valuation follows the number you pick.
Enflame's customer list, as its income statement describes it, is close to one name. Sales to Tencent were 84% of 2025 revenue, up from about 38% a year earlier, Bloomberg reported [15]. Revenue was 990m yuan in 2025 against 722m yuan in 2024, according to CNBC [16], so the top line grew about 37% [5]. Apply the percentages. About 832m yuan of last year's revenue came from Tencent, leaving roughly 158m yuan from everyone else [1][2]. In 2024 the same split was about 274m yuan from Tencent and about 448m yuan from all other customers [3]. The book outside Tencent shrank by roughly two thirds while the headline number rose [4].
"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," analysts at Huajin Securities including Li Hui wrote in a note reported by Bloomberg [21]. The same analysts said Enflame trails its peers in revenue scale and gross margin [22].
Paul Triolo of the advisory firm DGA called Enflame's choice of alternative chips a "high-risk form of strategic independence" and told Bloomberg the approach "may be good for Tencent and municipal data centers" while being "less attractive in the open developer market" [23]. Outside Tencent, Enflame's revenue has come from Chinese state-backed computing projects in cities including Wuxi and Qingyang [26]. Enflame did not respond to Bloomberg's requests for comment [27].
At Friday's close the company was priced at about 173 times its 2025 revenue [6], and its 2025 net loss was about 1.17 times that revenue [7]. Management has told the market the gap narrows fast: a loss of no more than 860m yuan for the first nine months of 2026, on revenue expected to more than triple from a year earlier [18].
The listing capitalises design work. Enflame plans to spend the proceeds on fifth- and sixth-generation chips it wants to match high-end products from international rivals, CNBC reported [20]. Those advanced parts are still made by overseas manufacturers, according to The Information [24], and in late 2023 the company downgraded some designs to keep access to TSMC's factories [25].
Whether a domestic accelerator is a business or a captive supplier turns on the share of revenue that comes from the shareholder, and on what a customer pays to move a workload onto the part and keep it there. Enflame answers the first at 84% [15]. On the second there is no published figure: the founders deliberately built a chip designed to work outside Nvidia's ecosystem [13], and neither the porting cost nor a count of customers who stayed past one contract appears in what has been disclosed.
What to watch
- Whether the first nine months of 2026 land inside the 860m yuan loss cap, and how much of the promised revenue tripling comes from Tencent.
- Whether Enflame discloses a second customer of any real size, or whether state-backed computing projects in cities such as Wuxi and Qingyang remain the entire non-Tencent book.
- Whether the fifth- and sixth-generation designs get fabricated abroad as drawn, or get downgraded again to keep foundry access.