TWO of China’s most prominent designers of artificial intelligence (AI) chips are each targeting an initial public offering (IPO) in Shanghai as soon as this year, taking advantage of growing appetite for domestic players seeking to challenge Nvidia.
Shanghai Enflame Technology aims to raise as much as two billion yuan (S$366.7 million) in an IPO on Shanghai’s Star board, choosing a venue friendly to loss-making but fast-growth startups, the sources said. They asked to remain anonymous discussing private plans.
Rival Shanghai Biren Intelligent Technology plans to file for its own IPO on the same bourse, people familiar with the matter said. Both now aim to formally file documents this year, eyeing a debut in 2024 or early-2025.
The pair of Shanghai-based chipmakers will join peer Cambricon Technologies on their home city’s bourse, which is trying to shape the Star exchange into the country’s premier tech-listings destination.
Biren and Enflame, which is backed by Tencent, expect to draw investor interest because of a scarcity of listed chipmakers, despite the industry’s importance to Beijing’s geopolitical goals.
China is accelerating a campaign to develop a world-class semiconductor industry, an effort that the US is trying to curtail with sanctions and blacklists of companies such as Huawei.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
That conflict in recent years has expanded into the field of AI. Biren is one of several Chinese semiconductor companies on US blacklists that restrict their access to American technology.
Biren and Enflame have kicked off their IPO process by going into the usual “education period” for would-be debutantes, indicated Chinese regulatory notices.
While it is targeting the relatively niche Star board, Biren’s management has not yet ruled out Hong Kong as a destination should the Shanghai process bog down, the sources said.
Representatives for Enflame and Biren did not respond requests for comment.
Like Nvidia, the pair make chips that developers use to train and support AI services. However, the chips manufactured by the two companies are generally considered inferior in power and performance.
Still, Beijing is encouraging Chinese companies to develop, support and adopt local alternatives, fearful that Washington will ramp up efforts to choke off the flow of Western technology needed to power everything from AI to the military.
Other notable AI chip designers include Moore Threads Intelligent Beijing and T-Head, backed by Alibaba.
Enflame was founded by former Advanced Micro Devices employees in 2018. It was valued at about 18 billion yuan – or 62 times its 2022 sales – after completing a 2.5 billion yuan pre-IPO fundraising this year, indicated an investor deck.
Tencent controls more than a fifth of the company, alongside other backers including the China Integrated Circuit Industry Investment Fund, which is known as the Big Fund and the main financing vehicle for the country’s most important chip projects.
Founded in 2019, Biren focuses on areas such as graphics processing units (GPUs) and cloud computing, and is considered one of the most promising domestic contenders to Nvidia.
Backed by IDG Capital, Ping An Insurance and China Merchants Capital, it sought in 2022 to raise funds at a valuation of 17 billion yuan.
That year, it declared it was “setting a new record in global computing power” with its first general-purpose GPU. BLOOMBERG
