April 11, 2021

Tencent invests in Chinese AI chip start-up Enflame


A close up image of a CPU socket and motherboard laying on the table.

Narumon Bowonkitwanchai | Moment | Getty Images

GUANGZHOU, China — Tencent has pumped more money into a Chinese artificial intelligence (AI) chip start-up as the technology giant bets on the growing domestic industry for semiconductors.

It comes as Beijing pushes for more self-reliance in semiconductors amid rivalries between the U.S. and China that have spilt into the technology front.

Tencent together with a number of investors including CITIC, CICC Capital and Primavera invested 1.8 billion yuan ($278.5 million) in Shanghai-headquartered Enflame Technology. The start-up has received numerous rounds of funding from Tencent.

Enflame Technology makes chips designed to process huge amounts of data to train artificial intelligence systems. The chips are designed for data centers.

Over the past few years, China has been looking to ramp up its capabilities in both AI and semiconductors as the tech war with the U.S. continues.

Chips are a key strategic focus for Beijing which is looking to wean itself off American technology. But Washington has looked to hurt China’s ambitions, blacklisting SMIC, the largest semiconductor manufacturer in China.

While Enflame Technology is still small, innovative start-ups will be key to China’s broader goals in chips.

China’s efforts in AI chips are nascent compared to companies such as chip giants NVIDIA and AMD in the U.S.

But start-ups are raising money to pursue development. Last year, Cambricon Technologies raised 2.58 billion yuan in an initial public offering in Shanghai.

Tencent’s backing of Enflame Technology also highlights another trend — China’s technology giants are investing in the semiconductor industry.

Tencent is best known for software such as mobile gaming or its popular messaging app WeChat. However, it has a small but growing cloud computing business where Enflame’s chips could be of use.

In 2019, Chinese e-commerce giant Alibaba released its first chip to power AI processes. And search firm Baidu began production of its own AI chip called Kunlun 1 last year.



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