(Yicai) May 8 -- Shares in Hongxin Electronics Technology Group soared today after the Chinese maker of flexible printed circuit boards which is expanding into artificial intelligence computing services said that a subsidiary has bagged a contract to supply CNY1.5 billion (USD207.6 million) worth of AI computing servers to the Qianyang government in northwestern Gansu province.

Hongxin’s stock price [SHE: 300657] closed up 1.2 percent at CNY18.21 (USD2.50) today. Earlier in the day it surged 6.2 percent to CNY19.11.

Unit Gansu Suihong Artificial Intelligence Technology will provide Qingyang Jinghe Cloud Computing Technology with AI computing servers in three separate installments, the Xiamen-based parent firm said yesterday, citing the deal inked by the two parties that day.

The first batch, worth CNY500 million (USD69.2 million), should be delivered by the end of June and the other two installments within the next 12 months, it added.

The contract is an important part of the company’s tie-up with the Qingyang government to attain 40,000 petaflops of AI computing power, Hongxin said. It is also proof that customers have recognized the high-quality of Hongxin’s AI servers and will help drive up profit and revenue.

Qingyang has rich green energy resources and is one of the national computing hubs in China’s Big Data computing project. Hongxin said last September that it plans to build an AI computing center with over 2,000 Pflops in Qingyang with its partners.

Hongxin is building AI centers in Chinese cities and leasing servers to tech firms that need to train AI models. Last October, Hongxin linked arms with Suiyuan Technology, also known as Enflame, to use the semiconductor company’s chips to assemble AI servers in order for Hongxin to become a provider of one-stop solutions for computing hardware and services.

Although Hongxin only entered the AI computing sector last year, this segment now accounts for almost half of its earnings. In the first quarter, Hongxin’s revenue from its computing business, which mainly comprises the sales of servers for now, accounted for 46 percent of total revenue at CNY760 million (USD105.2 million), according to the firm’s latest earnings report.

Editor: Kim Taylor