(Yicai) Oct. 25 -- Hongxin Electron-Tech Group’s shares surged by their daily trading limit after the Chinese maker of flexible printed circuit boards said it will deepen ties with Tencent-backed Enflame Technology to ensure long-term supplies of artificial intelligence chips.

Hongxin [SHE: 300657] rose 20 percent to close at CNY21.16 (USD2.89) a share in Shenzhen today. The stock has almost doubled in value since the beginning of the year.

Hongxin, which is transforming itself into an AI computing services provider, has inked a five-year cooperation agreement with Enflame, the Xiamen-based company said yesterday, without making any predictions about the partnership’s financial outlook.

Shanghai-based Enflame will sell AI chips at favorable prices to Hongxin in addition to ancillary products such as AI acceleration cards and related services, per the latest deal. In turn, Hongxin will be Enflame's only supplier of AI servers and computing cards among other products. 

Hongxin has so far placed orders to buy over 9,150 AI chips from Enflame. Delivery is expected to be finished by December, according to the announcement.

Enflame also will help Hongxin establish relations with a leading internet firm in the AI field. The two are also interested in building a research and development center in Shanghai to jointly develop hardware products related to AI computing.

Hongxin is building data centers to lease AI servers to tech companies that need to train their AI models. Since early last month, Hongxin has set out plans to build five such centers in different parts of China.

The five hubs will mainly use servers with AI chips made by Nvidia, while some will use domestically produce chips depending on the requirements of clients and those chips will mainly be supplied by Enflame, Hongxin said earlier.

Enflame wrapped up a CNY2 billion (USD273.5 million) Series D fundraiser last month that valued it at more than CNY16 billion (USD2.2 billion). WeChat operator Tencent Holdings has joined every financing round since it was the lead investor in Enflame's Series pre-A offering in August 2018.

Editor: Emmi Laine