SiliconFlow Files for IPO as First AI Token Factory

Chinese AI infrastructure startup SiliconFlow (北京硅基流动科技股份有限公司) has filed for an initial public offering on the Hong Kong Stock Exchange, positioning itself to become the first publicly listed “AI Token Factory” company. The company submitted its application on June 30 under HKEX Chapter 18C, which allows pre-profitability specialist technology companies to list on the Main Board, with Huatai International and Guotai Haitong serving as joint sponsors.

Founded in August 2023 by Yuan Jinhui, a former PhD student of renowned Tsinghua University academician Zhang Bo, SiliconFlow has completed seven rounds of financing in under three years. Its valuation has surged from 280 million yuan in its angel round to 7.74 billion yuan (approximately $1.07 billion) following its B+ round in June 2026. Key strategic investors include Alibaba, Meituan, 360, Trip.com, SenseTime, and China Unicom, as The Paper reported.

The Token Factory Business Model

Unlike traditional AI companies that develop their own large language models or consumer-facing applications, SiliconFlow operates as an independent token supply platform — a middleware layer between computing hardware and AI models. The company aggregates heterogeneous computing resources from various cloud providers, integrates different AI model architectures through its proprietary inference engine, and packages computing power into standardized, billable “tokens” sold to developers and enterprises via API access.

The company describes itself as an AI “water seller” — providing the infrastructure for the AI gold rush rather than joining the rush itself. According to Frost & Sullivan data cited in the prospectus, SiliconFlow held a 1.5% share of China’s token supply market by 2025 throughput, ranking fourth overall and first among independent ecosystem token suppliers.

Explosive Growth Fueled by DeepSeek

The viral success of DeepSeek V3 and R1 in early 2025 proved transformative for SiliconFlow. When DeepSeek’s official servers were overwhelmed by demand, SiliconFlow quickly deployed DeepSeek models on Huawei Cloud using domestic Ascend chips, capturing massive overflow traffic. Combined with aggressive referral marketing, the company’s registered user base exploded from 127,000 to over 10 million as of April 2026.

Daily token throughput averaged approximately 578.5 billion tokens in April 2026, with a peak of 1.07 trillion tokens in a single day. The company’s revenue surged 653% year-over-year to 55.33 million yuan in 2025, up from just 7.35 million yuan in 2024.

Financial Challenges and Losses

Despite the explosive top-line growth, SiliconFlow faces significant financial headwinds. The company posted a net loss of 345 million yuan in 2025 (an adjusted net loss of 187 million yuan), widening from 81.9 million yuan in 2024. More concerning, the company recorded a negative gross margin of -24%, meaning it sells tokens below cost — particularly in its public cloud business, which carries a -119% gross margin.

R&D spending has grown from 10.8 million yuan in 2023 to 209 million yuan in 2025, though as a percentage of revenue it has dropped from 877.7% to 378.1%. Sales and marketing expenses reached 83.7 million yuan in 2025, driven by promotional computing resource costs used to acquire early users.

In its prospectus, SiliconFlow warned that it “has recorded gross losses and net losses, and has generated and expects to continue generating negative cash flows from operating activities” and “may not be able to achieve profitability in the near future or maintain profitability thereafter.”

The company’s financial position shows 171.5 million yuan in cash and 100 million yuan in time deposits as of end-2025, with a monthly cash burn rate of approximately 14.8 million yuan — providing roughly 18 months of runway. Total liabilities reached 693.7 million yuan, with 71.9% (498.6 million yuan) consisting of redemption liabilities. If SiliconFlow fails to complete a qualified IPO by December 31, 2030, early investors can demand share redemption.

Competitive Pressures and Risks

SiliconFlow faces intense competition from multiple directions. Cloud giants including Alibaba Cloud, ByteDance’s Volcano Engine, Tencent Cloud, and Baidu AI Cloud are all building in-house infrastructure capabilities, potentially eroding SiliconFlow’s middleware value proposition. Meanwhile, domestic chip makers such as Moore Threads and Muxi are bypassing middleware providers to partner directly with large model companies.

The ongoing AI price war in China adds further pressure. Since 2023, major AI companies have cut API prices over ten times, with some models seeing more than 90% price reductions. In May 2026, DeepSeek permanently cut V4-Pro prices by 75%, and Tencent Cloud followed with cuts of up to 97.5% — directly squeezing SiliconFlow’s already razor-thin margins.

Customer concentration, while improving, remains a risk. The top five customers accounted for 45% of 2025 revenue, down from 85% in 2024. The company also faces internal challenges, including the recent departure of co-founder and growth VP Yang Pan, who led the viral user acquisition strategy during the DeepSeek wave.

Founder Control and Governance

Founder Yuan Jinhui maintains 44.48% voting control through direct holdings and an employee incentive platform. The company’s board includes representatives from key investors, and the B+ round in June 2026 added Trip.com, SenseTime, China Unicom, and NIO Capital as investors.

In a February 2025 interview with Caixin, Yuan emphasized the importance of open-source strategy, stating: “China must play the open-source card strongly. Open source and open sharing make the whole world your friend, just like DeepSeek’s popularity.”

What’s Next

SiliconFlow’s IPO will serve as a critical test case for investor appetite in high-growth, pre-profitability AI infrastructure companies on HKEX’s 18C listing channel. The company’s success or failure will reflect the health of China’s independent AI infrastructure layer and the viability of middleware companies operating between chip makers and model developers.

Key questions remain: Can SiliconFlow achieve positive unit economics before its cash runway runs out? Will the HKEX approve the listing given the company’s negative gross margins? And can the company retain users acquired during the DeepSeek frenzy as major platforms expand their own capacity?

For investors, SiliconFlow offers pure-play exposure to China’s AI infrastructure buildout — but with significant risks attached to its path to profitability in an increasingly competitive and price-sensitive market.