• Cambricon Technologies posted a record 1.03 billion yuan profit in 1H25, marking a dramatic turnaround from previous losses as China’s domestic AI chip demand soars
• The Chinese AI chip giant’s stock hit 1,384.93 yuan on Monday, up 11.6%, bringing its market value close to overtaking luxury liquor maker Kweichow Moutai as China’s most expensive stock

Just three years ago, Cambricon Technologies was bleeding money, blacklisted by Washington, and fighting for survival in the shadow of Nvidia’s dominance. Today, the Chinese AI chipmaker has done something that seemed impossible: it turned a stunning US$144 million profit while US sanctions intended to cripple China’s tech ambitions appear to be backfiring spectacularly.

Record-breaking financial performance

The numbers tell the story of a company—and a country—defying expectations. Cambricon posted a 1.03 billion yuan profit versus a year-earlier loss of 533 million yuan, driven by a staggering 44-fold surge in revenue to 2.9 billion yuan for the first half of 2025. More than just a corporate comeback, this represents China’s most concrete proof yet that its domestic AI ecosystem can not only survive American restrictions—it can thrive because of them.

Cambricon Technologies, which competes directly with Huawei Technologies in providing AI accelerators for developing and hosting AI models, has achieved what many analysts thought was impossible under US restrictions. The company’s earnings per share (EPS) of 2.48 yuan and a sustained profitability trajectory, which began with its first-ever quarterly profit in late 2024, signal a fundamental shift in China’s semiconductor capabilities.

The transformation is all the more remarkable given the company’s recent struggles. Just months ago, Cambricon was grappling with years of persistent losses, while US sanctions severely limited its access to advanced manufacturing processes and cutting-edge technologies.

Market euphoria and valuation surge

The market’s response to Cambricon Technologies has been nothing short of euphoric. As of Aug 26, 2025, Cambricon Technologies was trading at 1,329.00 yuan, with a previous close of 1,384.93 yuan, representing an 11.6% jump on Monday alone. Cambricon’s stock closed up 11.4% on Monday at 1,384.93 yuan ($191.07) per share, just shy of the fiery liquor-maker Kweichow Moutai, which closed at 1,490.33 yuan.

Investors are paying an extraordinary premium for a piece of China’s AI future—Cambricon’s price-to-earnings ratio has ballooned to 4,463 times, making Kweichow Moutai’s 20 times multiple look conservative by comparison. The rally shows no signs of slowing: after rising 383% in 2024 to become China’s best-performing stock, shares have more than doubled since mid-July, delivering a spectacular 562% return since September.

The DeepSeek effect and China’s AI renaissance

Behind Cambricon’s meteoric rise lies a game-changing development: DeepSeek, the Chinese AI startup that shocked Silicon Valley with its cost-effective approach to artificial intelligence. When DeepSeek revealed it could achieve a “theoretical” profit margin of 545%—more than five times its costs—it didn’t just demonstrate Chinese AI prowess, it created a gold rush for the domestic chips powering these breakthroughs.

The ripple effect was immediate. As DeepSeek optimised its models for the “next generation of domestic chips,” investors suddenly grasped the full potential of China’s homegrown AI ecosystem. Beijing’s push for technological self-reliance wasn’t just about politics anymore—it was about profits, and companies like Cambricon were perfectly positioned to capitalise

When sanctions backfire

The irony is impossible to ignore: the very restrictions designed to kneecap China’s AI ambitions have become Cambricon’s greatest competitive advantage. When Washington added the company to its Entity List in December 2022, cutting off access to advanced US technologies, it seemed like a death sentence. Instead, it became a business opportunity.

Nvidia’s China-specific H20 chips—already a watered-down version designed to comply with export controls—were further restricted under the Trump administration’s latest regulations. The result? Chinese companies had no choice but to look inward, and Cambricon was ready with domestic alternatives. 

In September 2024, when Beijing ramped up pressure on local firms to ditch American processors, Cambricon’s shares hit the 20% daily trading limit.

The technical reality check

But can Cambricon actually compete with Nvidia’s technological prowess? The company, founded by brothers Chen Yunji and Chen Tianshi from China’s elite “genius youth class,” is betting its future on the Siyuan 690 processor—a chip designed to rival Nvidia’s H100. 

While specifications remain closely guarded, the China Academy of Information and Communications Technology has validated Cambricon as one of eight suppliers with DeepSeek-compatible hardware.

The real test isn’t just raw performance, but ecosystem compatibility. Chinese AI companies increasingly need chips optimised for their specific algorithms and cost structures—something Nvidia’s export-restricted chips struggle to deliver.

The $5 billion bet

Cambricon isn’t just riding the wave—it’s doubling down with a massive 5 billion yuan capital raise to fund large language model chip development. The allocation tells the story: 2.9 billion yuan for LLM chips, 1.6 billion yuan for software, and the rest for working capital. This isn’t incremental improvement; it’s an attempt to leapfrog generations of chip development.

Goldman Sachs’ bullish 1,835 yuan price target (50% above current levels) reflects growing confidence that Chinese cloud giants like Tencent will fuel sustained demand. But with a 4,463x P/E ratio, there’s little room for execution missteps.

The uncomfortable truth

The sustainability question looms large, and it’s not just about valuation bubbles. Cambricon’s explosive growth masks dangerous client concentration risks—a few large customers departing could crater revenues overnight. More fundamentally, while China can design competitive AI chips, manufacturing them at scale without access to cutting-edge Western equipment remains an open question.

The company likely relies on domestic foundries like SMIC or Hua Hong Semiconductor, which lag TSMC by several process generations. Physics doesn’t care about geopolitics, and advanced AI workloads demand the most efficient chips available.

The new semiconductor reality

Cambricon’s remarkable turnaround isn’t just a corporate success story—it’s a preview of the technology cold war’s next phase. For decades, the semiconductor industry thrived on global integration: American designs, Taiwanese manufacturing, Chinese assembly. That era is ending.

What we’re witnessing isn’t just market fragmentation, but the birth of parallel technological universes. Chinese AI companies will increasingly optimise for domestic chips, while American firms double down on Western hardware. The result won’t be healthy competition—it will be technological tribalism that ultimately slows innovation for everyone.

The real winners may not be the companies or countries involved, but the geopolitical rivals watching from the sidelines. While the US and China spend hundreds of billions building duplicate semiconductor ecosystems, Europe, India, and others are quietly developing their own capabilities without the baggage of a tech cold war.

Overall, Cambricon’s success proves that China can build a domestically powered AI ecosystem. But success and optimality are different things. The world is about to find out how much innovation we’re willing to sacrifice on the altar of technological sovereignty. Based on Cambricon’s soaring stock price, investors think the answer is: quite a lot.

The question isn’t whether China can build its own AI chip champions—Cambricon has already answered that. The question is whether a bifurcated global technology system will ultimately serve anyone’s interests, including China’s. On that, the jury is very much still out.