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Chinese chip firm Cambricon's revenue has jumped by 43x as Beijing looks to reduce reliance on foreign chips and rely on domestic alternatives instead. Cambricon posted RMB2.9 billion in revenue in its latest fiscal year, which marked a significant jump over last year's figures. The firm's profit sat at RMB1 billion, which was a marked jump over the year-ago figures of RMB530 million. Cambricon enjoys a key role in China's domestic AI chip ecosystem as it is the number two player in the industry after Huawei, whose Ascend AI accelerators continued to be the top-performing domestic AI chips.
Chinese AI Chip Sector Booms As Beijing Pushes For Self Sufficiency
Cambricon released its earnings report yesterday in China, with the data showing that the firm earned RMB2.88 billion in revenue during the year's first half. This marked a whopping 43x annual increase, while its profit of RMB1 billion marked a 2x jump from the year-ago loss of RMB530 million.
Cambricon currently offers seven AI chips in its portfolio. The latest of these chips is the MLU690 which, according to unverified rumors, is currently in early stages of production. The second-tier product is the MLU590, while the latest products listed on the firm's website are the 370 series chips.
According to reports on Chinese forums, the 590 chips are built on the 7-nanometer manufacturing process node, which makes it likely that SMIC is the one responsible for their production. However, TSMC might be involved as well since older chips are made through the Taiwanese firm's 7-nanometer process.
Out of the RMB2.8 billion in revenue that Cambricon earned during the first half, 99.6% came through its cloud computing business. As a result, it is clear that AI-driven demand, stimulated by Beijing's aim of relying on domestic chips, is driving the firm's revenue.
The Chinese firm also continues to aggressively invest in research and development, with its R&D spending being RMB456 million during the first half. The R&D spending accounted for 15.9% of the firm's operating revenue and marked a drop in the overall percentage of the operating revenue since Cambricon turned a profit. However, in absolute terms, the figure remained the same to indicate that the firm is continuing to aggressively invest in its future.
Cambricon's earnings report comes after the firm revealed plans to raise RMB3.98 billion in funding to capitalize on the aggressive Chinese domestic demand for AI chips. The firm also turned a profit in its first quarter, through its RMB355 million in net income for a significant jump over Q1 2024's RMB227 million in profit. The firm earned RMB1.1 billion in revenue in Q1 for a whopping 4,230% jump.
Cambricon's shares have gained 112% year-to-date, courtesy of a 94% jump since early August. Over the year, the stock is up by 462% to indicate the sudden surge in domestic demand of Chinese AI chips.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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