Apart from Nvidia Making a Comeback, Cambricon Also Has to Guard Against Its Own People

Author | Xie Chunsheng

Cambricon and NVIDIA, two major Chinese and American chip giants, are once again sounding the alarm in their competition.

On the early morning of March 17 Beijing time, NVIDIA’s annual GPU Technology Conference (GTC) kicked off in San Jose, USA. At this event, dubbed the “AI industry’s annual pilgrimage,” NVIDIA CEO Jensen Huang not only projected an astonishing revenue of at least one trillion dollars by 2027 but also announced that AI has fully entered the reasoning era with a series of hardware and software “nuclear bombs.” After his speech, NVIDIA’s stock price surged over 4% intraday, closing up 1.65%.

The day before NVIDIA’s conference, Chinese chip company Cambricon also reached a significant milestone—officially removing the “U” (note: a special marker in stock codes indicating unprofitable companies), changing its code from “Cambricon-U” to “Cambricon.” This marks that, after five years of continuous losses since its listing in 2020, Cambricon has finally turned a profit on a non-GAAP basis.

Image source: Cambricon announcement

Financial reports show that in 2025, Cambricon’s revenue reached 6.497 billion yuan, a year-on-year increase of 453.21%; net profit attributable to shareholders and non-GAAP net profit both turned positive, soaring from -4.52 billion yuan and -8.65 billion yuan last year to 2.059 billion yuan and 1.77 billion yuan respectively.

Cambricon attributes this significant revenue growth to two main factors: first, the continuous rise in demand for computing power in the AI industry; second, the company’s active market expansion and promotion of AI applications. While industry trends certainly played a role, a more direct factor may lie in another name—NVIDIA.

Over the past year, due to restrictions on high-end chip exports to China, NVIDIA nearly withdrew from the Chinese market, leaving a huge gap that domestic companies like Cambricon quickly filled, benefiting from a wave of “domestic substitution.” Now, with the U.S. easing restrictions on NVIDIA’s high-end chip exports, NVIDIA is planning to re-enter the Chinese market, which is not good news for the recently profitable Cambricon. Before the restrictions, NVIDIA once held up to 95% of the high-end chip market in China, nearly monopolizing core computing needs like large model training.

On one side are the newly profitable domestic leaders, and on the other are international giants eager to return—an undeclared war is about to unfold.

迎来“国产替代”红利

Let’s go back one year.

In April 2025, the Trump administration imposed its first restrictions on AI chip sales to China, banning the export of high-performance chips like the H100 and A100 from NVIDIA. To maintain market share, NVIDIA launched a China-specific H20 chip with significantly reduced performance to comply with export regulations. According to reports, the H20’s performance is only one-sixth of the H200, yet it still accounts for 60% of China’s AI inference market.

However, this situation didn’t last long. With the explosive popularity of inference models like DeepSeek, the H20 regained favor among AI companies, prompting the U.S. government to tighten controls again. In Q3 2025, H20 sales in China plummeted to $50 million, indicating that restrictions had taken effect.

In an interview, Jensen Huang admitted that NVIDIA’s market share in China “dropped from 95% to 0%.” In a sense, this export ban intended to curb China’s AI development instead created an unprecedented market space for domestic chip companies.

Cambricon is one of the biggest beneficiaries of this “domestic substitution” wave.

Performance is the best proof. In 2025, Cambricon, repeatedly questioned by the market about when it would turn profitable, experienced a highlight—breaking out of losses, with revenue and net profit exploding, achieving its first annual profit since listing, and successfully removing the “U.”

The backbone of this performance is its cloud product line.

Financial reports show that this segment contributed 99% of Cambricon’s total revenue, reaching 6.477 billion yuan, a growth of over 455%. The core driver of this growth was the urgent shift of domestic internet giants to domestic chips after NVIDIA’s supply cut-off. Companies like ByteDance, Alibaba, Tencent, driven by their need for computing power, turned their attention to domestic chips, with Cambricon’s “SiYuan 590” series becoming a “lifesaver” for major firms.

Image source: Cambricon 2025 Annual Report

Changes in customer structure also confirm this.

In 2025, four of Cambricon’s top five customers were new that year, contributing a total of 4.523 billion yuan, nearly 70% of total revenue. The largest customer alone bought over 1.7 billion yuan. Such procurement volume is typically from telecom operators, internet giants, or leading financial institutions. In other words, within just a year, Cambricon managed to acquire multiple core clients worth hundreds of millions to billions of yuan from scratch.

Of course, industry-driven explosive growth is also a key factor.

IDC data shows that from 2022 to 2027, China’s intelligent computing power market will grow at a compound annual rate of 33.9%. As the foundation of computing power, AI chips’ demand naturally surges. Driven by both market opportunities and timing, Cambricon’s explosive performance is thus understandable.

Funding Anxiety Remains

Having just turned profitable, Cambricon is also spending heavily.

On the same day as its 2025 financial report, Cambricon announced its first profit distribution plan: a cash dividend of 15 yuan per 10 shares, totaling 632 million yuan, accounting for 30.71% of net profit attributable to shareholders for the period.

Image source: Cambricon 2025 Annual Report

For a chip company that previously accumulated losses of billions and just turned around, this is quite rare.

On paper, Cambricon is cash-rich, but a detailed look at the financials reveals that its financial foundation isn’t as solid as it seems.

In Q3 2025, after raising 3.985 billion yuan through a private placement, its cash holdings increased to 5.178 billion yuan. However, this money was already allocated elsewhere. More importantly, despite achieving a net profit of 2.059 billion yuan in 2025, the company’s financial anxiety has not truly eased.

The real pressure lies in the balance sheet.

As of the end of 2025, Cambricon’s inventory book value reached 4.944 billion yuan, nearly tripling from 1.774 billion yuan at the end of 2024; prepayments also rose to 745 million yuan. This aggressive inventory buildup is a survival strategy amid supply chain turbulence and capacity competition but also carries significant risks. The company admits that the inventory increase mainly stems from raw material reserves. If market demand suddenly shifts, inventory write-downs could directly erode profits.

Image source: Cambricon 2025 Annual Report

Cash flow issues are even more prominent. Despite turning profitable, the company’s operating cash flow remains negative.

Wind data shows that from 2023 to 2025, the net cash flow from operating activities has been consistently negative, at -596 million yuan, -1.618 billion yuan, and -498 million yuan respectively. More concerningly, Cambricon disclosed in a recent inquiry that its overall funding gap over the next three years will reach 6.171 billion yuan—profitability alone hasn’t solved its long-term financial challenges.

Image source: Wind

The highly concentrated customer structure also poses risks.

In 2025, the top five customers contributed 5.76 billion yuan, or 88.66% of total revenue, with the largest customer accounting for over 26%. Although this concentration decreased slightly from 94.63% in 2024, dependence on a few major clients remains. This weakens bargaining power and introduces revenue volatility risks—if key clients change procurement strategies, the company’s performance could destabilize.

Additionally, Cambricon and its subsidiaries are listed on the U.S. “Entity List,” which continues to pressure supply chain stability. Switching suppliers would also incur additional costs.

In response to the rapid growth, funding gaps, and large dividends, sources have recently inquired with Cambricon, but no reply has been received as of press time.

Beware of “counterattack” from clients

Even after removing the “U” and paying large dividends, Cambricon’s stock price has not responded enthusiastically; instead, it has weakened.

Market concerns are simple: NVIDIA is coming back.

In January 2026, the U.S. officially approved NVIDIA’s export of the H200, a next-tier AI chip, to China. Behind this easing are three U.S. strategies: to harvest Chinese market benefits, to maintain technological suppression, and to delay domestic chip self-reliance. For domestic giants, NVIDIA’s CUDA software ecosystem, mature cluster solutions, and low migration costs remain highly attractive. Even with the shadow of supply restrictions, many manufacturers find it hard to give up the compliant H200.

At the GTC conference, Huang also unveiled the Rubin platform, which further widened the technology gap: FP4 inference performance is five times that of the previous Blackwell, and training performance exceeds 3.5 times. This rapid iteration speed is difficult for domestic manufacturers to catch up with in the short term. Once U.S.-China tech tensions ease, major domestic firms are likely to re-align with NVIDIA, posing a severe challenge to Cambricon, which has just stabilized.

More challenging than external competitors is the subtle shift in customer identities.

Now, giants like ByteDance and Alibaba are no longer just chip buyers—they are accelerating their own chip R&D, becoming direct competitors. Rumors suggest ByteDance’s self-developed chips may return to production in Q2 2026.

If large firms achieve chip self-sufficiency, Cambricon’s 88% customer concentration advantage could disappear.

Industry competition is also intensifying. Domestic GPU vendors like Hygon, Moore Threads, and Muoxi have gone public and are accelerating product iterations. Moore Threads’ revenue surpassed 1.5 billion yuan in 2025, though it hasn’t yet shaken Cambricon’s core position, but price wars have already begun in the trust innovation market and secondary scenarios.

Faced with these pressures, Cambricon’s only response is to continue “burning money.”

In 2025, Cambricon invested 1.169 billion yuan in R&D, accounting for 17.99% of revenue. The new generation of intelligent processors and instruction set architectures are still under development, but market doubts about the mass production schedule of the next-generation SiYuan 690 persist, with rumors that production has been delayed from late 2025 to the second half of 2026. This is the fate of all domestic chip manufacturers—they must run at full speed just to stay in place.

Image source: Cambricon 2025 Annual Report

NVIDIA’s technological dominance, customer self-research, and peer competition have already turned this AI computing war into a close-quarters fight.

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