Chinese AI chip maker Cambricon hits $81B valuation despite revenue risks

Cambricon Technologies, a Beijing-based AI chip designer, has seen its stock price soar to a market valuation of approximately $81.2 billion, surpassing established companies like MediaTek and SMIC despite generating significantly lower annual revenue. The meteoric rise reflects investor enthusiasm for China’s domestic AI hardware ecosystem, though questions remain about the sustainability of its growth amid heavy client concentration and geopolitical pressures.

The big picture: Cambricon’s financial turnaround has been dramatic, generating RMB28.81 billion (approximately $4.03 billion) in revenue during the first half of 2025—more than 40 times the figure from a year earlier.

• The company also achieved profitability with RMB1.038 billion (around $145 million) in net income over the same period, marking a significant shift after years of losses.
• Founded by brothers Chen Tianshi and Chen Yunji in 2016, the company has focused on developing processors specifically tailored for artificial intelligence applications.

Key product developments: The company’s Siyuan product line has evolved rapidly, with its latest chips positioned to compete directly against Nvidia’s flagship processors.

• The Siyuan 590 chip reportedly achieves about 80% of the performance of Nvidia’s A100 while being manufactured on a domestic 7-nanometer process.
• A follow-up model, the Siyuan 690, is expected to be positioned against Nvidia’s H100 processor.

In plain English: Think of these chips as specialized calculators designed specifically for AI tasks like training chatbots or image recognition systems. The “7-nanometer process” refers to how small the chip components are—smaller means more powerful and efficient, similar to how a more compact engine can deliver better performance.

Critical vulnerabilities: Nearly all of Cambricon’s revenue stems from cloud chips used in training large-scale AI models, with most sales tied to a handful of customers.

• The company’s largest client, unnamed but believed to be a major cloud provider, reportedly contributes the bulk of revenue, creating significant concentration risk.
• Any change in spending by that customer could cause Cambricon’s earnings to tank, similar to concerns that emerged with CoreWeave, a cloud computing company that experienced volatility due to customer concentration.

Geopolitical challenges: Cambricon faces significant restrictions that limit its access to international suppliers and advanced manufacturing capabilities.

• The company was placed on Washington’s trade blacklist in 2022, restricting access to overseas suppliers and forcing reliance on local foundries.
• Access to TSMC, Taiwan’s leading chip manufacturer, is also blocked, further constraining the company’s manufacturing options.
• Domestic competitors like Huawei are pushing their own AI hardware alternatives that could capture market share from Cambricon.

What’s at stake: Whether Cambricon can maintain its momentum will depend on several critical factors for long-term sustainability.

• The company must widen its customer base beyond its current concentrated client roster.
• Securing reliable production capabilities remains essential given the geopolitical restrictions on international partnerships.
• Successfully navigating China’s highly contested domestic AI hardware market will be crucial for sustained growth.