The race between the US and China in the field of AI chip technology has reached a new milestone with Chinese chip designer Cambricon Technologies reporting its first-ever quarterly profit. This significant achievement comes amidst heightened US export controls that have increasingly limited Chinese companies’ access to advanced semiconductor technology, particularly the sophisticated AI processors from Nvidia.
Cambricon’s breakthrough into profitability marks a notable shift in the competitive landscape of the US-China AI chip race. Originally established in 2016, Cambricon has evolved into China’s most valuable artificial intelligence company, with a current valuation of approximately 300 billion yuan (equivalent to $41 billion). This figure, though only a fraction of Nvidia’s market capitalisation of $3 trillion, indicates China’s growing capability to develop advanced AI chips domestically.
The financial turnaround of Cambricon is particularly striking in the context of the ongoing technological competition between the world’s two largest economies. After years of financial losses, Cambricon reported its first quarterly profit in the final quarter of 2024, with net profits ranging from 240 million yuan to 328 million yuan. This is especially significant given the company’s loss of 724 million yuan during the first nine months of the year.
The market’s response to this development in the US-China AI chip race has been noteworthy. Shares of Cambricon on the Shanghai Stock Exchange’s Star Market have surged over 470% in the past year, rising from 120.80 yuan to 695.96 yuan. This dramatic increase reflects investor confidence in Cambricon’s future prospects.
Cambricon projects a 70% increase in revenue for 2024, aiming to reach 1.2 billion yuan. This growth is being driven by China’s aggressive efforts to build up its computing infrastructure to support its AI ambitions. The rapid expansion in AI infrastructure is a critical factor in the company’s optimistic revenue projections.
On the technical front, Cambricon has positioned itself as a key player in China’s response to US-imposed chip restrictions with its 7-nanometre AI chips. The company’s flagship product, the Cambricon-1A processor, has gained significant traction in the domestic market, particularly in technology products from major companies like Huawei Technologies. This processor represents a critical advancement in China’s AI capabilities.
The stakes in the US-China AI chip race continue to escalate. Analysts at Changjiang Securities predict that China’s AI semiconductor market will reach 178 billion yuan by 2025. This growth is being fueled by Beijing’s push for semiconductor self-sufficiency and increased investments from domestic technology companies in AI infrastructure.
Recent US regulations, announced in January 2025, have further intensified the competition by restricting Chinese access to advanced AI technology and limiting it to American companies and their allies. In response, major Chinese technology companies have been heavily investing in domestic computing infrastructure, indicating a strategic shift to strengthen their technological capabilities internally.
For instance, ByteDance, the parent company of TikTok, has committed 4.5 billion yuan to a new computing center in Datong City, Shanxi province. This investment underscores the growing market opportunities for domestic chip manufacturers as they seek to reduce reliance on foreign technology.
Despite Cambricon’s impressive progress, challenges remain. The company must continue to narrow the technological gap with its international competitors while maintaining its growth trajectory. Achieving this balance will be crucial for sustaining its competitive edge in the global market.
Supportive government policies and the growing domestic demand for AI technology provide a favorable environment for Cambricon’s continued development. The company’s inclusion in the SSE 50 Index, which tracks the Shanghai Stock Exchange’s most valuable companies, highlights its strategic importance to China’s technology sector.
As global tensions persist and access to foreign technology becomes increasingly restricted, the development of domestic AI chip capabilities has become paramount for China’s technological advancement and economic security. Cambricon’s success is a testament to the country’s efforts to achieve self-sufficiency in this critical area.