Cambricon posts record $521M nine-month profit as its "China's Nvidia" story fades
What's the deal? Chinese AI chip designer Cambricon reported record quarterly revenue and profit on October 23, with nine-month net profit reaching US$511.5M, up 131.49% year on year. Third-quarter revenue hit US$485.4M, up 104.47%, and net profit rose 147.74% to US$192.5M.
The numbers behind the numbers: Growth came mainly from Cambricon's core business, not one-off gains — stripped of non-recurring items, third-quarter profit climbed 168.13%. Gross margin reached about 56.53% for the nine months, up roughly 1.24 points year on year, while research spending rose 45.35% to US$169.1M.
Why the caveats? The balance sheet shows strain. Inventory jumped 136% to US$1.6B and prepayments rose about 309% to US$418M — together exceeding nine-month revenue. Cash on hand fell to US$76.3M, and third-quarter operating cash flow was negative.
Cambricon uses a fabless model, relying on outside foundries and packaging, so stockpiling locks in capacity amid rising demand and input costs. But the bet carries risk: nine-month asset impairment losses hit US$69M, up from 87 million a year earlier, as stockpiled materials aged. If deliveries or demand disappoint, today's inventory becomes tomorrow's writedown.
The contrast: Cambricon's best-ever results came as its shares slid. Its market value peaked above US$137.5B on June 30, then fell more than 40% to about US$80.6B. The stock earned nicknames like "chip king" during a run that once topped Kweichow MoutaiDealroom has a profile for this one. Try Dealroom →, driven by its status as a perceived Nvidia substitute after 2022's push for domestic AI compute.
What's changed? The scarcity premium is thinning. Nvidia still held 34% of China's AI accelerator market in the first half of 2026 despite a 44% drop, per IDC. HuaweiDealroom has a profile for this one. Try Dealroom →, once an early partner, is now a rival: in September 2025 it laid out an Ascend roadmap through 2028 aiming to double compute roughly every year. Rivals including Alibaba's T-Head, Baidu's Kunlunxin, Hygon, and Moore Threads are also scaling up.
The signal: Cambricon's core problem is no longer whether it can turn a profit, but how to convert fast growth into stable, cash-generating quality. The company projects at least US$13.8B in cumulative revenue from 2026 to 2028, but the "China's Nvidia" narrative that once set its price is no longer enough to carry it. Investors are watching product competitiveness, order delivery, and collections — not just headline growth.
Read more: 36kr.com
Image credit: Generated with Gemini
