Cambrian Technologies (寒武纪), a Chinese semiconductor company, has seen its share price more than double in a month, drawing attention. The company specializes in designing artificial intelligence (AI) semiconductors and is still a startup, but investor enthusiasm is rising because it is pursuing a single-track strategy focused on AI semiconductors and is the only AI semiconductor company listed on China's stock market. Cambrian is expected to grow faster going forward. Even so, the share price has risen excessively, and the company itself has expressed concern about overheated investment.
Cambrian is a startup founded less than 10 years ago. In Mar. 2016, the day Google's AlphaGo defeated 9-dan Lee Se-dol in a Go match, brothers Chen Tianshi (陈天師) and Chen Yunzhi (陈云志), both from the Chinese Academy of Sciences (CAS), founded the company. The younger brother, Chen Tianshi, took charge of management, and the older brother, Chen Yunzhi, led research and development and has since returned to the institute. Because of the brothers' outstanding research capabilities, the company drew major attention from the market even before it had a proper office and secured large investments from venture capital (VC) and big tech companies such as Alibaba and iFlytek.
◇ Made a flashy debut but stumbled due to U.S. sanctions
In 2017, when China's market for AI chips for cloud computing was just taking shape, Cambrian launched the world's first commercial AI chip, the Cambrian-1A. Huawei was a major customer. Even after Huawei jumped into developing its own AI chips and became a competitor, Cambrian grew by securing large corporations such as Alibaba as customers. Active government support also played a big role in the company's growth. As a result, in Jul. 2020, Cambrian listed on the STAR Market, known as China's Nasdaq, and its share price jumped to four times the offer price.
But just over two years later, Cambrian was pushed to the brink. While losses were mounting due to massive research and development expenses, it was placed on the U.S. Commerce Department's Entity List. As a result, cooperation with its manufacturing partner TSMC was halted. As the "ChatGPT" craze began and the world's attention turned to AI, Cambrian failed to ride the wave. It halted projects under development and laid off hundreds of employees. The share price fell below the offer price.
◇ Thanks to U.S. curb on Nvidia exports to China, spotlight as a substitute
What revived Cambrian again was also U.S. regulation. In Sep. 2023, when the United States restricted semiconductor exports to China, Chinese companies could no longer procure Nvidia's AI chips. Cambrian did not miss the opportunity and, at the end of the same year, launched the "Shiyuan (思元)" series of AI chips with SMIC, the country's largest foundry. Although the performance lagged slightly behind Nvidia's chips, major big tech firms such as ByteDance became Cambrian's customers, and in the fourth quarter of 2024, Cambrian posted its first quarterly profit eight years after its founding.
Cambrian's growth accelerated this year. Starting in April, U.S. restrictions on semiconductor exports to China resumed, and Cambrian seized the moment by introducing the Shiyuan 670, cheaper than Nvidia's chips. Although exports of Nvidia chips to China resumed in July, the Chinese government pointed to a backdoor risk in Nvidia's AI chips, and corporations turned to domestically produced AI chips.
As a result, Cambrian's first-half revenue increased 43-fold year over year. According to Cambrian's earnings release at the end of 4th, first-half revenue totaled 2.881 billion yuan (about 562 billion won), up 4,348% from the first half of last year. Net profit swung from a loss of 609 million yuan (about 118.8 billion won) to a profit of 913 million yuan (about 178.1 billion won). The gross margin, an indicator of a company's profitability, reached 36%.
◇ Share price up 500% in a year… the homework is boosting output
As a result, Cambrian's share price rose 130% in August alone. Immediately after the earnings release, the share price jumped 16% in a single day. Over the past year, it climbed more than 500%. During intraday trading, it even became the most expensive stock on China's market. As of 12th, Cambrian's market capitalization was 532.6 billion yuan (about 103.8943 trillion won). That is more than 20 times its market cap at the time of listing.
CaiXin, citing an expert, said, "Rumors that Cambrian has secured large-scale orders and will reach 25 billion yuan in revenue in 2026, along with DeepSeek's mention of procuring domestically produced AI chips, fueled investor sentiment and drew funds to Cambrian, making it a barometer of the bull market in China's stock market."
Cambrian's task is to increase production. Demand for domestic AI chips among Chinese companies is high, but China's AI chip manufacturers still face low production capacity and low yields. Based on Cambrian's upper bound of annual revenue, CaiXin estimated that the company's maximum output is only 80,000 units per year.
Cambrian expects revenue of 5 billion to 7 billion yuan this year. On 1st, Goldman Sachs raised its target price for Cambrian to 2,104 yuan, citing increased investment in cloud computing facilities by major customers Alibaba and Tencent. Still, Cambrian is concerned about overheated investment. As of the end of August, the company noted that its price-earnings ratio (PER) was 5,118 times and its price-to-book ratio (PBR) was 114 times, excessively higher than the industry averages of 89 times and 6 times.