Cambricon Technologies Corporation Limited (688256.SH), China's leading AI chip company, has taken a crucial financial step to remove the primary obstacle to fulfilling its shareholder return commitments. Following its three-year dividend distribution plan, the firm announced on December 15 its intention to utilize up to 2.778 billion yuan in capital reserves to offset accumulated losses in undistributed profits on its parent company's financial statements.
This move, while procedurally straightforward, carries significant symbolic weight. By applying capital surplus—formed from shareholder investments—to cover historical R&D-driven losses, Cambricon effectively resets its parent company’s undistributed profits to zero. The company stated that this action aims to "alleviate historical loss burdens, enhance investor returns, and promote high-quality development."
**Clearing Historical Losses** The clearance of accumulated losses signals Cambricon’s readiness to initiate dividends, aligning with regulatory requirements and its public commitment to shareholder returns. Under China’s revised Company Law and CSRC dividend guidelines, a prerequisite for cash payouts is positive cumulative distributable profits. Prior to this adjustment, Cambricon’s parent company reported a -2.778 billion yuan deficit in undistributed profits at the end of 2024, rendering profit distribution legally unfeasible.
The capital reserve adjustment directly addresses this hurdle. Financial experts note that once completed, the company meets the core financial condition for dividends.
**From "Burning Cash" to Profitability** Cambricon’s operational turnaround in 2025 has been striking. In the first three quarters, revenue surged to 4.607 billion yuan, up 2,386.38% year-on-year, while net profit attributable to shareholders reached 1.6 billion yuan, marking four consecutive profitable quarters. This performance, driven by soaring demand for AI computing power, underscores the company’s transition from heavy R&D investment to sustainable profitability.
Globally, the AI infrastructure "arms race" continues to fuel massive investments. North America’s top cloud providers are projected to spend $351–357 billion in 2025, while Chinese tech giants like Alibaba and Tencent are also ramping up data center and AI hardware investments. IDC forecasts the global AI server market to hit $222.7 billion by 2028, growing at a 12% CAGR.
Despite progress, challenges remain. Cambricon’s shares closed down over 4% at 1,273.92 yuan on December 16, reflecting market scrutiny over its valuation and growth prospects.
(Disclaimer: This content is for reference only and does not constitute investment advice.)
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