Leading Chinese AI chipmaker Cambricon Technologies Corporation Limited (ASX: 688256), following its market capitalization surpassing 1 trillion yuan to become the first stock on the STAR Market to achieve this milestone, promptly issued a stock trading risk warning announcement. The notice explicitly cautioned that the company's valuation is significantly higher than industry levels and disclosed multiple operational uncertainties, including supply chain constraints and intensifying competition.
On June 30, the company's board of directors released a statement noting that the cumulative stock price increase had far outpaced gains in the STAR Market Composite Index and the Shanghai Composite Index, indicating "there may be a risk of decline due to excessively rapid short-term appreciation." The announcement cited data from the China Securities Index Company, showing the company's latest trailing price-to-earnings (P/E) ratio had reached 368.97 times, with a price-to-book (P/B) ratio of 77.88 times, both substantially deviating from industry averages.
That day, Cambricon's stock price surged over 8% intraday, touching 1,613 yuan, pushing its total market value above 1.01 trillion yuan. It closed at 1,595.55 yuan. Regarding financial performance, for the first quarter of 2026, Cambricon achieved operating revenue of approximately 2.885 billion yuan, net profit attributable to shareholders of about 1.013 billion yuan, and non-GAAP net profit skyrocketed 238.56% year-on-year to roughly 934 million yuan, with cash flow turning positive. Despite the evident momentum in profitability realization, the company candidly stated in its announcement that it is "still in a continuous development stage and has relatively limited ability to withstand market volatility and industry changes."
As its market capitalization reached its peak, an online commentary also highlighted three underlying concerns while acknowledging Cambricon's milestone significance for the STAR Market. These concerns included potential downward pressure on the high valuation if performance fails to meet expectations, the existing gap between domestic AI chips and international top-tier levels in high-end large model training, and the risk that overheated capital could foster homogeneous competition and industrial impatience.
Elevated Valuation Metrics
Valuation pressure stands as the most prominent risk highlighted in the company's announcement. According to data from the China Securities Index Company, as of June 30, Cambricon's trailing P/E ratio was 368.97 times and its P/B ratio was 77.88 times. These figures are approximately 4.9 times and 9.7 times the respective averages for the computer, communication, and other electronic equipment manufacturing industry (74.86 times, 8.06 times). The gap is similarly significant compared to the software and information technology services industry averages (74.13 times, 5.67 times).
Major financial institutions have maintained positive outlooks on the company, citing reasons such as concentrated delivery of orders from large clients and a stabilizing supply chain. However, a dynamic P/E ratio exceeding 370 times has sparked notable debate in the market—any scenario where performance or deliveries fall short of expectations could trigger significant valuation correction risks. The company also frankly acknowledged in its announcement that its gross margin is subject to multiple factors, including product mix, raw material and packaging/testing costs, the degree of market competition, and global supply chain stability, and is therefore subject to potential fluctuations.
In the first quarter of 2026, Cambricon reported operating revenue of approximately 2.885 billion yuan, total profit of about 1.014 billion yuan, and net profit attributable to shareholders of around 1.013 billion yuan. After excluding non-recurring gains and losses, net profit surged 238.56% year-on-year to approximately 934 million yuan, and cash flow turned positive from negative, clearly indicating an improving profitability trend. Nevertheless, the company used straightforward language in its announcement, stating it is "still in a continuous development stage and has relatively limited ability to withstand market volatility and industry changes."
Potential Impact of Rising Input Costs
Supply chain vulnerabilities represent a key risk highlighted in the announcement. Cambricon operates on a fabless model, relying on external suppliers such as IP licensors, wafer foundries, and packaging and testing houses, which subjects its supply chain stability to certain pressures. Concurrently, demand for upstream raw materials in the domestic semiconductor industry continues to grow, supply remains tight, and procurement prices are generally trending upward. The announcement pointed out that if prices continue to rise, it could adversely affect the company's operating performance.
Regarding the competitive landscape, the announcement noted that artificial intelligence chip technology is still in a developmental phase, with rapid iteration, and no architecture or system ecosystem with absolute dominance has yet been established. As leading integrated circuit companies and startup design firms increasingly enter the AI chip space, competition in this field is becoming increasingly fierce.
The online commentary also pointed out that domestic AI chips still lag behind international top-tier levels in terms of computing hardware for high-end large model training and developer ecosystem development. The journey from being "usable" to "user-friendly" requires continuous and dedicated effort.
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