In response to a query about the company's high inventory levels during an earnings call on August 12, Cambricon Technologies Corporation Limited Chairman and General Manager Chen Tianshi stated that the domestic semiconductor industry has seen a sustained increase in raw material demand, with purchase prices generally trending upward. He confirmed the company will actively manage this pressure through strategic stockpiling and other measures.
The company's first-half 2026 financial report, released recently, revealed that Cambricon's inventory book value has reached 8.25 billion yuan, accounting for 45.32% of its total assets. While the company delivered a strong performance in the first half of the year, with both revenue and net profit attributable to the parent company doubling year-on-year, the growth rate has decelerated from its previous "breakneck" pace to a "high-speed" trajectory. This is a notable shift compared to last year's explosive growth, where revenue surged 43-fold and net profit swung from a 500 million yuan loss to a 1 billion yuan gain. Industry insiders suggest that such extremely high growth rates are difficult to sustain over the long term, as the market transitions from being "scarcity-driven" to "competition-driven."
The financial report also shows a significant increase in inventory. For instance, AI chip company Moore Threads reported an inventory book value of 3.55 billion yuan in its first-half 2026 report, a 166.48% jump from the end of last year, representing 20.97% of its total assets. During the earnings call, Chen Tianshi elaborated that the company is using strategic stockpiling to address the pressure from rising upstream raw material prices. The current situation extends beyond memory chips, signaling the start of a super cycle for the entire semiconductor industry. Recent price increases have been widespread, with domestic companies like Yangjie Technology, Silan Micro, and others issuing price hike notices, and international giants such as Infineon, Texas Instruments, and STMicroelectronics also initiating new rounds of price increases. Reports suggest that foundries like TSMC are also planning comprehensive price hikes.
Beyond the price factor, an analyst from InSemi Research noted that this is likely a proactive strategic move by companies to build up supply chain reserves for future deliveries. This also reflects the current extreme tightness in supply chain capacity within the AI chip industry. Echoing this, the CEO and Chief Analyst of iMedia Consulting added that the core reason for the sharp rise in inventory levels among chip companies is the industry-wide practice of locking in production capacity early to ensure supply chain security, driven by the explosive growth in domestic computing power orders. The surge in inventory has led to a 40.59% increase in Cambricon's accounts payable to 1.076 billion yuan compared to the end of last year, and a 65.83% decline in net cash flow from operating activities to 311 million yuan. This introduces significant market risk. Cambricon stated in its announcement that its procurement plans are based on customer orders and forecasts of future market demand. If the market environment changes, it could increase the risk of inventory write-downs, negatively impacting profitability. The iMedia Consulting analyst also pointed out that with the rapid product iteration speed in the GPU market, if downstream demand falls short of expectations, products face a high risk of technological obsolescence. Managing inventory through subsequent iterations will be a major challenge, while high inventory levels increase pressure from asset impairment and tie up operating cash flow, posing a continuous test to the company's financial health. When asked by reporters about how it plans to manage these risks, Cambricon did not respond before the deadline. However, during the earnings call, Chen Tianshi said the company will continue to expand its market, actively promote the application of artificial intelligence, and control related risks.
Despite these challenges, Cambricon posted a strong financial report for the first half of the year. It achieved revenue of 5.996 billion yuan, a year-on-year increase of 108.13%, approaching its full-year 2025 figure. Net profit attributable to the parent company reached 2.311 billion yuan, up 122.61% year-on-year, surpassing its total for the previous year. However, compared to the same period last year, the growth rate has moderated significantly. In the first half of 2025, Cambricon reported revenue of 2.881 billion yuan, a staggering 4,347.82% year-on-year increase, and net profit attributable to shareholders of 1.038 billion yuan, achieving a major turnaround from a loss. The Dean of the DeepTech Research Institute noted that Cambricon's performance explosion was primarily driven by policy-backed domestic substitution benefits and a surge in AI computing power demand. The high-speed growth market exists, but maintaining such an ultra-high growth rate is unsustainable as the market shifts from being 'scarcity-driven' to 'competition-driven.' With the release of production capacity from domestic competitors and intensifying price competition, the company's growth rate is expected to gradually decline to a high industry level this year.
At the end of last month, Cambricon released a draft of a 2026 Restricted Stock Incentive Plan. The plan aims to further establish a long-term incentive mechanism, attract and retain top talent, and align the interests of shareholders, the company, and the core team to promote the company's long-term development. The plan proposes granting 5 million restricted shares. The performance targets for the first class of incentive recipients are set for the fiscal years 2026-2028. The target values are: 2026 revenue of no less than 13.5 billion yuan; cumulative revenue of no less than 40.5 billion yuan for 2026-2027; and cumulative revenue of no less than 100 billion yuan for 2026-2028. To meet the 2026 target of 13.5 billion yuan in revenue, Cambricon needs to generate over 7.5 billion yuan in the second half of this year, representing a 25% sequential increase from the first half. If the company can maintain its first-half growth rate, achieving this target appears feasible. Chen Tianshi revealed during the earnings call that Cambricon is becoming an indispensable key player in the large model ecosystem. The company is continuously advancing the adaptation and optimization of models like DeepSeek, Qwen, and Hunyuan, improving the overall training efficiency of major mainstream models. It is also deepening the collaborative adaptation of domestic chips and models, supporting models like GLM, DeepSeek, Qwen, Kimi, and MiniMax, thereby expanding the model coverage of its inference software platform. Simultaneously, Cambricon is accelerating the adjustment of its business. In the first half of the year, the company stated that its products have achieved continuous large-scale commercial deployment in core industries such as finance and the internet, establishing an effective closed-loop between business scenario feedback and product optimization. Notably, its cloud product line generated 5.994 billion yuan in revenue during the first half, accounting for 99.98% of total revenue. An analyst commented that the onboarding of more industry clients validates that the AI chip products have formed a multi-scenario commercial closed-loop, indicating that AI applications are beginning to penetrate and land in more industries. This is beneficial for expanding the company's performance ceiling in the long run. He added that Cambricon's strategic focus on the high-value, high-barrier cloud AI chip segment is a logical choice.
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