Following its three-year shareholder dividend plan, which outlined clear cash dividend commitments, China's leading AI chipmaker Cambricon Technologies Corporation Limited (688256.SH) has taken a crucial financial step to remove the primary obstacle to fulfilling these promises.
On the evening of December 15, the company announced plans to utilize up to 2.78 billion yuan in capital reserves to offset accumulated undistributed losses in its parent company’s financial statements. This move, while procedurally straightforward, strictly complies with China’s Company Law and Ministry of Finance regulations. The core objective is to apply capital surplus—formed from shareholder investments—toward eliminating long-term R&D-related losses, effectively resetting the parent company’s undistributed profits to zero.
However, the symbolic significance runs deeper. This marks a systematic effort by Cambricon, once known for heavy R&D spending and persistent losses, to shed its historical financial burdens. The company stated that this step aims to "alleviate the burden of past losses, enhance investor returns, and drive high-quality development."
Viewed against Cambricon’s strong 2025 performance, this is not merely an accounting adjustment but a strategic financial realignment as the company transitions from technological validation and market expansion to sustainable profitability.
The loss-clearing initiative signals Cambricon’s readiness to pave the way for dividends—a systematic effort to honor shareholder commitments, meet regulatory requirements, and enter a new phase of growth.
Under China’s revised Company Law and CSRC dividend guidelines, a prerequisite for cash dividends is positive cumulative distributable profits at the parent level. Prior to the adjustment, Tianjian Certified Public Accountants’ 2024 audit report showed Cambricon’s parent company with -2.78 billion yuan in undistributed profits, zero surplus reserves, and 9.625 billion yuan in capital reserves. This deficit legally barred profit distribution in 2024, making the zeroing of losses essential for future payouts.
The capital reserve solution directly applies shareholder-funded reserves to neutralize negative undistributed profits, achieving the reset. Financial experts note that this fulfills the core requirement for dividend eligibility.
In May 2025, Cambricon had already unveiled a three-year (2025–2027) shareholder return plan, pledging to prioritize cash dividends when conditions permit—with a minimum 30% of average annual distributable profits paid out over any three-year period. Approved at the 2024 annual shareholders’ meeting, this plan set the stage for the current financial maneuver.
Critically, Cambricon now possesses the operational strength to deliver. Its 2025 performance breakout—marked by scaled profitability and improved operating cash flow—provides tangible backing for future dividends.
Industry analysts highlight multiple benefits from the loss-clearing move:
1. **Regulatory Compliance & Shareholder Flexibility**: Under tightened减持 rules, controlling shareholders face restrictions if a company skips dividends for three consecutive years. Restoring payout capacity lifts this constraint, enhancing major shareholders’ liquidity.
2. **Commitment Fulfillment & Market Confidence**: As a hard-tech firm newly past breakeven, delivering on dividend promises demonstrates not just commercial success but willingness to share gains—a trust-building milestone for long-term investors.
3. **Corporate Maturity**: Persistent losses once fueled investor concerns. Coupled with strong current results, this reset signals Cambricon’s transition from "high-burn R&D phase" to "profitable, returns-driven growth."
The 2.78 billion yuan adjustment effectively closes Cambricon’s era of "strategic losses" tied to heavy investment cycles.
Yet challenges remain. After a steep 2025 rally, its valuation—at 1,273.92 yuan/share as of December 16—faces scrutiny over growth sustainability.
Cambricon’s 2025 performance shattered records. H1 revenue surged 4,347.82% YoY to 2.881 billion yuan, with net profit hitting 1.038 billion yuan—a historic turnaround. By Q3, cumulative revenue reached 4.607 billion yuan (+2,386.38% YoY), with net profit at ~1.6 billion yuan, marking four straight profitable quarters. Q3 revenue grew 1,332.52% YoY to 1.727 billion yuan, though net profit dipped 16.99% QoQ to 567 million yuan.
Crucially, operational cash flow turned decisively positive in H1 (911 million yuan vs. -631 million yuan in 2024), reflecting stronger collections and high-quality order execution. Despite a slight Q3 dip (-29.3048 million yuan) due to seasonal factors, the overall trend remains upward.
Scale effects drove the profit surge. As revenue crossed billions, expense ratios collapsed. Changjiang Securities noted Q2 net margins hit a record 38.57%, confirming Cambricon’s transition past breakeven into a "revenue-growth-faster-profit" cycle. Huatai Securities observed stable profitability despite Q3’s slight gross margin dip from tiered pricing.
Underpinning this is market validation of Cambricon’s products. Its CloudThink chip series has scaled in internet, telecom, and finance sectors, handling complex demands from AI training to multimodal tasks while supporting mainstream models like DeepSeek—proving its technical viability.
Cambricon’s breakout aligns with China’s AI self-sufficiency push.
Globally, an AI arms race is funneling massive capital into computing infrastructure. North America’s top four cloud providers may spend $351–357 billion in 2025, while Chinese giants like Alibaba and Tencent are pouring billions into AI hardware. IDC forecasts global AI server sales to hit $222.7 billion by 2028 (12% CAGR).
One AI firm executive noted Cambricon’s chips now match NVIDIA’s performance in inference tasks—a testament to reduced external dependency.
This demand surge offers domestic players like Cambricon a golden window for commercialization. Huatai Securities highlights accelerated token usage by ByteDance and Google in late 2025, signaling sustained inference-side growth.
To bolster stickiness, Cambricon is building its software platform—mirroring NVIDIA’s CUDA ecosystem—while optimizing support for local AI models, a key step toward becoming a "platform-ecosystem player."
As strategic investments bear fruit, Cambricon’s year-end financial reset draws a line under its past—and opens a new chapter.
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