China's AI chip leader, Cambricon Technologies Co., bears the mission of independent chip development in China and catching up with European and American companies like Nvidia. However, after going public in 2020, Cambricon delivered its worst half-year performance in the first half of 2023. The six early investors in Cambricon have recently almost completely liquidated their holdings, taking advantage of the surge in the company's stock price driven by generative AI since 2023 and cashing out.
According to reports from Chinese media such as Yicai and National Business Daily, in the wake of Huawei's new product unveiling over the past month, Chinese consumers have been swept up in a strong wave of nationalism-driven purchases. However, Cambricon, also on the US government's export control entity list, is facing skepticism from its original shareholders about its prospects, leading to a quiet exodus of investors.
Compared to Nvidia's A100 and H100 chips, which are in high demand in the Chinese market, Cambricon has previously admitted that its related chips have not yet contributed to revenue, and there is still "uncertainty" about large-scale purchases of the company's products by customers.
Since December 2022, Cambricon has been on the US entity list, and it is approaching its one-year anniversary. At the same time, since its listing in July 2020, Cambricon has accumulated losses of up to CNY 4 billion. After a recent collective sell-off by venture capital shareholders, Cambricon's controlling shareholder and chairman, Chen Tianshi, issued an emergency announcement on the morning of the 26th, pledging not to reduce his holdings in any way before the end of 2024.
Several semiconductor industry insiders have told Yicai and National Business Daily that considering Cambricon's situation facing US government sanctions and its current strategic development path, it will be quite challenging to turn losses into profits in the short term.
The abandonment of Cambricon by its six major original institutional shareholders has brought more uncertainty to the company's future. Despite the early optimism toward Cambricon by its early investors, the company has been losing money every year since its establishment 6.5 years ago. In the fiercely competitive field of AI chips, the company's poor financial stance may not necessarily win financial support from Beijing authorities.
Between April and July 2023, there were reports in the market about Cambricon shutting down its automotive business and laying off employees. The first-half financial report for 2023 also revealed a significant year-on-year reduction of about 20% in research and development personnel. After the stock market frenzy, the company is now facing the dilemma of major shareholders selling off and a loss of confidence, but it still faces the real competitive challenge in the AI industry.
