CSC Financial 1H net income 4.51B yuan

CSC Financial 1H net income 4.51B yuan

In a significant development, Cambricon Technologies Corp. (CN:688256) has reported a staggering 4,000% year-over-year revenue growth for the first half of 2025, reaching 2.88 billion Chinese RMB (USDCNY), or approximately $403 million [1]. The Chinese chipmaker also achieved net profits of 1.04 billion RMB, marking a stark contrast to its 530 million RMB loss for the same period last year.

These figures come amidst heightened geopolitical tensions between the U.S. and China, with the computer chip industry emerging as a major battleground. Cambricon's impressive growth underscores the Chinese government's aggressive push to develop artificial-intelligence technology to rival that of the U.S. However, the company remains a "rounding error in global terms" with "no chance of winning any business outside of China," according to Richard Windsor, founder of the research firm Radio Free Mobile [1].

Cambricon's revenues are dwarfed by those of Nvidia Corp. (NVDA), which reported over $84 billion in revenue for the six months ending April 2025. While Cambricon holds 3% of the Chinese market and 0.3% of the global market, Nvidia's scale and global reach are far more substantial [1].

The Chinese government has been encouraging the growth of its domestic chip industry, reportedly advising local tech companies to avoid Nvidia's H20 chip. However, China's chip sector still lags behind the U.S. in terms of size and quality, as evidenced by the delay in the release of DeepSeek's new model due to issues training it on domestic Huawei chips [1].

Windsor expressed skepticism about Cambricon's 34% operating margin, calling it "unrealistic" and suggesting that the Chinese government might be subsidizing the company. This would allow Cambricon to earn margins on a globally uncompetitive product, according to Windsor [1].

In 2022, Cambricon was included on the U.S. Entity List, prohibiting it from working with Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) (TW:2330). As a result, Cambricon shifted to partnering with Chinese state-owned Semiconductor Manufacturing International Corp. (HK:981), confining its manufacturing to older and less advanced process nodes. This makes Cambricon's chips "not globally competitive," according to Windsor [1].

While Cambricon's growth is notable, it is unlikely to pose a significant threat to Nvidia or other major chipmakers in the long run. Windsor noted that Nvidia could lose market share in China but would likely make up for it elsewhere in the world.

References:

[1] https://www.morningstar.com/news/marketwatch/20250827196/nvidias-upstart-chinese-rival-cambricon-just-showed-4000-growth-but-dont-get-too-excited