01Fundamentals: From “Loss Leader” to “Profit Dark Horse” TurnaroundAs the first domestic AI chip stock, Cambricon has been a focal point in the market since its IPO in 2020. However, the company was previously perceived as “technologically strong but difficult to profit,” incurring nearly 5 billion yuan in losses from 2017 to 2023, earning the title of “A-share loss leader.”The plot took a dramatic turn in 2024! The company achieved a stunning turnaround—2024 revenue reached 1.174 billion yuan, a year-on-year increase of 65.56%; in the first quarter of 2025, revenue surged to 1.111 billion yuan, a staggering year-on-year increase of 4230%, nearly matching the total revenue of the previous year, and achieving a net profit of 355 million yuan. Even more surprisingly, this marks Cambricon’s second consecutive quarter of profitability, completely dispelling doubts about “never being profitable.”It seems that Cambricon has found the key to profitability, with performance continuing to soar in the first three quarters of 2025, achieving revenue of 4.607 billion yuan and a net profit of 1.419 billion yuan after deducting non-recurring gains and losses.02Industry Chain: A Key Player in the Center of the AI BoomCambricon occupies a very unique and critical position in the industry chain—as an AI chip supplier. Simply put, they create the “mining tools” of the AI era; whether you are developing chatbots, image recognition, or autonomous driving, computational power is essential, and that power relies on AI chips.Upstream of the industry chain: primarily chip foundries (such as TSMC), EDA software suppliers, and IP suppliers. These are all hard technologies, significantly affected by the international trade environment.Midstream of the industry chain: companies like Cambricon that design chips but do not manufacture them, instead outsourcing production to foundries.Downstream of the industry chain: includes cloud server providers (such as Alibaba Cloud, Tencent Cloud, etc.), intelligent computing centers, and various AI application enterprises.Cambricon’s core competitiveness lies in its full-stack layout, developing both chip hardware and software platforms in-house. The company possesses self-developed instruction sets for intelligent processors, microarchitecture, and foundational system software technology, forming an integrated product line from cloud to edge.03Revenue Composition: Cloud Chips Become the Absolute Main ForceIf you want to know how Cambricon makes money, look at this revenue structure:The cloud product line (intelligent chips and accelerator cards, intelligent complete machines): This is the absolute main force, with revenue reaching 1.166 billion yuan in 2024, accounting for 99.3% of total revenue. Main products include the Siyuan 370 and Siyuan 590 series chips, with the Siyuan 590 directly competing with NVIDIA’s A100.Edge product line: experienced rapid growth in previous years, achieving a year-on-year increase of 741% in 2021, but has slowed down in recent years.Intelligent computing cluster systems: primarily provide overall solutions for intelligent computing centers, such as the Kunshan Intelligent Computing Center project.IP licensing and software: this part of the business has gradually shrunk in recent years, with the company completely shifting its focus to cloud chips.It is worth noting that Cambricon’s gross margin is quite high, reaching 56.71% in 2024, which is considered very good for a hardware company.04Domestic and International Revenue: Domestic Market Holds Absolute DominanceAlmost all of Cambricon’s revenue comes from the domestic market, with domestic revenue accounting for as high as 99.9% in 2024, while overseas revenue only accounts for 0.1%.This revenue structure is a double-edged sword:Advantages: In the current context of Sino-U.S. technological friction, Cambricon has become the biggest beneficiary of domestic substitution. NVIDIA’s CEO Jensen Huang even stated that NVIDIA’s market share in China has dropped from 95% to 0%, and this market gap is being filled by domestic chip companies like Cambricon.Challenges: Low degree of internationalization; to become a world-class enterprise in the future, it needs to expand into overseas markets.05Performance Review: The Transformation Journey from Huge Losses to Profitability2021: Revenue Growth but Expanded LossesOperating revenue: 721 million yuan, a year-on-year increase of 57.12%Net profit attributable to the parent company after deducting non-recurring gains and losses: -1.111 billion yuan, with losses expanding year-on-yearThis year, the edge product line performed brilliantly, with revenue increasing by 741% year-on-year, but the company had to lower the gross margin of the MLU220 chip and board to seize market share. R&D investment reached 1.136 billion yuan, exceeding the total annual revenue, which was a major reason for the losses.2022: Stagnation in Growth, Losses WorsenOperating revenue: 729 million yuan, a year-on-year increase of only 1.11%Net profit attributable to the parent company after deducting non-recurring gains and losses: -1.579 billion yuan, with losses continuing to expandThis year, the company encountered a bottleneck, with almost zero revenue growth. The expansion of losses was mainly due to increased R&D expenses, asset impairment losses, and credit impairment losses. At that time, the company also planned to raise no more than 1.672 billion yuan through a private placement to alleviate financial pressure.2023: Hovering at the Low Point, Losses NarrowOperating revenue: 709 million yuan, a slight year-on-year decrease of 2.70%Net profit attributable to the parent company after deducting non-recurring gains and losses: -1.043 billion yuan, with losses narrowingThis year was the darkness before dawn; although revenue slightly declined, losses began to narrow, mainly due to the company’s optimization of resource allocation and a decrease in employee compensation and other expenses.2024: A Turning Point, Significant GrowthOperating revenue: 1.174 billion yuan, a year-on-year increase of 65.56%Net profit attributable to the parent company after deducting non-recurring gains and losses: -865 million yuan, with losses significantly narrowing, marking a turning point in the company’s performance.First three quarters of 2025: Explosive GrowthOperating revenue: 4.607 billion yuan, a year-on-year increase of 2386.38%Net profit attributable to the parent company after deducting non-recurring gains and losses: 1.419 billion yuan, turning losses into profits year-on-yearThis is Cambricon’s highlight moment, with performance showing explosive growth, mainly due to the significant increase in cloud products like the Siyuan 590.06Development Outlook: Opportunities and Challenges CoexistMarket OpportunitiesHuge space for domestic substitution: U.S. export controls on chips to China have created historic opportunities for domestic enterprises. NVIDIA’s AI chip H20, designed specifically for the Chinese market, has been included in the export control list, leaving a market gap that needs to be filled.Explosive demand for AI computing power: Major cloud providers and AI companies are frantically purchasing computing power, and Cambricon’s Siyuan 590 series is perfectly positioned to ride this wave.Product ProgressThe Siyuan 690 chip is highly anticipated: the Siyuan training and inference integrated 690 chip is currently in the final testing phase, with performance targeting 80% of NVIDIA’s H100, expected to become a core carrier of domestic computing power.Software ecosystem gradually improving: The company has partnered with software vendors like DeepSeek and SenseTime to jointly promote hardware-software optimization, which is crucial for building a complete ecosystem.Risk ChallengesCash flow pressure: Despite the improvement in performance, the company’s operating cash flow in the first quarter of 2025 was still -1.399 billion yuan, with only 638 million yuan in cash on hand. Fortunately, the company has just completed a private placement of 3.985 billion yuan, alleviating financial pressure.Customer concentration risk: Historically, the sales proportion of the company’s top five customers once exceeded 80%, and the risk of dependence on major customers still exists.Intensifying competition: Competitors like Huawei and Haiguang Information are also ramping up efforts in AI chips, leading to increasingly fierce market competition.Cambricon’s story resembles a roller coaster—moving from continuous losses to surprising performance explosions. Cambricon has now proven its profitability, no longer just “talking the talk.”In the short term, Cambricon is expected to continue its growth trajectory, driven by the Siyuan 590/690 series chips and the benefits of domestic substitution. However, in the long term, the company needs to demonstrate that this growth is sustainable and not just a one-time surge.Investing in Cambricon essentially means investing in the future of China’s AI chips. If you believe that the Chinese AI industry will continue to develop and that Cambricon can achieve continuous technological breakthroughs, then it may be worth considering. But remember, the chip industry is characterized by rapid technological iteration and high investment, with significant risks involved.