The US-China AI Chip Race Enters a New Phase
Cambricon Technologies Reports First-Ever Quarterly Profit
The US-China AI chip race has entered a new phase as Chinese chip designer Cambricon Technologies reports its first-ever quarterly profit. The milestone emerges against a backdrop of escalating US export controls that have increasingly restricted Chinese companies’ access to advanced semiconductor technology, particularly Nvidia’s sophisticated AI processors.
A Shift in the US-China AI Chip Race
Cambricon’s breakthrough into profitability signals a significant shift in the US-China AI chip race, transforming from a 2016 startup into China’s most valuable artificial intelligence company, now valued at approximately 300 billion yuan ($41 billion). While this represents only a fraction of Nvidia’s $3 trillion market capitalization, it marks China’s growing capability to develop sophisticated AI chips domestically.
Financial Turnaround
The company’s financial turnaround is particularly noteworthy in the context of technological competition between the world’s two largest economies. After years of losses, Cambricon reported its first quarterly profit in the final quarter of 2024, with net profits ranging from 240 million yuan to 328 million yuan, despite posting a 724 million yuan loss in the first nine months.
Market Response
The market’s response to this shifting dynamic in the US-China AI chip race has been remarkable. Cambricon’s shares on the Shanghai Stock Exchange’s Star Market have surged more than 470% over the past year, climbing from 120.80 yuan to 695.96 yuan.
Growth Projections
The company projects a 70% revenue increase to 1.2 billion yuan in 2024, driven by China’s aggressive buildup of computing infrastructure to support its AI ambitions.
Technical Advancements
At the technical level, Cambricon has positioned itself as China’s answer to US chip restrictions with its 7-nanometre AI chips. The company’s flagship Cambricon-1A processor has gained significant traction in the domestic market, particularly in products from major technology companies like Huawei Technologies.
The Stakes in the US-China AI Chip Race
The stakes in the US-China AI chip race continue to rise, with analysts at Changjiang Securities projecting that China’s AI semiconductor market will reach 178 billion yuan by 2025. Beijing’s push for semiconductor self-sufficiency and increasing investments from domestic technology companies in AI infrastructure are fueling this growth.
Recent Developments
Recent US regulations announced in January 2025 have intensified the race, restricting Chinese access to advanced AI technology and limiting it to American companies and their allies. In response, major Chinese technology companies are investing heavily in domestic computing infrastructure.
Challenges and Opportunities
While Cambricon’s progress represents a significant advancement in the US-China AI chip race, challenges remain. The company must continue to narrow the technological gap with international competitors while maintaining its growth trajectory. However, supportive government policies and growing domestic demand provide a favourable environment for continued development.
Conclusion
Cambricon’s inclusion in the SSE 50 Index, which tracks the Shanghai Stock Exchange’s most valuable companies, underscores its strategic importance to China’s technology sector. As global tensions persist and access to foreign technology becomes more restricted, developing domestic AI chip capabilities has become increasingly important for China’s technological advancement and economic security.
FAQs
- Q: What is the significance of Cambricon’s quarterly profit?
A: Cambricon’s quarterly profit marks a significant shift in the US-China AI chip race, demonstrating China’s growing capability to develop sophisticated AI chips domestically. - Q: What are the implications of US export controls on the US-China AI chip race?
A: The US export controls have restricted Chinese companies’ access to advanced semiconductor technology, particularly Nvidia’s sophisticated AI processors, intensifying the competition in the US-China AI chip race. - Q: What are the growth projections for China’s AI semiconductor market?
A: Analysts at Changjiang Securities project that China’s AI semiconductor market will reach 178 billion yuan by 2025, driven by Beijing’s push for semiconductor self-sufficiency and increasing investments from domestic technology companies in AI infrastructure.
