Cambricon Technologies has posted a record third quarter, with net profit for the quarter ended September 30 surging 147.7 per cent year on year to 1.4 billion yuan (US$210 million), the Chinese AI chipmaker reported on Friday. Revenue climbed 104.5 per cent to 3.5 billion yuan — faster than the second quarter’s 75.8 per cent — as Beijing’s drive to replace Nvidia chips in data centres picks up pace. According to the South China Morning Post, the company credited the surge to market expansion and “facilitating AI applications”; rival Hygon Information Technology posted a strong quarter alongside it. With Morgan Stanley rating Cambricon’s MLU692 chip at 50 to 150 per cent above Nvidia’s H20 on tokens per second, China’s domestic AI silicon is becoming a genuine contender.
Cambricon’s Record Quarter, In Numbers
The numbers point to a business hitting an inflection point. Cambricon’s third-quarter net profit of 1.4 billion yuan compares with 566.6 million yuan a year earlier — a 147.7 per cent leap that Reuters reports arrived just hours after shares closed 5.5 per cent higher at 932.2 yuan on Friday. Revenue of 3.5 billion yuan accelerated from the second quarter’s 75.8 per cent growth, suggesting demand is steepening.
The chipmaker’s explanation was deliberately simple: the surge came from market expansion and “facilitating AI applications” — corporate language for selling more AI accelerators into a market Beijing is actively steering toward domestic suppliers. Investors bid the stock up before the release even landed.
For context on the silicon Cambricon competes against, see our explainer on Nvidia’s AI chips from Blackwell onward — and why Chinese data centre operators are so eager for a home-grown alternative.
The Nvidia-Replacement Driver
The deeper engine is geopolitical. After US export controls cut China’s access to Nvidia’s most advanced AI accelerators, Beijing has pushed domestic cloud providers and AI companies to buy local — and Cambricon, founded by the Chen brothers and often called China’s answer to Nvidia, sits at the top of the beneficiary list. Every H20 order that cannot be fulfilled, every Blackwell rack that cannot ship to Shenzhen, becomes a sales meeting for Cambricon’s MLU line.
That policy tailwind is what separates this quarter from earlier Chinese hardware booms. This is a structural demand shift underwritten by the state, funnelling procurement budgets toward whichever domestic chipmaker clears the performance bar. Cambricon’s numbers suggest it is clearing it.
The economics of the market it is entering are enormous — see our look at how Nvidia actually makes its money from AI to understand the margins and moats at stake in the global AI chip trade.
Hygon Joins The Rally
Cambricon is not alone. Hygon Information Technology also reported a strong third quarter: revenue of 5.9 billion yuan, up 45.5 per cent year on year, and net profit of 1 billion yuan, up 37.9 per cent. The company said progress on its next-generation central processing unit and deep-computing unit is “on track” — a signal its roadmap is holding together.
Together, the two sets of results sketch a broader picture: China’s domestic chip sector is posting real, accelerating earnings rather than surviving on subsidies and promises. Demand looks broad-based across training and inference workloads, not concentrated in a single customer or product line.
The MLU692 Test Morgan Stanley Is Watching
The most forward-looking detail may be a single chip: Cambricon’s MLU692, part of its Siyuan 690 series. According to Morgan Stanley, it outperforms Nvidia’s H20 by 50 to 150 per cent in tokens per second — the throughput metric that matters most for serving large language models. Cambricon delivered it to a major cloud provider for testing in Q3, so real deployment decisions could follow soon.
There is a catch: high-bandwidth memory shortages are pressuring margins. HBM, the advanced memory paired with AI accelerators, remains a supply-chain chokepoint where domestic suppliers are still catching up. For more on that bottleneck, see our coverage of Samsung and TSMC’s 3nm and HBM partnership with Nvidia. Whoever solves HBM supply at scale may decide how fast Cambricon’s margin story improves.
Why It Matters
Cambricon’s quarter matters because it is the first hard evidence that the Nvidia-replacement strategy is working financially, not just politically. A 147.7 per cent profit jump on revenue growth above 100 per cent changes how global investors value the entire Chinese AI hardware stack — and how seriously Western chipmakers take the competitive threat behind the Great Firewall.
If a major cloud provider qualifies a domestic chip that genuinely beats the H20 on inference throughput, the calculus for every Chinese AI lab shifts: staying with Nvidia’s sanctioned, cut-down parts starts looking like the expensive choice rather than the safe one. The HBM shortage is the one cloud over the picture — but supply problems get solved with money, and Cambricon now has plenty of it.
Background
US export controls on AI chips to China, tightened repeatedly since 2022, created a vacuum in one of the world’s largest AI compute markets — and Beijing responded by steering domestic buyers toward home-grown alternatives. Cambricon, listed on Shanghai’s STAR Market and backed by state-linked investment, was built for exactly this moment: a decade of AI accelerator R&D finally meeting a market that is required, not just encouraged, to buy from it. Friday’s results show what happens when that preparation meets policy.
Source: South China Morning Post and Reuters
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