US-China AI chip race: Cambricon’s first profit lands

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.

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 capitalisation, it marks China’s growing capability to develop sophisticated AI chips domestically.

Given the technical rivalry between the two biggest economies in the world, the company’s financial recovery is especially remarkable. Despite reporting a 724 million yuan loss in the first nine months, Cambricon announced its first quarterly profit in the last quarter of 2024, with net earnings ranging from 240 million yuan to 328 million yuan. This came after years of losses.

The market has responded remarkably to this change in the US-China AI chip race dynamics. Over the previous year, Cambricon’s shares on the Star Market of the Shanghai Stock Exchange have increased by more than 470%, from 120.80 yuan to 695.96 yuan.

Due to China’s fast expansion of its computer infrastructure to meet its AI aspirations, the business anticipates a 70% rise in sales to 1.2 billion yuan in 2024.

With its 7-nanometer AI circuits, Cambricon has technically positioned itself as China’s response to US semiconductor regulations. In the local market, the company’s flagship Cambricon-1A processor has become quite popular, especially in devices made by well-known tech firms like Huawei Technologies.

With Changjiang Securities analysts predicting that China’s AI semiconductor market would reach 178 billion yuan by 2025, the stakes in the US-China AI chip competition are only going to become higher. This expansion is being driven by Beijing’s drive for semiconductor self-sufficiency as well as rising investments in AI infrastructure from local IT firms.

The competition has been more intense due to recent US laws that were announced in January 2025 and limit access to breakthrough AI technology to American corporations and their allies, therefore limiting Chinese access. Large Chinese tech firms are responding by making significant investments in homegrown computer infrastructure.

The parent firm of TikTok, ByteDance, has invested 4.5 billion yuan in a new computer facility in Datong City, Shanxi province. This demonstrates the expanding market potential for domestic chip producers.

There are still issues even if Cambricon’s development is a major step forward in the US-China AI chip competition. The business must keep up its development trajectory while closing the technology gap with foreign rivals.

Nonetheless, a favorable atmosphere for further development is created by encouraging government policies and rising domestic demand. Cambricon’s strategic significance to China’s technology industry is highlighted by its inclusion in the SSE 50 Index, which measures the most valuable businesses listed on the Shanghai Stock Exchange.

Building up local AI chip capabilities has become more crucial for China’s technical growth and economic security as international tensions continue to rise and access to foreign technology becomes more limited.