China's AI Chip Darling Posts Insane Growth Numbers That Smell Fishy

When Government Mandates Meet Earnings Reports

So Cambricon reported massive revenue growth

• something like 40x growth overnight.

These aren't normal market numbers. For perspective, Nvidia's best growth during the crypto craze was maybe triple or quadruple. This is absolutely insane growth.

Here's what's actually happening: Beijing told Chinese companies to stop buying American chips and start buying domestic alternatives.

Cambricon went from selling to a few research labs to suddenly being the mandatory supplier for every AI company in China. It's not innovation, it's captive market economics.

DeepSeek and the Forced Partnership Economy

The Cambricon-DeepSeek partnership isn't some organic business relationship.

Deep

Seek got cut off from Nvidia chips by US export controls, so they had to find domestic alternatives. Cambricon was basically the only option with chips that didn't completely suck.

What this means for the numbers:

• Revenue exploded because customers literally had no choice

• Stock price doubled on speculation, not fundamentals

• Growth came from government mandates, not competitive advantage

• Market cap ballooned on pure nationalist speculation

Are These Chips Actually Any Good?

Cambricon's MLU processors supposedly compete with older Nvidia GPUs while costing less. That might even be true

• China has decent chip engineering talent. But when your entire customer base is legally required to buy from you instead of better alternatives, how would we even know?

The question isn't whether Cambricon makes decent chips (they probably do). It's whether this growth means anything when it's driven by government orders rather than market competition. Call me when they start winning customers who actually have a choice.

Beijing's throwing insane amounts of money at chip development and apparently it's working... sort of. Cambricon's surge is real, but let's not pretend this happened in a vacuum. China basically created a captive market by banning most foreign competition while pumping money into companies like it's 2021 crypto season.

The Numbers Are Suspicious As Hell

CNBC reports on Cambricon's growth, but here's what they're not telling you: most of their revenue comes from DeepSeek and other Chinese AI companies that basically had no choice but to buy domestic chips after US sanctions.

It's like claiming your lemonade stand is crushing it because you're the only vendor allowed at the school fair. The growth is real, but the competition got banned.

Why This Might All Fall Apart

TrendForce sees through the hype and calls out three massive red flags:

1. Customer concentration: They're basically DeepSeek's chip supplier, not a real competitor
2. Still behind on tech: Their chips are like Nvidia H100s from 2022 - decent but not cutting edge
3. Market size reality: China's AI market isn't big enough to justify these valuations

What This Actually Means for Everyone Else

Here's the thing - even if Cambricon's chips are "good enough," that's still a problem for Nvidia. Most AI workloads don't need bleeding-edge performance, they need chips that work and don't cost $40k each.

If Chinese companies can build 80% of Nvidia's performance for 30% of the cost, that's game over for a lot of use cases. I know European AI companies already eyeing these alternatives because spending €35k on H100s just to train glorified chatbots is fucking insane.