Cambricon triggered the selloff with a Thursday filing in which it dispelled talk about non-existent products in the pipeline, reminded investors it labors under US sanctions, and stressed the difficulties of ascending the technology ladder. The Shanghai-listed company’s stock dived by the most since April in early Friday trading, while the market stood largely unchanged.
The litany of warnings underscores growing scrutiny of a domestic market rally led by chipmakers such as Cambricon — the biggest publicly traded designer of the chips that underpin AI development in China. Investor euphoria is running high even as regulators hint they might try to cool things down, with US tariffs and a property crisis straining the economy. Cambricon’s stock encapsulates that frenzy: it’d surged 134% since July 28 — about 17 times the 8% gain of the CSI 300 Index.
The market rally could gain even more steam should retail investors buy into the concept of Beijing’s support for emerging technologies like AI and chips — especially given low interest rates and few better alternatives.
“The company’s stock price increase has exceeded that of most peers and is significantly higher than the performance of relevant indexes,” Cambricon said in its filing. “There is a risk that the stock price may have deviated from the company’s current fundamentals, and investors participating in trading may face significant risks.”
Cambricon on Thursday also forecast 2025 revenue of between 5 billion yuan ($700 million) and 7 billion yuan. That’s up several-fold from 1.2 billion yuan in 2024.
Its filing comes as the CSI 300 Index gained more than 20% from this year’s low. China’s stock market is heavily dominated by retail traders and the market rally has sparked concerns over growing risks to investors.
That’s prompted some brokerages and fund managers to cut back on financing and limit purchases, while the country’s commercial banks are tightening oversight of clients using credit cards to fund stock investments.
On Friday, chip firm Dosilicon Co. said in a filing it’s temporarily suspended trading in its stock from Aug. 29 because of unusual fluctuations in its price.
More broadly, the ascent of Cambricon also stems from an important shift in China’s stock market landscape. Investors are moving away from consumer firms and betting on the tech sector to re-energize an economy mired in deflation and trade tensions.
The Chinese AI chip designer competes with Huawei Technologies Co. to provide accelerators for developing and hosting AI models. This week, it reported a record profit for the first half, underscoring how startups and big tech firms like Alibaba Group Holding Ltd. are increasingly employing domestic alternatives to Nvidia Corp. as the pace of AI development intensifies.
The Chinese authorities have urged local agencies to use homegrown chips, citing security concerns as well as persistent uncertainty over the Trump administration’s export curbs.
–With assistance from Charlotte Yang, Kelly Li, Shiyin Chen and Catherine Ngai.
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