Cambricon, one of China’s most valuable artificial intelligence (AI) chipmakers, is the Chinese Communist Party’s ace for breaking the dominance of U.S. rivals, including Intel, Nvidia, and Xilinx, in developing AI chips. 

According to a Da Ji Yuan report on October 28, Cambricon’s shares started trending down since its listing in July 2020. As a result, the company’s stock prices tumbled from their peak at around $41 (297.77 yuan) to about $9.30 on October 27.

Over the last two years, Cambricon’s shares have lost a total market value of more than $6.9 billion.

In its latest quarterly earnings report, the AI chipmaker recorded a net loss of $44.5 million, widening from a contraction a year earlier.

The company’s revenue reached $36.5 million in the first three quarters, up 18.86% from last year’s period. Meanwhile, the net income loss attributable to stockholders was about $131 million, an increase of 50.09% from last year.

Cambricon’s main products are terminal intelligent processor Intellectual Property (IP), cloud smart chips and accelerator cards, edge smart chips and accelerator cards, and supporting intelligent computing cluster systems.

Da Ji Yuan , citing Tianyancha, noted that the company, as an AI firm, strongly depends on Chinese regime customers.

On October 26, Cambricon announced a pre-bid project valued at $70.3 million from Nanjing Technology Innovation Investment. The actual controller of this state-backed firm is the state-owned Assets Supervision and Administration 

Commission of Nanjing Municipal Government, which is a regime customer.

From 2019 to 2021, the company obtained about $50 million in regime subsidies. 

The cumulative funds were nearly $21 million in the first three quarters.

Despite Beijing’s constant support, Cambricon continued to make losses. From 2017 to 2021, the AI firm saw a total loss of about $394.5 million.

Cambricon explained that the losses were due to various factors, including rising R&D investment, credit impairment, and asset impairment loss.

In addition, Nikkei Asia pointed out that the firm had faced fierce competition from other major global tech firms in the past few years.

The company’s prospectus said, “Nvidia, Intel, Qualcomm, MediaTek, Arm, and Huawei are all investing heavily in artificial intelligence computing and many of them launched acquisitions to enhance their AI capability. That could potentially squeeze our market and impact our business outlook.”

Controversial telecom behemoth Huawei was once its biggest customer. However, the company drew substantial public attention in 2017 when its AI intellectual property was applied to millions of Huawei smartphones. 

However, since 2018, Huawei has turned into a direct competitor after doubling down on its semiconductor arm HiSilicon Technologies.

Despite being an early backer of Cambricon, Alibaba Group Holding also launched its own AI semiconductors for data center servers and became its rival.

Meanwhile, other clients, including Sugon, Lenovo Group, and China’s top server manufacturer Inspur were in trouble with U.S. policymakers.

As of June 2020, the Department of Defense added Inspur to a list of Chinese military-linked companies. In 2019, the Department of Commerce put Sugon on its trade blacklist.

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