Chip Giant with 700 Billion Market Cap Sees Soaring Inventory
"Chips Giant with 700 Billion Market Cap Sees Inventory Soar"
In its 2026 first-half financial report, Cambricon, a leading Chinese AI chip design company, reported significant growth in both revenue and profit. Revenue reached 59.96 billion yuan, up 108.13% year-on-year, while net profit grew 122.61% to 23.11 billion yuan.
However, a major point of investor focus was the sharp rise in the company's inventory, which surged 66.83% from the end of the previous year to 82.48 billion yuan. This inventory now represents 45.32% of its total assets. The increase is primarily attributed to a substantial growth in raw materials (up 77.95% to 52.78 billion yuan) and work-in-process with contract manufacturers (up 61.85% to 24.18 billion yuan).
Cambricon management explained that the inventory build-up was due to increased purchases of raw materials and outsourced processing. The company acknowledged the risk of inventory impairment should market conditions change. Industry analysts noted that as a fabless chip designer, such inventory accumulation is a strategic move to secure wafer capacity. However, it carries significant risk due to the industry's rapid technological iteration. If downstream demand slows, the company could face substantial inventory write-downs.
Additionally, Cambricon's prepayments soared nearly threefold to 29.14 billion yuan. Brokerage analyses interpret the concurrent rise in prepayments and inventory as a positive indicator, suggesting strong future order fulfillment and pointing towards significant revenue growth in the third quarter.
Despite strong operational metrics, the company's cash and cash equivalents have shown a declining trend over the past three years, dropping to 6.26 billion yuan by mid-2026. Cambricon's stock price hit a historic high of 1,620 yuan per share in June, briefly pushing its market capitalization above one trillion yuan. As of August 13th, its share price was 1,105.5 yuan, with a total market cap of approximately 694.6 billion yuan.
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