"The increase in the company's inventory compared to the end of the previous period is mainly due to the growth in raw materials and entrusted processing materials at the end of this period," replied Chen Tianshi, Chairman and General Manager of Cambricon, at the performance meeting held on the 12th.
In the first half of 2026, while Cambricon achieved growth in both revenue and profit, the book value of its inventory reached 8.248 billion yuan, an increase of 66.83% compared to the end of the previous year.
Significant Growth in Inventory Scale
Specifically, in the first half of 2026, Cambricon achieved operating revenue of 5.996 billion yuan, a year-on-year increase of 108.13%; net profit attributable to shareholders reached 2.311 billion yuan, up 122.61% year-on-year; and net profit attributable to shareholders after deducting non-recurring gains and losses was 2.166 billion yuan, an increase of 137.30% year-on-year.
Cambricon's main business is the research, design, and sales of AI core chips applied to various cloud servers, edge computing devices, and terminal devices. Currently, its main product lines include cloud product lines, edge product lines, IP licensing, and software. According to the financial report, in the first half of 2026, revenue from Cambricon's cloud product lines amounted to 5.994 billion yuan, a year-on-year increase of 108.88%.
The substantial growth in the book value of inventory became one of the key points of concern for investors during this performance meeting.
Over the past five years (2021 to 2025), Cambricon's year-end inventory was 287 million yuan, 287 million yuan, 99 million yuan, 1.774 billion yuan, and 4.944 billion yuan, respectively.
Regarding questions about the inventory digestion pace in the second half of the year and potential impairment pressure, Cambricon's management did not provide direct responses at the performance meeting.
As of the end of the second quarter, Cambricon's inventory of 8.248 billion yuan included raw materials with a book value of 5.278 billion yuan, an increase of 77.95% compared to 2.966 billion yuan at the end of 2025; entrusted processing materials with a book value of 2.418 billion yuan, an increase of 61.85% compared to 1.494 billion yuan at the end of 2025; and finished goods with a book value of 85.3849 million yuan, and goods in transit with a book value of 465 million yuan.
Cambricon's 2026 interim report disclosed that in terms of asset impairment, the total increased provision for raw materials, finished goods, and entrusted processing materials in this period was 397 million yuan, while reversed or written-off reductions amounted to 18.9215 million yuan.
Cambricon mentioned in its financial report that the company faces the risk of inventory write-down. As of the end of the second quarter, the book value of the company's inventory accounted for 45.32% of total assets at the period-end. If future market conditions change, it may lead to an increased risk of inventory depreciation, adversely affecting the company's profitability.
Wang Jing, a senior analyst at market research firm CINNO Research, told China-Singapore Jingwei on the 13th that as a Fabless (fabless semiconductor design) company, Cambricon's inventory mainly consists of raw materials and entrusted processing materials, which reflects an active strategy to lock in wafer production capacity. However, the risk lies in the industry's rapid technological iterations and high specificity. Once downstream demand slows, companies will face significant pressure from inventory impairment.
Wang Jing stated that from an industry perspective, current computing power demand shows structural differentiation. The phased easing of training computing power is mainly seen in mid-to-low-end and existing capacity, while high-end training cards remain in short supply due to export controls. Inference computing power, along with HBM (High Bandwidth Memory) and enterprise-grade storage, is still in short supply. The storage price increase cycle is expected to continue at least until 2027, and long-term risks from concentrated capacity releases need attention.
Prepayments Grow Nearly Three Times Compared to End of 2025
Cambricon's prepayments also saw significant growth, reaching 2.914 billion yuan in the first half of 2026, accounting for 16.01% of total assets, an increase of approximately 291.37% compared to the end of 2025. Over the past five years (2021 to 2025), the company's year-end prepayments were approximately 85 million yuan, 8 million yuan, 148 million yuan, 774 million yuan, and 745 million yuan, respectively.
"The increase in the company's prepayments compared to the end of the previous period is mainly due to the rise in prepaid procurement payments at the end of this period," stated Cambricon's 2026 interim report.
According to a research report released by Guosheng Securities on August 11, the growth in Cambricon's inventory and prepaid accounts ensures supply, with ample stockpiling supporting order fulfillment.
A research report commentary from Northeast Securities on August 11 regarding Cambricon's 2026 interim report stated that prepayments are the source of inventory growth, and inventory is the driver of revenue growth. For chip design companies, there is a stable transmission chain from demand to revenue: after customer demand is confirmed, GPU manufacturers place orders with foundries, reflected in prepayment growth on the financial statements; wafers return and enter inventory about a quarter later, driving inventory growth; delivery is completed another quarter later, with customer confirmation and payment leading to increased revenue.
Northeast Securities believes that the demand for domestic computing power continues to be robust. As a leading domestic provider of cloud-based AI chips, Cambricon's prepayment and inventory indicators point to significant revenue growth in the third quarter.
Regarding cash flow, as of the first half of 2026, Cambricon's ending cash and cash equivalents balance was 626 million yuan.
The company's cash and cash equivalents have shown a continuous declining trend. Over the past three years (2023 to 2025), the year-end figures were approximately 3.954 billion yuan, 1.972 billion yuan, and 929 million yuan, respectively.
On June 30, Cambricon's A-share price hit an intraday high of 1,620 yuan per share, reaching a historical peak and corresponding to a market capitalization exceeding one trillion yuan. On August 13, Cambricon's A-shares closed at 1,105.5 yuan per share, up 0.01%, with a total market capitalization of 694.6 billion yuan.
This article is from the WeChat public account "China-Singapore Jingwei" (ID: jwview), author: Xie Jingwen
