Cambricon, Moore Threads Sales Jump 108% as HBM Costs Bite

China's two flagship AI chip makers delivered record first-half revenue, but rising memory costs and swelling inventories now test whether the growth is sustainable.

China's two leading AI chip designers posted record first-half sales — Cambricon up 108 percent, Moore Threads up 147 percent — as surging HBM and memory costs squeeze margins and force heavy inventory buildup.

"The company formulates procurement plans based on customer order demand and forecasts of future market demand," Chen Tianshi, chairman of Cambricon, said at the earnings briefing. "Should the market environment change, this could increase the risk of inventory impairment."

Cambricon reported first-half revenue of 5.996 billion yuan ($890.7 million), with net profit of 2.311 billion yuan up 122.61 percent. Moore Threads posted 1.736 billion yuan in revenue, already above its full-year 2025 total of 1.506 billion yuan, while its net loss narrowed 95.73 percent to 11.56 million yuan. Both are stockpiling aggressively: Cambricon's inventory reached 8.248 billion yuan, or 45.32 percent of total assets, while Moore Threads' inventory jumped 166.5 percent to 3.55 billion yuan.

The buildup is a bet on continued demand after Nvidia's H20 supply cutoff in April 2025 left a void in China's GPU market. But with Goldman Sachs projecting SK Hynix HBM prices up 87 percent in 2027, and Morgan Stanley flagging delivery delays at Cambricon, the cost of that bet is rising.

Record Sales Mask a Slowing Second Quarter

Cambricon's second-quarter revenue of 3.111 billion yuan rose 75.8 percent year-on-year but only 7.8 percent sequentially — a sharp deceleration from the first quarter's 159.56 percent surge. Morgan Stanley said the figure came in below expectations, reflecting delivery delays and slower revenue recognition. The stock fell more than 6 percent the day after results. Cambricon needs roughly 7.5 billion yuan in second-half revenue to hit its 13.5 billion yuan full-year target, a level first-half progress of 44.41 percent leaves in doubt.

Moore Threads' growth was more uneven. The company posted its first quarterly profit of 29 million yuan in the first quarter, but swung back to a loss in the second as gross margin fell to 49.26 percent from 67.35 percent. The decline reflects both rising raw material costs — operating costs grew 245.2 percent, outpacing the 147.4 percent revenue gain — and a 660 million yuan cluster delivery in the second quarter that carries lower margins because it bundles third-party CPUs, storage and switches.

HBM Costs and Wafer Capacity Cap the Ceiling

The margin squeeze traces to the same supply chain fueling demand. Goldman Sachs projects SK Hynix's HBM average selling prices could rise 87 percent in 2027, prompting even Nvidia to trim HBM content on some Rubin Ultra models. Morgan Stanley said locking in sufficient HBM inventory in 2026 could determine delivery stability in 2027.

On the wafer side, Moore Threads relies on SMIC, whose advanced capacity is largely locked by Huawei. Huawei's Ascend is expected to take more than 60 percent of China's domestic AI chip market in 2026, leaving the four emerging GPU players — Moore Threads, Cambricon, Hygon and Biren — to split the remainder. TrendForce projects domestic solutions will capture nearly 90 percent of China's high-end AI chip market this year.

Cambricon shares trade at a premium reflecting its profitability — second-quarter net margin hit a record 41.71 percent — while Moore Threads carries a roughly 180x price-to-sales valuation on a company that has yet to post a full-year profit. The market is pricing in sustained demand from Chinese model developers such as DeepSeek, Kimi and Zhipu, which are racing to secure domestic compute. Whether those bets pay off depends on whether the two chip makers can convert record inventory into revenue without margin erosion.

This article is for informational purposes only and does not constitute investment advice.