Cambricon, a Chinese AI chip designer, nearly disappeared after its largest customer Huawei abandoned it in 2019, but the company has survived a devastating eight-year loss period and is now competing directly with NVIDIA by developing processors that achieve 80 to 90 percent of NVIDIA's A100 performance. The story of Cambricon reveals how a single customer dependency can destroy a promising technology company, and how perseverance through academic roots can enable a comeback.

What Happened When Huawei Suddenly Stopped Buying Cambricon's Chips?

Cambricon's rise and fall mirrors a cautionary tale in the semiconductor industry. Founded in 2016 by two brothers from the Chinese Academy of Sciences, Chen Yunji and Chen Tianshi, the company initially thrived by licensing its neural network processor designs to Huawei. In 2017, when Huawei integrated Cambricon's 1A processor into the Kirin 970 mobile chip used in blockbuster phones like the Mate 10 and P20, the company became an overnight success. Global shipments of these phones exceeded 100 million units, and Cambricon's valuation soared to $1 billion.

However, this success masked a critical vulnerability. Over 98 percent of Cambricon's revenue came from Huawei HiSilicon, leaving the company dangerously exposed. The turning point arrived on June 21, 2019, when Huawei released the Kirin 810 mid-range chip with its own internally developed Da Vinci architecture neural processing unit, replacing Cambricon's IP for the first time. Three months later, the flagship Kirin 990 also switched to Da Vinci, completely ending Cambricon's era in the Kirin series. The company's IP licensing revenue declined by 41.23 percent year-over-year in 2019 and continued falling afterward.

This shift forced Cambricon into a completely different business model. Selling intellectual property licenses is asset-light and highly profitable, but selling actual chips requires massive investments in research and development, manufacturing, inventory management, and ecosystem building. The company had only two years to make this transition, and the impact was devastating.

How Did Cambricon Survive Its Darkest Years?

After Huawei's departure, Cambricon accelerated development of its own chips, launching the Cambricon 100 in 2018, the Cambricon 270 in 2019, and the Cambricon 220 in 2019 with mass shipments beginning in 2020. The company went public on the Shanghai STAR Market on July 20, 2020, with an opening price of 250 yuan, giving it a market capitalization in the hundreds of billions of yuan. Yet despite this public listing, the company was still operating at a loss.

The next three years proved to be Cambricon's most difficult period. On December 15, 2022, the U.S. Department of Commerce added Cambricon and 36 other Chinese technology companies to its Entity List, effectively cutting off access to advanced manufacturing partners like TSMC. The company was forced to switch to SMIC, a less advanced domestic manufacturer. Combined with changing customer demands and project delays, Cambricon's cloud business revenue collapsed in 2023. Annual revenue fell to between 700 and 800 million RMB (roughly $97 to $111 million), while losses ballooned to between 800 million and 1.2 billion RMB. The company's market capitalization plummeted from over 100 billion RMB at its 2020 IPO to a low of 20 billion RMB in 2022, a decline of nearly 80 percent.

During this period, many investors and industry observers dismissed Cambricon as a failed "story stock" destined for bankruptcy. The company's survival seemed unlikely given the combination of customer loss, U.S. sanctions, and manufacturing constraints.

What Changed in 2023 That Gave Cambricon New Hope?

The turning point arrived in the second half of 2023 when Cambricon released the Cambricon 590, described as its first truly usable cloud training chip. This processor achieved performance levels of 80 to 90 percent of NVIDIA's A100, a benchmark-setting GPU that has dominated AI training workloads globally. This breakthrough suggested that Cambricon could finally compete in the high-performance computing market where NVIDIA has maintained near-monopoly status.

The Cambricon 590's emergence is significant because it represents the culmination of years of research and development conducted despite the company's financial struggles. The chip's performance metrics indicate that Chinese semiconductor designers can now produce competitive alternatives to American-made AI processors, potentially reshaping the global AI hardware supply chain.

How the Chen Brothers' Unique Partnership Shaped Cambricon's Strategy

Understanding Cambricon's resilience requires examining the unusual arrangement between its two founders. Chen Yunji, the elder brother born in 1983, entered middle school at age 9 and earned his PhD from the Chinese Academy of Sciences, becoming a core architect of the legendary Loongson chip. Chen Tianshi, born in 1985, followed a similar academic trajectory and specialized in artificial intelligence algorithms. After Cambricon's founding in 2016, Chen Tianshi became CEO while Chen Yunji remained at the Institute of Computing Technology at the Chinese Academy of Sciences as a researcher.

This arrangement, where the older brother stayed in academia while the younger brother entered business, is almost unique in China's technology commercialization history. Most companies see their entire core team depart together. However, this structure gave Cambricon a permanent advantage: continuous access to cutting-edge research, patents, and talent flowing from one of China's premier research institutions. By the end of 2025, Cambricon had filed 2,846 patent applications with 1,734 granted, reflecting this deep academic connection.

Steps to Understanding Cambricon's Path Forward in AI Chip Competition

• Academic Foundation: Cambricon maintains direct ties to the Chinese Academy of Sciences through Chen Yunji's continued research position, ensuring access to fundamental breakthroughs in neural network architecture and chip design that inform product development.
• Technology-First Strategy: Rather than pursuing compatibility with existing NVIDIA software ecosystems, Cambricon has chosen an aggressive technology development path, filing thousands of patents and focusing on performance metrics that rival American competitors.
• Domestic Supply Chain Resilience: After U.S. sanctions forced a switch from TSMC to SMIC manufacturing, Cambricon adapted by optimizing designs for domestic production capabilities, reducing dependence on foreign suppliers and creating a more resilient supply chain.
• Cloud and Training Focus: The Cambricon 590 targets the high-margin cloud AI training market where NVIDIA's A100 and H100 processors command premium prices, positioning the company to capture market share from price-sensitive customers.

The Cambricon story demonstrates that even after catastrophic customer loss and international sanctions, a company with deep technical expertise, academic roots, and determined leadership can rebuild and compete at the highest levels of the semiconductor industry. The company's survival through 2019 to 2023 and emergence with competitive products in 2023 suggests that the global AI chip market may be entering a new phase where alternatives to NVIDIA's dominance become viable for customers seeking geographic diversification or cost reduction.

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