Initiation: Turning LLM demand into revenue

Research evidence excerpt

Initiation: Turning LLM demand into revenue

see Cambricon’s attention to R&D even in its early days, which

ultimately bears fruits in financial returns and market positioning.

Of note, Cambricon's flagship MLU590 ASIC chip reached mass production in ~2024, and

we believe its R&D started in 2022, and Cambricon's steady focus on R&D would finally bear

fruits in two years.

This can also reflect in Cambricon’s patent library: In its prospectus disclosure, Cambricon

was licensed 65 patents as of Feb 2020; This compares to the company’s licenced patent of

1,734 as of Dec 2025. We believe Cambricon has developed a solid patent arsenal which is

well-positioned for the future.

From Spring to Autumn: Time to harvest

Cambricon has seen significant improvements over the years, both in project-by-project

operating metrics and in its overall financials. Project-level operating metrics: In 2019-20,

Cambricon’s sales relied significantly on intelligent computing clusters; many of these were

local government projects. The Zhuhai Hengqin computing cluster was a major project in

2019, and Cambricon invested to set up the 30%-held JV Qinzhi Tech (琴智科技) in Aug

2019. Qinzhi Tech focused on operation and maintenance of the Zhuhai Hengqin computing

cluster, and was a good demonstration of Cambricon's need to co-invest to increase its sales.

We understand that government-related projects tend to have long receivable days and

relatively weak cashflows, and Cambricon tends to book the revenue towards the end of

each year.

This situation has changed since the company's FY25 interim results, at which Cambricon

reported a 43x YoY surge in interim revenue to Rmb2.9bn on robust demand from cloud

and LLM customers. Interim profit also saw a turnaround to Rmb1.04bn from a net loss of