Cambricon must book about RMB4 billion of fourth-quarter revenue to reach the RMB13.5 billion 2026 goal tied to its share incentives, with RMB11.7 billion of inventory to convert.
Cambricon, the Beijing-based designer of AI processors, reported third-quarter net profit attributable to shareholders of RMB1.404 billion on October 23, up 147.74% from a year earlier, on revenue of RMB3.53 billion, up 104.47%. The figures come from the company’s third-quarter report, filed with the Shanghai exchange that day and reported the same evening by the South China Morning Post, which put the profit at about US$210 million. For the first nine months, revenue reached RMB9.53 billion, up 106.76%, and net profit RMB3.715 billion, up 131.49%.
The quarter was Cambricon’s most profitable on record, according to Cailian Press in a report carried by 21财经, and net profit rose about 8% from RMB1.298 billion in the second quarter. The company credited continued market expansion and its support for putting AI applications into use. Profit excluding one-off items grew faster still, by 168.13% to RMB1.358 billion in the quarter.
The balance sheet tells a second story. Inventory and prepayments to suppliers have grown far faster than sales, and the quarter’s operating cash flow was negative. For investors, the question is how quickly that stock turns into revenue.
Profit has doubled while cash stays tied up in inventory
Cambricon’s inventory reached RMB11.66 billion at the end of September, up from RMB4.94 billion at the end of 2025. Inventory stood at RMB8.25 billion at the end of June, according to TMTPost, so the third-quarter increase of about RMB3.4 billion was close to the quarter’s entire revenue. Prepayments rose to RMB3.04 billion from RMB745 million at the start of the year, and cash and equivalents fell to RMB555 million from RMB1.32 billion.
Operating cash flow was a net outflow of RMB83.7 million in the third quarter, leaving RMB228 million of inflow for the nine months, against an outflow of RMB29.3 million a year earlier, The Paper reported. Cash received from customers rose about 112% to RMB10.67 billion over the nine months. The report attributes the cash-flow improvement to much larger sales collections. An analysis by Red Star Capital Bureau, the financial unit of Chengdu Business News, republished in a separate 21财经 piece, summed the gap up as RMB3.7 billion earned and RMB200 million collected, with the rest sitting in the warehouse. It counted RMB502 million in asset impairment losses over the nine months, against RMB86.9 million a year earlier in the quarterly report, and a rise in notes payable to RMB4.97 billion from RMB350 million.
Management said it tightly controls inventory and will speed up turnover to reduce risk, according to Cailian Press. The impairment charges relate to raw materials bought earlier that have aged. Chairman Chen Tianshi said upstream prices have been rising and that the company is responding with strategic stockpiling.
Margins held steady as research spending fell as a share of sales
Revenue minus operating cost of RMB4.14 billion implies a nine-month gross margin of about 56.5%, close to the 55.25% Cambricon reported for the first half, as Jiemian noted at the time. Research and development spending rose 73.66% to RMB523 million in the third quarter, equal to 14.8% of revenue, down 2.63 percentage points from a year earlier. For the nine months, research spending of RMB1.23 billion was 12.86% of revenue, down from 18.3%.
Contract liabilities, which mostly reflect customer payments received before delivery, rose to RMB141 million from RMB611,000 at the end of 2025. Cailian Press noted that the balance was lower than at mid-year. Total assets grew 66.43% to RMB22.36 billion over nine months.
The stockpiling fits the supply conditions Chinese chip designers describe. The Next Web reported that they face shortages of high-bandwidth memory, the stacked memory used in AI accelerators, because US-led sanctions restrict sales by Samsung, SK Hynix and Micron, and that Morgan Stanley expects Cambricon to hold about 14% of China’s AI chip market this year, second to Huawei.
The fourth quarter must deliver about RMB4 billion in sales
Cambricon’s restricted-share incentive plan sets a 2026 revenue goal of RMB13.5 billion, and The Next Web reported that the company has kept that target. With RMB9.53 billion booked by September, the company needs roughly RMB3.97 billion in the fourth quarter, about 12% more than the third quarter delivered. The same plan sets cumulative goals of RMB40.5 billion for 2026 and 2027 and RMB100 billion through 2028.
The shares closed up 5.46% at RMB932.20 on October 23, the day of the release, The Paper reported, though The Next Web noted they have lost about half their value since a June record. Other chip companies have reported strong quarters this week, including packaging group JCET, which raised its 2026 investment plan as profit rose 60%.
The company says its next-generation processor microarchitecture and instruction set are under development. The figure to watch in its annual report is the inventory line: a fall from RMB11.66 billion alongside fourth-quarter revenue near RMB4 billion would show the stockpile converting into sales.