Cambricon is replacing Nvidia in China with major chip expansion

Cambricon Technologies Corp. plans to more than triple its AI chip production in 2026 as it seeks to gain share from Huawei Technologies Co. and replace Nvidia Corp. in China.

The Beijing company aims to deliver about 500,000 AI accelerators next year, according to people familiar with its targets. That includes up to 300,000 units of its Siyuan 590 and 690 chips. Production will rely mainly on Semiconductor Manufacturing International Corp.’s N+2 7-nanometer process, the people said.

The expansion highlights the rise of China’s domestic chipmakers after Beijing discouraged the use of Nvidia products this year. Huawei is preparing to double output of its top AI chips in the same period. Moore Threads Technology Co. will debut in Shanghai this week as another contender in the market.

Nvidia Chief Executive Jensen Huang said in November the company is effectively blocked from China, a shift he said would strengthen local competition. The Trump administration is weighing whether to allow sales of Nvidia’s H200 chips, though it is unclear whether China would permit their adoption.

Cambricon has emerged as a major beneficiary. The company reported a 14-fold jump in revenue in the September quarter and a nine-fold rise in market value since 2021. It is positioned to win orders from large AI buyers including Alibaba Group Holding Ltd., sources said. ByteDance Ltd. is currently its biggest customer, accounting for more than half of all orders.

Cambricon produced an estimated 142,000 AI chips this year, according to Goldman Sachs. Its ambitions depend on securing capacity at SMIC, which is also under pressure from Huawei and other rivals. Yields for the Siyuan 590 and 690 remain around 20%, the people said, far below global leader Taiwan Semiconductor Manufacturing Co., whose 2-nanometer process has yields of at least 60%, analysts estimate.

Another obstacle is high-bandwidth memory supply, still dominated by SK Hynix Inc. and Samsung Electronics Co. Huawei’s latest 910C accelerators rely on chips from both companies.

Cambricon’s position gives it leverage with partners. Founded in 2016 by Chen Tianshi, it is one of the largest beneficiaries of China’s push for self-reliance, backed by an estimated $98 billion in government and corporate spending this year.