The Valuation Paradox of the Siyuan Series
Capital is no longer rational in the Shanghai tech corridor. Cambricon Technologies (688256.SH) has decoupled from the gravity of traditional earnings multiples. As of the market close on October 23, 2025, the company’s valuation reflects a strategic necessity rather than a fiscal reality. The third-quarter fiscal report released this week reveals a revenue print of 942.8 million RMB. This represents a 214 percent increase compared to the same period last year. Yet, the underlying net loss remains a persistent shadow at 210.4 million RMB. In the logic of the current semiconductor cycle, losses are merely a down payment on national autonomy.
Investors are pricing in the displacement of Western silicon. The Siyuan 590 series is now being integrated into Tier-1 data centers across the mainland. This domestic pivot is driven by the tightening of export controls documented in recent Reuters reports concerning high-end HBM3e memory access. Cambricon is the primary beneficiary of this forced localization. The market capitalisation has swollen to 184 billion RMB, a figure that dwarfs its current book value. This is not a bubble in the traditional sense; it is a geopolitical hedge.
The Billionaire Engineer and the State Subsidy
Chen Tianshi has entered the global elite. His net worth reached 12.6 billion USD this week, placing him firmly within the top 100 global billionaires per the latest Bloomberg Billionaires Index. This wealth is built on a foundation of massive R&D spending. In the first nine months of 2025, Cambricon allocated 1.14 billion RMB to research and development. This exceeds their total revenue for the same period. Such a fiscal structure is only sustainable through the indirect support of the state-led Big Fund III.
Institutional appetite remains voracious. While US-listed peers like Nvidia face scrutiny from the SEC regarding long-term growth sustainability in restricted markets, Cambricon operates in a vacuum of competition within China. The following table illustrates the divergence between Cambricon and its domestic contemporaries as of October 24, 2025.
| Metric (Q3 2025) | Cambricon (688256.SH) | Loongson Tech (688047.SH) | Hygon Information (688041.SH) |
|---|---|---|---|
| Revenue Growth (YoY) | 214% | 42% | 88% |
| R&D as % of Revenue | 121% | 64% | 38% |
| Market Cap (RMB) | 184.2B | 54.1B | 142.9B |
| Net Margin | -22.3% | -12.8% | 14.2% |
The risk profile is asymmetrical. Retail investors are chasing the momentum of the Siyuan 590 rollout, ignoring the technical debt inherent in rapid scaling. The architectural shift from 7nm to 5nm equivalents remains the primary hurdle. Without access to advanced lithography, Cambricon must rely on chiplet designs to maintain performance parity with global leaders. This increases manufacturing complexity and compresses gross margins, which currently hover at 58.4 percent.
Visualizing the October Liquidity Surge
The Geopolitical Arbitrage
Supply chains are hardening. The surge in Cambricon’s value is a direct response to the rumors of a total ban on AI accelerator exports to China expected by early 2026. Domestic cloud providers like Alibaba and Baidu are stockpiling Siyuan chips as a survival mechanism. This captive market creates a floor for Cambricon’s share price that is independent of its profitability. The technical specifications of the Siyuan 590 claim 320 TFLOPS of FP16 performance, which places it within striking distance of the Nvidia A100, though it still lags behind the H200 series currently dominating global markets.
Institutional flow data suggests a rotation. Large-cap Chinese funds are exiting consumer internet stocks and piling into the “Hard Tech” sector. This is a structural realignment of the Chinese economy. The premium paid for Cambricon today is a premium paid for the certainty of supply in a decoupled world. If the company manages to secure stable yields from domestic foundries in the coming months, the current valuation may actually be conservative. However, any disruption in the domestic 5nm process will lead to a violent correction.
Attention now shifts to the January 2026 production audit. This milestone will determine if Cambricon can translate its paper valuation into physical inventory. Watch the yield rates at SMIC closely; they are the true arbiter of Chen Tianshi’s fortune.
