Cambricon(SH:688256)2025-10-19 15:58Summary of Cambricon's Conference Call Company Overview - Company: Cambricon (688256.SS) - Industry: AI Chip Manufacturing Key Points Financial Performance - 3Q25 Revenue: Rmb1.7 billion, up 1333% YoY, consistent with 2Q25 levels, and close to Bloomberg consensus estimates [4][8] - 9M25 Revenue: Rmb4.6 billion, nearing the low-end of the 2025 revenue guidance of Rmb5 billion [1] - 4Q25 Revenue Projection: If high-end guidance of Rmb7 billion is achieved, 4Q25 revenues could increase by 39% QoQ to Rmb2.4 billion [1] - Gross Margin (GM): Decreased to 54% in 3Q25 from 56% in 2Q25, reflecting a shift in product mix from government projects to enterprise clients [4][10] - Operating Expenses (Opex): Ratio improved to 21%, better than consensus estimates, with R&D expenses increasing by 12% QoQ [7][10] Strategic Partnerships - Sensetime Cooperation: A strategic agreement signed in October 2025 to leverage technical advantages in AI chips and foundation models, aiming to enhance product compatibility and accelerate AI deployment [2] - Zhipu Collaboration: Zhipu's new GLM-4.6 model successfully deployed on Cambricon's AI chips, marking a significant achievement in local chip production [3] Market Dynamics - Contract Liability: Reduced to Rmb80 million in 3Q25 from Rmb543 million in 2Q25, indicating improved cash flow management [1] - Inventory Increase: Inventory rose by 39% QoQ, suggesting strong market demand and effective wafer supply management [1] Future Outlook - Revenue Guidance: Analysts have raised 2025E net income estimates by 8% due to better-than-expected cost control [10] - Target Price: Maintained at Rmb2,104, reflecting a 68.6% upside potential from the current price of Rmb1,247.68 [16][14] Risks - Supply Chain Risks: Potential wafer supply restrictions due to Cambricon being added to the US Entity List in December 2022 [15] - Competition: Increased competition in the cloud chips market could impact future growth [15] Additional Insights - R&D Capability: Recognition of Cambricon's strong R&D capabilities, as evidenced by passing compatibility tests with other leading AI models [3] - Cost Control: Effective cost management strategies have led to a significant improvement in operating income, exceeding analyst expectations [7][10] This summary encapsulates the essential insights from Cambricon's conference call, highlighting its financial performance, strategic partnerships, market dynamics, future outlook, and associated risks.