Cambricon Technologies plans to triple AI chip production to fill Nvidia void in China

Cambricon Technologies Targets Massive Production Expansion

Cambricon Technologies has set an ambitious target to triple AI chip production in 2026, aiming to produce approximately 500,000 AI accelerator chips according to sources cited by Bloomberg 1

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. This represents a dramatic increase from the roughly 142,000 units expected in 2025, based on Goldman Sachs estimates. The Chinese AI chip maker plans to produce 300,000 units of its flagship Siyuan 590 and 690 chips as part of this expansion 2

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. The move positions Cambricon to fill the void left by Nvidia's forced pullback from the Chinese market due to export controls and trade restrictions 3

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Low Yield Rate Poses Significant Production Challenge

Despite ambitious production targets, Cambricon faces substantial fabrication capacity limitations. The Siyuan 590 and 690 chips currently have a reported low yield rate of just 20%, meaning only one in five chips produced is actually viable for use 1

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. This inefficiency stands in stark contrast to TSMC's latest 2nm process technology, which achieves yield rates as high as 60% despite being seven generations ahead of what Semiconductor Manufacturing International currently offers 2

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. For next year's production, Cambricon will rely on SMIC's N+2 process 7-nanometer node, but the low yields mean a sizeable portion of fabricated chips may be unusable 1

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Competition with Huawei Intensifies Resource Pressure

Cambricon's expansion plan will put it in direct position to compete with Huawei Technologies, which has already announced plans to double its own chip production output 1

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. Both companies are competing for similar wafers and fabrication resources at Semiconductor Manufacturing International, creating potential bottlenecks that could limit production speed and scale 2

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. Memory shortages present another obstacle, as companies struggle to secure sufficient High-Bandwidth Memory (HBM) and LPDDR components needed for data center projects 1

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Strong Demand Driven by Domestic Semiconductor Reliance

Cambricon's revenue for the last quarter reportedly surged fourteenfold, reflecting enormous demand from domestic companies as China pushes for semiconductor independence 1

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. The company has secured contracts and interest from major Chinese tech firms including Alibaba and ByteDance, as government investment and incentives encourage domestic AI companies to favor local suppliers 2

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. Over the past year, chip embargos and trade restrictions have made access to high-end AI accelerators from Nvidia inconsistent at best, making domestic alternatives essential for China's national AI ambitions 1

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. China's regulators have found that domestic AI processors have reached or exceeded the level of Nvidia's chips allowed under export controls 3

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. However, the gap between China's current semiconductor technology and Western competitors like Nvidia, AMD, and Intel remains substantial in terms of performance and efficiency 2

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