[SHANGHAI] Cambricon Technologies shares tumbled by the most in nearly eight months after investors cashed out of one of the more spectacular Chinese stock rallies of 2025.
Shares of the AI chip designer closed 14 per cent lower, extending losses into a second day. That helped wipe 6.1 per cent off the SSE Science and Technology Innovation Board 50 or Star 50 Index. That sell-off reflected growing wariness about a recent surge in tech stocks and the broader Chinese market, as well as Cambricon’s doubling in market value this year.
Chinese equities have gone on a tear in recent weeks, with the benchmark CSI 300 Index surging 10 per cent last month to become one of the world’s best performers. But those gains have also drawn scrutiny from regulators worried about how any sharp reversal could inflict heavy losses on retail investors.
The CSI gauge slumped 2.1 per cent on Thursday (Sep 4), its worst performance in almost five months, after Bloomberg News reported that financial regulators were considering a number of measures to cool the rally.
“There is some degree of panic in the sell-off in Star names today that is mostly sentiment driven. As we all say, the corrections in the middle of bull markets tend to be quite intense,” said Zhang Kexing, partner at Beijing Gelei Asset Management Center Limited Partnership. “I don’t believe we’ve seen the peak of the rally in hardware makers. Usually, long-term peaks are formed after clearer policies that are detrimental towards the sector, and clearly, from the AI policies revealed last week, the authorities are still very supportive towards this sector’s growth.”
Cambricon, regarded as a favourite target of speculators, warned investors last week about risks in trading its stock. Investors were also concerned about the impact on fund flows because the company’s weighting on the Star 50 is set to drop to 10 per cent at the end of next week, according to a statement from the China Securities Index Co.
Cambricon’s rally stems from a recognition among investors of China’s growing prowess in AI chipmaking, as well as Beijing’s support for a critical sector.
It competes with Huawei Technologies to provide accelerators for developing and hosting AI models. The company reported a record profit for the first half, underscoring how startups and big tech firms like Alibaba Group Holding are increasingly employing domestic alternatives to Nvidia as the pace of AI development intensifies.
Beyond Cambricon, a number of other chipmakers also slid on Thursday, with Semiconductor Manufacturing International and Hua Hong Semiconductor down more than 5 per cent in Hong Kong. Shares of Chinese defence stocks also fell, another sector that had gained a lot this year. BLOOMBERG
