Shares of Cambricon (ticker SH688256), one of China’s best-known AI chip designers, plunged sharply in Shanghai on 3 February, falling as much as 14% intraday and knocking the company’s market value down to roughly RMB 450 billion. The abrupt move came without an immediate, detailed explanation from the company, leaving investors scrambling for causes amid a swirl of online speculation.
When pressed by a reporter posing as an investor, a staff member at Cambricon’s board secretary office said the company did not know the specific reason for the drop and warned that many of the circulating rumours were false. The employee pointed instead to volatility in secondary-market fund flows and investor sentiment as the proximate drivers, and urged market participants to remain rational.
The episode underlines how fragile the valuations of China’s high-profile technology firms have become in the era of AI exuberance. Cambricon has been one of the headline names in the domestic push to build an indigenous AI semiconductor ecosystem, and its share price has been particularly sensitive to swings in investor expectations about demand for generative-AI hardware and the wider chip cycle.
Market microstructure in China amplifies such moves. The STAR Market and other domestic bourses still host a heavy mix of retail and momentum-driven institutional trading, which can turn rumours, forced selling and short-term repositioning into outsized price swings. That dynamic is compounded for firms seen as strategically important: any shock to a flagship AI supplier invites close scrutiny from both investors and policymakers.
For long-term participants, the incident is a reminder that headline market caps mask underlying business risk. Cambricon’s technology, customer wins and roadmap remain the principal determinants of its value over time, but short-term liquidity events and narrative shifts can rapidly erode paper valuations and complicate capital plans. For regulators and company boards, the episode accentuates the need for clearer, faster investor communication to stem damaging speculation.
The wider sector could feel spillovers. A swift retreat in a marquee AI-chip name can trigger re-pricing across related software and hardware stocks, influence M&A calculations, and shape foreign investors’ appetite for Chinese semiconductor exposure. Whether the bounce back from this specific drop will be driven by a corrective rebound, fresh corporate disclosure, or broader market calm remains an open question.