Macquarie initiated coverage on five Chinese AI chip stocks in a late June report, naming Shanghai-listed Cambricon its top pick with a price target implying more than 50% upside, citing shifting government policy and a broadening domestic customer base.
Macquarie has declared this the optimal moment to invest in Chinese domestic AI chip companies, initiating coverage on five publicly traded firms and naming Shanghai-listed Cambricon its top pick — with a price target implying more than 50% upside from last Friday's close.
"We believe the best time to invest in China's AI chip players has arrived, given the development of AI, domestic large language model (LLM) players and the token economy in China," Macquarie's China Information Technology analysts wrote in a late June report.
The firm set a price target of 2,060 yuan ($303.43) on Cambricon, rating it outperform. The analysts cited a shift in the company's customer base as a key factor driving the recommendation.
"We believe Cambricon has shifted its core customer base from government intelligent computing clusters to leading domestic cloud providers and LLM developers," the analysts wrote. "These customers provide a more balanced sales mix, healthy margins and solid cash flows."
Among Hong Kong-listed names, Macquarie expressed the strongest preference for Biren Tech, setting a price target of 140 Hong Kong dollars ($17.85) — more than double the stock's Friday close. The firm also listed Hong Kong-listed Iluvatar CoreX and Shanghai-listed MetaX as favored holdings.
"We like Biren's [General-Purpose computing on a Graphics Processing Unit] product portfolio skewed towards higher computational power, chip interconnect, and large-scale computing clusters," the analysts said, adding that the company's focus on domestic supply chains is positioned to support new product launches.
The lone underperform rating in the group went to Shanghai-listed Hygon. Despite its established position in China's CPU and AI chip sector, Macquarie analysts said they "attribute much of its success to tech transfer from AMD" and see limited upside from agentic AI development.
Macquarie's bullish stance is grounded in part on shifting government policy. Beijing has increasingly restricted imports of Nvidia GPUs, mirroring U.S. export controls — a dynamic the analysts said has improved growth visibility for domestic chipmakers.
"The PRC Government's support on domestic AI chip firms (partially via import restriction of Nvidia GPUs which echoes with U.S. export controls) has lifted the growth visibility of domestic leaders," the report stated.
Huawei and its Ascend chip line remain the dominant force in China's AI semiconductor market. Cambricon ranked a distant second to Huawei's Ascend in AI chip shipments last year, according to the Macquarie report, which cited IDC data. Hygon ranked third.
Huawei has not indicated plans to go public, leaving the traded field to the five companies Macquarie now covers. Alibaba and Baidu also operate subsidiaries that produce AI chips, though neither was the focus of Macquarie's initiations.
The report arrives as China continues to accelerate efforts to build a self-sufficient semiconductor ecosystem — a push that analysts say is creating durable commercial opportunities for domestic suppliers even as geopolitical tensions surrounding chip technology remain unresolved.
TechEchelon Staff bylines are produced collectively by the newsroom for short, breaking, and wire-style coverage. Longer-form reporting is published under the responsible reporter's name.
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