Chinese Paradox: Market Flies Up, AI-Chip 'Nvidia Killer' Cambricon Falls Into the Abyss

Imagine a party where absolutely everyone is dancing — from solar panel manufacturers to tiny startups — and only one most important guest sits in the corner crying. That's roughly what trading looked like on the Chinese stock market (A-shares) today. While the Shanghai and Shenzhen indices painted beautiful green candles (or red ones, if you're used to Chinese color-coding for growth), the artificial intelligence sector served up an unpleasant surprise. The market truly came alive: over 4,800 stocks closed in the green. Investors, tired of prolonged stagnation, were buying almost everything. But the devil, as always, hides in the details of exactly what they were selling in order to buy all that "everything."

Optics vs. Silicon

The most interesting move happened in AI infrastructure. The optical modules sector (Optical Modules) — these are the very "pipes" through which data flies between servers in data centers — showed explosive growth. Companies like Roboteco and Tongyu Communication skyrocketed to the upper limit. This makes sense: regardless of which chips you use, Nvidia's or Huawei's, you still need kilometers of high-speed fiber optics to cluster them together. But with the "brains" themselves, trouble struck. Cambricon — arguably China's most well-known public company trying to create an alternative to Nvidia's GPUs — crashed more than 9%. For a company that is a symbol of China's technological sovereignty in AI, this is a painful blow.

Why does this matter?

Cambricon's fall against the backdrop of a general rally looks like a troubling bell. Usually, when the market rises ("a rising tide lifts all boats"), tech stocks rise too. But here we're seeing a clear rotation of capital.

Investors are exiting overheated expectations about the chips themselves and rotating into more tangible, grounded assets — like the same optics, or even solar energy (Photovoltaics), which was also among today's leaders. Perhaps the market is getting tired of promises to "catch up and overtake" the H100 and wants to see real profit here and now. Or it's just classic profit-taking ahead of new earnings reports.

In any case, the situation shows that blind faith in any "AI Chip" label is coming to an end. Now investors are looking at the real supply chain. By the way, the banking sector and "oil" also declined, but that concerns few people in the context of our industry.

The main drama is unfolding right in the hardware.

Key takeaway: Euphoria around Chinese AI hardware is becoming selective. Infrastructure (optics) is still "hot," but the manufacturers of the chips themselves will have to prove their worth not with presentations, but with real shipments. Cambricon got a black mark today — let's see if they can overturn it next week.