China's AI GPU Industry Moves Closer to Commercial Scale

Metax Integrated Circuits (688802.SH), one of China's leading domestic AI GPU designers, reported its first semi-annual results since listing on the Shanghai STAR Market in December 2025. The numbers mark a turning point for the company — and potentially for China's broader effort to build a self-sufficient AI compute supply chain.

Revenue and Profitability

For the first half of 2026, Metax generated RMB 1.324 billion in operating revenue, up 44.67% year-over-year. Net profit attributable to shareholders reached RMB 612 million, a dramatic swing from a RMB 186 million loss in the same period of 2025.

Second-quarter performance was even more striking. Q2 revenue came in at RMB 762 million, up 28.12% YoY, while Q2 net profit attributable to shareholders surged to RMB 711 million — a 1,425.76% increase year-over-year.

Gross margin improved to 57.2%, up 1.1 percentage points from the prior-year period, reflecting better product mix and scale efficiencies as the C600 ramped into volume delivery.

The C600 Milestone

The company's flagship product, the Xiyun C600 GPU, entered mass production and began customer deliveries in the first half of 2026. In May, the C600 became one of the first domestic AI accelerators to pass China's safety and reliability certification — a prerequisite for procurement by government and state-owned enterprise customers.

This certification milestone carries significant weight. It places Metax among a small group of domestic GPU vendors whose products meet the compliance bar for China's "Xin Chuang" (information technology application innovation) ecosystem, opening doors to public-sector and critical-infrastructure demand that uncertified competitors cannot access.

R&D Investment

Metax continued to invest heavily in research and development. R&D spending reached RMB 525 million in the first half, accounting for 39.65% of revenue. The company employed 747 R&D personnel, representing over 70% of its total workforce — a ratio that underscores its identity as a design-house-first organization still in the build-out phase of commercialization.

Caveats: Quality of Earnings

The headline profitability figures warrant scrutiny. Net profit excluding non-recurring items remained negative at RMB –49 million, meaning the RMB 612 million reported profit was driven substantially by non-operating gains — likely government subsidies, tax incentives, or one-off financial items rather than core business earnings.

Operating cash flow was also deeply negative at RMB –1.297 billion, suggesting that working capital tied up in inventory and receivables — typical during a production ramp — is consuming cash faster than operations generate it. For a company just entering volume manufacturing, negative cash flow is not unusual, but the magnitude indicates that Metax is still far from self-sustaining on an operating basis.

Industry Context

Metax's results arrive amid a surge across China's domestic GPU sector. Cambricon reported H1 revenue of RMB 5.996 billion, up 108.13%; Moore Threads posted RMB 1.736 billion, up 147.42%; and Iluvatar CoreX reached RMB 946 million, up 191.6%.

While Metax's 44.67% growth is the slowest among this peer group, the company's gross margin of 57.2% and the C600's certification milestone suggest a different competitive positioning — one focused on compliant, enterprise-grade deployment rather than pure top-line velocity. The combined H1 revenue of these four domestic GPU firms now exceeds RMB 9.5 billion, a figure that would have been unthinkable just two years ago and signals that domestic alternatives are gaining real traction in production environments.

The competitive dynamics also reveal divergent strategies. Cambricon, as the sector's most established player, is leveraging scale across cloud and edge deployments. Moore Threads and Iluvatar CoreX are growing faster from smaller bases, targeting inference workloads and specific vertical markets. Metax, with its safety-certified C600, is positioning for the regulated and public-sector segments where compliance is a hard gate — a narrower but potentially stickier market niche.

What It Means

Metax's first post-IPO interim report sends a mixed but broadly encouraging signal. Revenue is growing, the flagship product is in mass production and certified for government procurement, and gross margins are expanding. Yet the dependence on non-recurring income and deeply negative operating cash flow reveal that the business has not yet reached the stage where core operations independently sustain profitability.

For China's AI GPU industry, the takeaway is that commercial-scale deployment — not just prototype demonstration — is now underway. Multiple domestic vendors are simultaneously ramping revenue, shipping certified products, and competing for the same enterprise and public-sector customers. The next test will be whether these companies can convert top-line growth into sustainable, operating-cash-flow-positive businesses — and whether the market is large enough to support all of them.