Did sanctions create China’s AI billionaire?

In 2019, Chen Tianshi was a long way from becoming one of the wealthiest people on the planet.

His three-year-old artificial intelligence chip startup’s largest customer, Chinese telecommunications giant Huawei Technologies Co., had abruptly cut off almost all business in favor of developing its own semiconductors. Until then, Huawei had been the source of over 95% of the company’s revenue.

But then he caught a break from an unexpected source. The U.S. decision to cut off China’s access to cutting-edge chips and Beijing’s determination to foster homegrown technology ultimately created a halo of state sponsorship and a vast protected market for the computer prodigy’s company, which propelled him to become one of the world’s richest self-made billionaires.

Shares of his chip designer Cambricon Technologies have surged more than 765% over the last 24 months. His wealth, the majority of which is derived from his 28% stake in the Beijing-based producer of AI accelerators, has more than doubled to $22.5 billion since the beginning of the year, according to the Bloomberg Billionaires Index.

Chen’s meteoric rise underscores how China’s robust support for its domestic AI industry is minting a new class of state-aligned tech elites just a few years after it cracked down on its private-sector titans. As Washington’s export bans choked China’s access to advanced chips, firms such as Chen’s Cambricon have emerged as national champions, shielded by policy mandates and investor zeal — symbols of a new industrial order where political favor, not market freedom, defines the winners.

Questions over how much the significant support from government protectionism — rather than the competitiveness of its chips — has contributed to Cambricon’s surge has divided observers over how long the run will last.

“Cambricon’s explosive revenue growth is mainly due to a low starting point, and its current valuation may be inflated without sustained policy support,” said Shen Meng, director at Beijing-based investment bank Chanson & Co.

Although Chen is still some way off Nvidia founder Jensen Huang’s net worth, he’s already the third richest person in the world at or under age 40, behind Lukas Walton and Mark Mateschitz, heirs to the Walmart and Red Bull fortunes, respectively, according to the index.

Shares of Cambricon — and by extension Chen’s net worth — took off in August when Beijing urged local companies to avoid using market leader Nvidia Corp.’s H20 processors, particularly for government-related purposes.

The company stepped in to cool the investor frenzy around its shares, warning in an August filing to the Shanghai Stock Exchange that it still labors under U.S. sanctions and emphasizing the difficulties of ascending the technology ladder. It also dispelled speculation about nonexistent products in the pipeline.

Brokerage notes around the same time mentioned its upcoming Siyuan 690 chip, although it’s believed to still lag at least a few years behind Nvidia’s corresponding product.

“It’s too early to say if Cambricon or Huawei, the leading AI chip designer in China, will become China’s Nvidia, as Nvidia’s full stack including the CUDA ecosystem is extraordinarily hard to replicate quickly,” said Sunny Cheung, a researcher at Washington-based think tank Jamestown Foundation, referring to the AI chip giant’s proprietary programming language bundled with its hardware.

Cambricon didn’t respond to Bloomberg requests for comment.

Despite the questions about Cambricon’s valuation, Chen’s path to success has become something of a case study for China’s state-supported academic pipeline that also spurred the surprise breakthrough of AI startup DeepSeek and its millennial founder, Liang Wenfeng.

Born in 1985 to an electrical engineer father and a history teacher mother in the southeastern city of Nanchang, Chen had a keen intellect that was identified early. He and his older brother, Chen Yunji, were fast-tracked into a program for gifted students at Hefei’s elite University of Science and Technology of China, where he earned a PhD in computer science in 2010.

From there, Chen joined his brother as a researcher at the computing institute of the Chinese Academy of Sciences, the center of the nation’s scientific ambitions funded by state coffers.

That’s where the brothers first garnered broader attention with internationally acclaimed academic papers on their DianNao accelerator in 2014. A year later, they debuted their first chip, a brain-inspired processor for deep learning. That component was named Cambricon, after the Cambrian explosion — a period marked by a rapid increase in the diversity of life forms — to signify it as an early evolutionary starting point for AI.

In 2016, the Cambricon project was spun off and founded as a company with the academy an early financial backer.

It achieved its first breakthrough in 2017 when Huawei used Cambricon’s AI processor technology to improve the photography and gaming capabilities of its Mate 10 smartphone. That partnership ended in 2019 when Huawei started to develop similar technology on its own. Since then, Cambricon has gradually shifted its focus toward designing and selling AI chips for both cloud servers and edge devices.

It was listed on the Sci-Tech Innovation Board in Shanghai in 2020, but it was consistently in the red before it began to book quarterly profit for the first time since its initial public offering of stock in the three-month period through December 2024.

It suffered a setback in 2022 when the U.S. Department of Commerce added Cambricon to the so-called entity list for its efforts to “acquire U.S.-origin items in support of China’s military modernization,” limiting the company’s ability to access advanced Western technologies.

But the U.S. curbs did little to hinder Cambricon’s prospects. When Washington broadened the export controls to block Nvidia and Advanced Micro Devices from selling any high-performance AI chips to China, it created a supply vacuum. Beijing responded with force, mandating that domestic tech firms “buy local,” meaning Chinese companies now have to source at least some of their chips from domestic manufacturers such as Huawei or Cambricon.

Demand exploded. Cambricon’s revenue surged more than 500% over the last 12 months, even as it competes with companies such as Huawei and a slew of other domestic startups.

Although the company remains a top domestic AI play for now, investors could turn their eyes to homegrown rivals as the likes of Moore Threads and MetaX advance toward public listings in China. Meanwhile, AI chipmakers Biren Technology and Iluvatar CoreX are reportedly preparing for IPOs in Hong Kong.

“Their rise is directly caused by the urgent need for countries to have access to hardware infrastructure,” said Shuman Ghosemajumder, co-founder and chief executive of Reken, a San Francisco-based AI startup. “Similar to Nvidia, I think they will likely encounter a lot of variance in their stock price as people decide exactly how much infrastructure is required for practically useful generative AI models, and how much those expectations have been overhyped.”