Every Chinese CPU maker grew in 1H26 but only one grew on processors

In the first half of 2026, Chinese chip companies collectively reported growth, yet underlying business models diverged sharply. A leading firm has achieved scale in processor development and is now expanding via balance sheet financing rather than operational cash flow, signaling a mature dual-driven model of technology and capital. Another group remains focused on improving profitability of indigenous instruction sets, grappling with both technological obsolescence and cost pressures. Most notably, profit growth did not stem from processor core business but from upstream segments like IP licensing or EDA tools, reflecting a deeper industry specialization. Policy momentum continues to reshape supply chains, but geopolitical risks and compliance costs are rising. Competitors are likely to pursue consolidation to strengthen domestic capabilities. Over the next 12–24 months, the industry will enter a phase of 'technological stratification and capital stratification,' where only firms with autonomous instruction sets and ecosystem integration will dominate.