Summary of Key Points
MoerThread, a domestic GPU manufacturer, saw its revenue soar by 147% year-on-year in the first half of 2026 due to the surge in AI computing power demand, with losses narrowing by 50%. However, the cost increase outpaced revenue growth. Inventory levels reached a four-year high of 3.55 billion yuan, as the company prepared for the peak season. The company also announced plans to list on the H-share market (just eight months after its A-share listing), in conjunction with Muchi Co., Ltd., to advance an A+H strategy. Nevertheless, it still faces challenges such as high R&D expenses, tight operating cash flows, and significant borrowing pressures.
I. Performance: Revenue Doubled, but Profitability Depends on "Side Businesses"
MoerThread's revenue for the first half of the year was 1.736 billion yuan, an increase of nearly 1 billion yuan compared to the same period last year, mainly driven by the surge in GPU demand amid the AI trend and the profitability of its own Kuaye Intelligent Computing Cluster. However, costs increased even faster (245%), with the company attributing this to rising prices of semiconductor raw materials.
In terms of profits, losses decreased by 259 million yuan (net loss attributable to the parent company was 11.56 million yuan), and after deducting non-recurring gains and losses, the loss was 151 million yuan, which is 166 million yuan less than last year. This improvement was partly due to government subsidies of over 88 million yuan and nearly 60 million yuan in profits from investing in financial assets, totaling 139 million yuan. Excluding the cost of employee stock incentives, the company actually made a profit of 83.53 million yuan (compared to a loss of 165 million yuan last year).
Looking at quarterly figures, revenue increased by 35% (nearly 1 billion yuan) in the second quarter, but profits turned from a gain of 29.36 million yuan in the first quarter to a loss of 40.92 million yuan, mainly due to higher costs and expenses in the second quarter.
II. Inventory at Four-Year High: A Boost for the Peak Season or a Potential Risk?
As of the end of June, MoerThread's inventory amounted to 3.55 billion yuan, more than doubling from the end of last year and increasing by 61% compared to the first quarter. The company explained this as a precautionary measure to meet the higher demand for semiconductors during the third quarter and ensure supply chain stability.
This high level of inventory is significant: it equals twice the company's revenue for the first half of the year and represents the highest level in four years. For the market, increased inventory is generally seen as a positive sign, indicating optimism about future orders; however, it also poses a risk if products cannot be sold during the peak season, leading to potential asset impairment (39.05 million yuan has already been recognized for impairment in the first half of the year). Whether these inventories can be converted into revenue will directly affect performance in the third and fourth quarters.
III. A+H Listing: Why Rush for the H-share Market When Just Raising 8 Billion Yuan from the A-share Market?
MoerThread listed on the STAR Market last December, raising 8 billion yuan. Now, just eight months later, it is planning to list on the H-share market, alongside Muchi Co., Ltd., which announced its H-share plans less than six months after its A-share listing.
There are two main reasons for this: first, "internationalization" to attract top-tier R&D talent (the GPU industry faces a shortage of such expertise); second, "financing needs"—R&D in the GPU sector is extremely costly. Looking at its A-share fundraising projects, only about 20% of the funds were used for three chip development projects, while 77% (780 million yuan) was spent on "cash flow replenishment and debt repayment," with the remaining 226 million yuan to be used up soon. The company also has short-term loans of 443 million yuan and long-term loans of 2.825 billion yuan, of which 240 million yuan must be repaid within a year, creating significant financial pressure. Listing on the H-share market could provide additional funding to support R&D efforts.
IV. High R&D Expenses and Tight Cash Flows: A Common Issue in the GPU Industry
MoerThread spent 769 million yuan on R&D in the first half of the year, accounting for 44.3% of its revenue (44 cents out of every 100 yuan earned were invested in R&D), a year-on-year increase of 38%. This is typical of the GPU industry, where rapid technological advancements require continuous investment.
However, the company's ability to generate cash is weak: its net operating cash flow for the first half of the year was -2.169 billion yuan (an increase of 1 billion yuan compared to last year), mainly due to high costs associated with purchasing raw materials. The cash received from sales (1.526 billion yuan) was less than revenue, indicating that not all payments have been collected. In this situation, the company relies on borrowing and financing to sustain operations, making a H-share listing an inevitable choice.
V. Opportunities and Challenges for Domestic GPUs: The "Life or Death Battle" in the AI Landscape
The explosion in AI computing power demand has presented opportunities for domestic GPU manufacturers (such as MoerThread, with its revenue doubling), but they also face three major challenges:
1. Technological Gap: There is still a gap between domestic and international giants like NVIDIA in terms of performance and software ecosystems.
2. Financial Pressure: Both R&D and inventory buildup require substantial funding, necessitating ongoing financing.
3. Market Competition: Domestic competitors (such as Muchi and Cambricon) are competing for market share, and international manufacturers are also cutting prices to gain market share.
For MoerThread, the key lies in selling its inventory, successfully listing on the H-share market to raise funds, and developing more competitive chips. These three factors will determine its ability to establish a foothold in the AI computing power landscape.
Conclusion
MoerThread has seen improved performance amid the AI trend, but its profitability remains unstable, with inventory and financial pressures being significant concerns. The joint A+H strategies of MoerThread and Muchi reflect the urgent need for domestic GPU manufacturers to both compete in the market and secure funding. Whether they can transition from heavy R&D spending to profitable operations will depend on technological breakthroughs and their ability to convert market opportunities into actual revenue.