Chinese AI chipmaker Cambricon Technologies is embroiled in a legal dispute with its former Chief Technology Officer (CTO), Liang Jun, who has filed a lawsuit seeking compensation for stock incentive losses worth approximately CNY 4.3 billion (USD 600 million). The case is scheduled to be heard on January 23, 2025, at Haidian District Court in Beijing.

The lawsuit centers around Liang’s claim that Cambricon breached a stock incentive agreement linked to his role as CTO between 2017 and 2022. Liang argues that his stock-based compensation should be considered part of his labor benefits. According to Liang, the company failed to honor the agreement, leading to significant financial losses when the company's stock price surged, especially in 2024.

In addition to the labor dispute, Cambricon has filed a separate lawsuit demanding Liang transfer his shares in the company, which were valued at CNY 72 billion (USD 9.9 billion) as of January 2025. The legal row comes as Cambricon navigates a period of soaring stock prices and continued financial losses.

From Huawei to Cambricon: Liang’s Journey and Contributions

Liang, who had a distinguished 17-year career at Huawei, joined Cambricon in 2017 as CTO. He was instrumental in the company’s development, including launching its first AI chip and securing intellectual property related to semiconductor technologies. Under his leadership, Cambricon became a key supplier of AI chips for major players like Huawei.

However, by 2022, after a reported strategic divergence regarding the company’s future direction, Liang left Cambricon. The company cited differences in focus—while Cambricon was aiming for rapid market expansion, Liang emphasized long-term technological innovation. Despite his departure, Liang's technical influence remains significant, and he held a substantial indirect stake in the company.

At the time of his departure, Liang’s stock holdings were valued at around CNY 7.6 billion, and he had earned various stock incentives, including 100,000 restricted shares. However, upon leaving, 80,000 of these shares were forfeited under the company’s stock incentive plan, contributing to the ongoing legal conflict.

Cambricon's Financial Outlook Amidst Legal Struggles

While Cambricon’s stock has soared in 2024, with a 404% increase, the company continues to face significant challenges. Despite being viewed as a critical player in AI chip production, especially with the rise of AI-driven data centers, Cambricon has yet to report a profitable year since going public. In its 2024 financial forecast, the company expects CNY 10.7 billion to CNY 12 billion in revenue, up 51% to 69% year-over-year. However, its net losses are projected to remain significant, with estimates ranging from CNY 396 million to CNY 484 million.

Despite these losses, Cambricon’s market value has skyrocketed, reaching approximately CNY 260 billion (USD 36 billion) by January 2025. This increase in stock value highlights the growing demand for semiconductor technologies, particularly for AI applications.

Conclusion

The lawsuit between Liang Jun and Cambricon underscores the tensions within the fast-evolving AI chip industry. As Cambricon grapples with its legal challenges and financial hurdles, all eyes will be on the upcoming court decisions that could shape its future trajectory. The case also highlights the broader dynamics of the Chinese semiconductor industry, where intellectual property and labor agreements are becoming critical in a fiercely competitive market.