China’s computing firms post revenue rise on strong demand

China’s computing firms Hygon and Sugon reported increased revenue in 2025 amid rising domestic demand for computing hardware.

Hygon, based in Beijing, posted revenue of 14.4 billion yuan (US$2.1 billion), a 56.9% rise from 2024, with profit attributable to shareholders reaching 2.54 billion yuan, up 32%.

Sugon, a maker of high-performance computing systems and the largest shareholder of Hygon, reported revenue grow 13.9% to 14.97 billion yuan (US$2.17 billion), with net profit rising 10.5% to 2.11 billion yuan (US$306 million).

Hygon attributed its growth to increased demand for domestically produced high-end chips.

Despite US restrictions affecting imports of Nvidia’s H200 GPUs, China continues investing heavily in expanding its computing capacity.

In December, Hygon and Sugon canceled a planned merger, citing changes in market conditions and the domestic and international environment.

The results reflect broader efforts to bolster China’s domestic tech supply chain amid ongoing international tensions.

🔗 Source: South China Morning Post

🧠 Food for thought

Implications, context, and why it matters.

Sanctioned firms are growing from a foundation of licensed U.S. tech

Hygon’s central processing units (CPUs) trace back to a 2016 licensing deal with AMD for its Zen 1 design plus x86-64 architecture 1.
Sugon joined the U.S. government’s Entity List, a trade restriction list that limits access to U.S. technology, in 2019 2.
Hygon and Sugon said they ended merger talks because the “market environment has changed significantly” and the conditions to carry out the restructuring were “not yet mature” 2.
The companies said the decision keeps Hygon independent as a chip supplier for China’s domestic server industry, while Sugon keeps working with other chipmakers as a server manufacturer 2.

U.S. sanctions are helping accelerate a parallel, state-backed AI ecosystem

Hygon’s expansion ties to a national approach where the Chinese government assigns limited domestic chip manufacturing capacity, with Hygon reportedly getting priority access after Huawei 3.
U.S. limits on advanced Nvidia chips for China have tightened that supply, with reports of problems around Nvidia’s China-focused H20 chip amid shifting U.S. export restrictions, Chinese regulatory scrutiny, and supply-chain disruption linked to production 4.
A long-term outcome is a separate ecosystem that does not depend on Nvidia.
DeepSeek said its latest AI model works with domestic AI chips expected soon, and Rest of World reported that Chinese chip and AI model companies formed a “chip-model” alliance 5.