Key Takeaways:
GigaDevice Semiconductor reported first-half net profit of RMB 6.857 billion, up 1,091.50 percent year-on-year, as memory chip volume and prices surged across its core product lines.
"The results reflect strong memory pricing and volume growth," BofA Securities said in a research note, raising its A-share target price to RMB 663 from RMB 627 and reiterating a Buy rating. The bank lifted 2026-2028 earnings forecasts by 15 percent to 31 percent.
First-half revenue reached RMB 11.566 billion, up 178.67 percent year-on-year, in line with the company's July guidance of approximately RMB 11.5 billion. Second-quarter net profit came in at RMB 5.396 billion, up 269 percent quarter-on-quarter, with revenue of RMB 7.4 billion, up 229 percent year-on-year. Gross margin expanded 29.6 percentage points year-on-year to 66.6 percent in the second quarter, benefiting from higher DRAM and SLC NAND prices.
Memory chip revenue jumped 245.44 percent year-on-year, driven by niche DRAM, SLC NAND Flash, and NOR Flash all posting volume and price gains. In niche DRAM, the exit of major overseas players created a supply-demand imbalance, with DDR4 products achieving full-scale mass production and self-developed LPDDR4X progressing smoothly. SLC NAND benefited as international majors cut 2D NAND capacity in favor of 3D NAND. NOR Flash sales volumes grew across all application segments with moderate price increases.
MCU revenue grew 49.07 percent year-on-year, with the industrial sector becoming the largest revenue source. Automotive-grade Flash cumulative shipments surpassed 450 million units, while automotive-grade MCU shipments exceeded 10 million units. Operating cash flow reached RMB 6.048 billion, up 531.47 percent year-on-year. Fair value gains on securities investments of RMB 2.228 billion also contributed to profit.
Management expects memory product and MCU prices to rise moderately, with gross margins expected to gradually stabilize as upstream costs rise. The sensor business was impacted by the smartphone market, with fingerprint chip revenue declining year-on-year.
Shares fell despite the results, with A-shares down 8.36 percent and H-shares down 7.29 percent to HKD 479.8 on Aug 19, tracking a broader chip sector decline. Chairman Zhu Yiming, who also chairs ChangXin Memory Technologies, sold over RMB 4.4 billion of shares in the first half but pledged not to reduce his stake for 12 months and announced plans to increase holdings by no less than RMB 1 billion starting December 2026.
The earnings surge reflects a structural supply-demand imbalance in niche memory markets as major global manufacturers such as Samsung and SK Hynix shift capacity to AI-focused products. Investors will watch whether the company can sustain pricing power through the second half and whether the RMB 2 billion share repurchase program proceeds.
This article is for informational purposes only and does not constitute investment advice.
