The first trading day of August saw a sharp decline for Gigadevice Semiconductor Inc. (603986.SH), as its A-shares hit the daily limit lower, closing at 340.74 yuan, with a total market capitalization of 239.1 billion yuan. This marks a stark reversal from early July 2026, when the stock peaked at 846.66 yuan, representing a roughly 60% drop in less than a month, erasing over 350 billion yuan in market value.
Meanwhile, the company's H-shares, listed on the Hong Kong Stock Exchange in January 2026, closed at 423.6 Hong Kong dollars, giving it a market cap of 297.3 billion Hong Kong dollars. The H-share listing, priced at 162 Hong Kong dollars, raised net proceeds of 4.61 billion Hong Kong dollars after deducting expenses, and the stock continues to trade well above its initial public offering price.
The recent controversy centers on a dual move by the company and its founder. Last Wednesday, Gigadevice announced that its actual controller, Zhu Yiming, had reduced his holdings between May 6 and June 12, 2026. Through a combination of centralized bidding and block trades, Zhu sold a total of 11,110,637 shares, accounting for 1.58% of the company's total outstanding shares of 701,745,034. The share sales were executed at prices ranging from 339.44 yuan to 538.90 yuan per share, netting Zhu a total of 4.4 billion yuan. Before this reduction, Zhu and his concert party, Hong Kong Yingfude Co., Ltd., collectively held 8.39% of the company. Following the sales, their combined stake fell to 6.80%. Zhu also made a commitment not to sell any further shares for 12 months starting July 29, 2026.
On the same day, Gigadevice also announced a share buyback plan, with the total amount of funds to be used ranging from 1 billion to 2 billion yuan. The stated purpose was to safeguard the interests of all shareholders, boost investor confidence, and stabilize and enhance the company's value. Zhu Yiming proposed that the company conduct the share repurchase through centralized bidding, and that the repurchased shares be subsequently cancelled to reduce the company's registered capital.
This juxtaposition of a founder selling high while the company buys back shares has drawn significant criticism from investors. Many are dissatisfied with the arrangement, which they view as a conflict of interest. The sharp decline in the A-share price has also inflicted heavy losses on some investors. One investor recounted going from a 15% unrealized profit to a 10% loss after hastily stopping out during the stock's downward spiral. Industry insiders have pointed out that the practice of a company buying back shares while its major shareholder sells off holdings should be strictly prohibited. They argue that such a move not only fails to stabilize the stock price but also raises clear suspicions of improper benefit transfer, essentially using the company's buyback to support the shareholder's exit. This approach, critics say, severely damages the interests of the listed company and its public investors and should be firmly banned.
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