The South Korea Composite Index surged 5.12% on May 4th, with leading memory chip manufacturers showing particularly strong performance. SK Hynix closed up 12.52%, and Samsung Electronics rose 5.44%, both reaching record-high closing prices. Similarly, U.S. memory stocks like Micron and SanDisk also hit all-time highs last Friday.
The memory chip sector has entered a new super cycle, driven by explosive AI demand and rising chip prices. A-share memory chip companies are now in a period of rapid revenue and profit growth, delivering on their earnings potential. Following strong growth in the fourth quarter of last year, these companies continued to report significant increases in both revenue and profit for the first quarter of this year.
Several companies reported first-quarter profits that were multiple times their full-year 2023 earnings. Due to the shortage of memory chips and high prices, these companies have not only seen revenue growth but also profit increases that far outpace revenue growth. Companies such as Jiangbolong, Demingli, and Baiwei Storage reported single-quarter profits several times higher than their total profits for the entire previous year.
Jiangbolong achieved first-quarter revenue of 9.909 billion yuan, a year-on-year increase of 132.79%. Its net profit attributable to shareholders reached 3.862 billion yuan, surging 2644.05% compared to the same period last year. The single-quarter revenue was nearly half of last year's total, while the net profit was 1.7 times the full-year 2023 net profit.
Baiwei Storage reported a first-quarter net profit of 2.899 billion yuan, which is 3.4 times its full-year 2023 net profit. Shannoncore posted a net profit of 1.327 billion yuan for the quarter, 2.4 times its 2023 annual profit. Demingli's first-quarter profit reached 3.346 billion yuan, 4.8 times its full-year 2023 net profit. GigaDevice showed a more modest profit increase, with a first-quarter net profit of 1.461 billion yuan, close to 90% of its total profit for the previous year.
Since the fourth quarter of last year, memory chips have entered a pricing "super cycle," with prices rising continuously for both AI-related and consumer-grade memory chips. As a result, the aforementioned A-share companies have benefited from the overall industry upcycle, leading to substantial earnings growth.
How closely are A-share memory companies linked to AI? The surge in demand for memory chips driven by AI has significantly boosted the performance of giants like SK Hynix, Micron, and Samsung. But how relevant is AI demand to A-share memory-listed companies?
A-share memory companies do not operate as original memory chip manufacturers; they are primarily involved in module processing or act as distributors. However, related companies are accelerating their transition toward AI-demand chips to capitalize on this memory super cycle.
Jiangbolong stated that it has successfully renewed Long-Term Agreements and Memoranda of Understanding with multiple original manufacturers, deeply securing core supply chain resources and laying a solid foundation for future long-term development.
The company also emphasized its focus on edge AI. In recent years, guided by its self-developed chips and firmware technologies, it has proactively introduced core hardware and software technologies such as SPU, iSA, and HLC. Supported by its own high-end packaging and testing capacity, it has developed innovative storage products like mSSD and ultra-thin ePOP. Leveraging its full-stack technological advantages across key storage segments, the company integrates storage capabilities to systematically support diverse edge storage needs and fully embrace edge AI.
As of the report date, Jiangbolong's flagship storage products, represented by UFS4.1, have achieved mass shipments. In customized edge AI storage products, the company directly supplies automotive-grade storage products to a leading North American smart car and autonomous driving technology giant and has entered the supply chains of many globally renowned automotive manufacturers.
Demingli also highlighted that during the reporting period, it deepened cooperation with key enterprise-level storage customers, increased the number of implemented projects, and saw stable growth in related business revenue. The company previously appeared at the Alibaba Cloud Summit, with its products now compatible with Alibaba Cloud, some of which have completed verification and are being delivered in bulk.
Public information indicates that Demingli is one of the few domestic manufacturers with full in-house R&D capabilities, spanning from controller chip firmware algorithms to hardware design and manufacturing.
Shannoncore primarily acts as a distributor for SK Hynix, and its strong performance is largely attributable to the growth in Hynix's memory products.
Unlike module makers and distributors, GigaDevice is a memory chip design company whose main products include Nor Flash and MCUs. Based on its earnings performance, AI demand has had a limited boosting effect on GigaDevice.
Comments