Against the backdrop of shortages and price hikes in storage wafers, stockpiling serves as a supply guarantee measure but also presents a double-edged sword.
Samsung Electronics' preliminary results previously indicated that its first-quarter operating profit surpassed that of the entire previous year. The tailwind of profit growth for storage stocks in the first quarter has also reached A-shares. Recent preliminary Q1 results from two A-share storage companies show both expect significant year-on-year improvement in net profit, with growth rates standing out prominently among companies that have released forecasts.
Among them, Shenzhen Techwinsemi Technology Co.,Ltd. (001309.SZ) anticipates Q1 revenue of 7.3 billion to 7.8 billion yuan, a year-on-year increase of 483.05% to 522.98%, and a net profit of 3.15 billion to 3.65 billion yuan, turning a profit compared to a loss last year. Shannon Semiconductor Technology Co.,Ltd. (300475.SZ) forecasts a Q1 net profit of 1.14 billion to 1.48 billion yuan, surging 6714.72% to 8747.18% year-on-year.
Behind the tens-of-times growth in net profit lies the storage cycle's transition from a downturn to an upturn last year. However, alongside rising profits, elevated inventory levels have become a potential risk for some storage manufacturers.
**Anticipated Q1 Profit Surge** Shenzhen Techwinsemi Technology Co.,Ltd. and Shannon Semiconductor Technology Co.,Ltd. were the first among A-share storage stocks to disclose preliminary Q1 results. Shenzhen Techwinsemi Technology Co.,Ltd. is a provider of storage control chips and solutions, developing its own flash memory controller chips, with product lines including SSDs, embedded storage, memory modules, and portable storage. Shannon Semiconductor Technology Co.,Ltd. engages in electronic component distribution and owns a storage brand, distributing SK Hynix products while selling its own brand SSDs and DRAM products.
Regarding the reasons for the Q1 net profit growth, Shannon Semiconductor Technology Co.,Ltd. stated that booming demand from generative AI applications has driven sustained industry growth, with enterprise storage product prices continuously rising, improving the company's profitability. Shenzhen Techwinsemi Technology Co.,Ltd. noted that the accelerated deployment of AI inference applications has created long-term, broad market opportunities for the storage industry, with the sector's upturn persisting since the third quarter of last year.
Storage module manufacturer Biwin Storage Technology Co.,Ltd. (688525.SH) previously released its January-February performance forecast, expecting revenue of 4 billion to 4.5 billion yuan, up 340% to 395% year-on-year, and a net profit of 1.5 billion to 1.8 billion yuan, shifting from loss to profit. The company attributed this to the highly favorable storage cycle this year, from which it has significantly benefited.
Storage, as a bulk technology product, undergoes cycles based on supply-demand dynamics. Last year, the storage industry transitioned from a downturn to an upturn, with AI demand growth further boosting the sector from the second half onwards. Some storage manufacturers, including Shenzhen Techwinsemi Technology Co.,Ltd., recorded losses in Q4 2024 and Q1 2025. However, as the cycle bottomed out and AI demand surged, leading to storage shortages and price increases, net profit turned positive by Q3 2025.
In Q4 2024 and Q1 2025, Shenzhen Techwinsemi Technology Co.,Ltd., Biwin Storage Technology Co.,Ltd., and Shenzhen Longsys Electronics Co.,Ltd. (301308.SZ) all reported losses. In Q1 2025, they reported losses of 69 million yuan, 197 million yuan, and 152 million yuan, respectively. Shenzhen Techwinsemi Technology Co.,Ltd. and Biwin Storage Technology Co.,Ltd. continued to report losses in Q2. Starting from Q3 last year, all three companies returned to profitability, driving full-year net profit growth.
For the full year 2025, Shenzhen Techwinsemi Technology Co.,Ltd. reported revenue of 10.789 billion yuan, up 126.07% year-on-year, and a net profit of 688 million yuan, up 96.35%. Biwin Storage Technology Co.,Ltd. reported 2025 revenue of 11.302 billion yuan, an increase of 68.82%, and a net profit of 853 million yuan, surging 429.07%. Shenzhen Longsys Electronics Co.,Ltd. estimated 2025 revenue of 22.5 billion to 23 billion yuan, up 28.8% to 31.7%, and a net profit of 1.25 billion to 1.55 billion yuan, rising 150.66% to 210.82%.
Other A-share storage companies that have released their 2025 financial reports or forecasts also showed annual performance growth. Shannon Semiconductor Technology Co.,Ltd.'s preliminary report indicated 2025 revenue of 35.251 billion yuan, up 45.24%, and a net profit of 544 million yuan, up 106.06%. Montage Technology Co.,Ltd. (688008.SH) reported 2025 revenue of 5.456 billion yuan, up 49.9%, and a net profit of 2.236 billion yuan, up 58.4%. Gigadevice Semiconductor Inc. (603986.SH), whose products include niche DRAM and SLC NAND Flash, reported 2025 revenue of 9.203 billion yuan, up 25.12%, and a net profit of 1.648 billion yuan, up 49.47%.
Entering the first quarter of this year, storage shortages and price increases have persisted. Many A-share storage stocks do not manufacture the core DRAM and NAND flash wafers but are involved in related areas like controller chips, interface chips, product distribution, or module assembly. Nevertheless, rising wafer prices and demand have boosted sentiment across multiple segments of the supply chain.
Storage wafer price trends reflect the overall industry's health. Although spot market prices for some products have recently shown volatility and declined, institutions expect contract prices to continue rising. Market research firm TrendForce forecasts that DRAM contract prices, after increasing 93% to 98% in Q1, will rise another 58% to 63% in Q2. NAND flash prices are expected to increase 70% to 75% in Q2, following an 85% to 90% rise in Q1. Shenzhen Techwinsemi Technology Co.,Ltd., citing market research on investor platforms, stated that contract price trends more accurately reflect the industry's long-term development.
**Rising Inventory as a Double-Edged Sword** While demand growth and improved performance are positive, companies involved in storage module manufacturing or selling their own branded products need to spend more on purchasing scarce upstream storage wafers. This has led to a situation where, despite rapid net profit growth last year for some firms, operating cash flow turned negative, and inventory levels surged. In the context of wafer shortages and price hikes, stockpiling acts as a supply safeguard but also carries risks.
In 2025, there was a significant discrepancy between the net cash flow from operating activities and net profit for Shenzhen Techwinsemi Technology Co.,Ltd. While its net profit nearly doubled year-on-year, net cash flow from operating activities was negative 2.24 billion yuan, widening by 77.37% compared to the previous year. Inventory stood at 7.058 billion yuan, an increase of 59%.
Biwin Storage Technology Co.,Ltd. faced a similar situation. Its 2025 net cash flow from operating activities was negative 1.965 billion yuan, turning negative year-on-year. As of the end of 2025, inventory was 7.868 billion yuan, a 122.44% increase from the end of 2024.
The decrease in operating cash flow and increase in inventory are linked to purchasing upstream storage wafers. Shenzhen Techwinsemi Technology Co.,Ltd. explained that the change in operating cash flow was primarily due to the company's rapid growth phase, requiring increased inventory stocking and R&D investment to ensure supply chain stability and meet business demand. Biwin Storage Technology Co.,Ltd. attributed the change to increased operational procurement expenditure, including strategic purchases of key raw materials like storage wafers, resulting in high cash outflows.
Negative operating cash flow poses certain pressures on working capital, while high inventory levels can also lead to operational risks.
Although Biwin Storage Technology Co.,Ltd. stated it is deepening cooperation with global major wafer manufacturers and signing LTAs to secure capacity, with sufficient inventory ensuring long-term stable operations, it also highlighted risks. The company noted that its inventory book value accounted for 50.7% of total assets at the end of 2025, and the large scale of inventory somewhat ties up working capital, potentially leading to operational risks.
Biwin Storage Technology Co.,Ltd. warned that if future wafer prices fluctuate significantly, it might need to make large provisions for inventory write-downs, substantially reducing profits. Shenzhen Techwinsemi Technology Co.,Ltd. also cautioned that if the industry cycle turns downward, leading to price declines requiring large inventory impairments, or if raw material supply tightens, its performance could face further decline risks. The company stated it would closely monitor market dynamics to ensure a rapid response.
In its Q1 results forecast, Shannon Semiconductor Technology Co.,Ltd. also highlighted risks related to upstream raw material supply, noting that future changes in industry supply-demand or raw material price fluctuations could lead to performance volatility.
Although many domestic storage manufacturers have not yet released Q1 reports disclosing the latest inventory figures, the sentiment for securing supply remains strong among domestic players amid upstream wafer shortages and price hikes. Several storage manufacturers have deepened cooperation with wafer fabs, particularly domestic ones.
In late March, Gigadevice Semiconductor Inc. announced that it and its subsidiaries plan to purchase DRAM-related products manufactured by ChangXin Memory Technologies (CXMT) and its subsidiaries, with estimated transactions worth 5.711 billion yuan this year. Biwin Storage Technology Co.,Ltd. disclosed signing a 24-month routine procurement contract with a storage wafer manufacturer for a specific wafer type totaling 1.5 billion USD (approximately 10.2 billion yuan) to enhance medium-to-long-term supply stability, while also warning of risks from potential market price declines. The contract value is close to 90% of Biwin Storage Technology Co.,Ltd.'s revenue last year.
Shenzhen Longsys Electronics Co.,Ltd. recently stated during investor meetings that it has established long-term, in-depth strategic partnerships with domestic and international wafer fabs like Yangtze Memory Technologies Corp. (YMTC) and CXMT. Shenzhen Techwinsemi Technology Co.,Ltd. also mentioned maintaining stable cooperative relationships with multiple storage wafer manufacturers and chip foundries, including CXMT.
An executive from a company producing storage controller chips, SSDs, and embedded storage recently emphasized the importance of partnering with domestic wafer fabs, noting that significant capacity from overseas fabs has been booked by North American tech giants. In this context, domestic fabs are striving to increase production to meet local demand. The company is collaborating with domestic fabs to supply downstream industries like automotive, ensuring the supply chain does not break due to reduced availability.
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