The first quarter of 2026 witnessed a surge in earnings for the memory industry. Companies in the sector have released their Q1 2026 results, showing significant year-over-year growth in both revenue and profit, achieving substantial gains. For instance, ChangXin Memory Technologies reported revenue growth of 7.2 times and net profit growth of 12.7 times, while GIGADEVICE (03986) saw increases of 1.2 times and 5.1 times, respectively. Overseas industry leaders also posted impressive results, with SK Hynix reporting growth of 1.98 times and 3.98 times, respectively. Additionally, Micron Technology's quarterly report for the period ending February 2026 showed revenue and net profit growth of 1.96 times and 7.7 times, respectively. Industry-wide net profit margins generally exceeded 50%.
This earnings surge is attributed to rising memory chip prices. Following a doubling of prices last year, prices continued to double in Q1 this year and saw double-digit increases in Q2, a rate of increase far surpassing that of lithium carbonate. Data shows that, for example in the PC segment, DDR4 DRAM prices rose by 120%-125% in Q1, while DDR5 increased by 105%-110%, with Q2 seeing further increases of 20%-33%. The professional consulting firm TrendForce has raised its forecast for DRAM contract prices, predicting a Q2 increase of 58-63%.
The combination of price increases and strong earnings has fueled the rise of several stocks that have doubled in value. This wave of investment opportunity is comparable to the market performance of lithium mining stocks over the past year. In terms of specific stocks for 2026, Micron Technology's stock rose 140%, SanDisk's surged 460%, and Hong Kong-listed GIGADEVICE gained 3.4 times. As an industry leader, Micron Technology boasts a market capitalization exceeding $780 billion (approximately RMB 5.32 trillion), with a P/S ratio over 20.9x. GIGADEVICE is dual-listed on the A-share and H-share markets, with market capitalizations of RMB 283.6 billion and RMB 367.2 billion, respectively, and static P/S ratios of 30.8x and 40x. The valuation of the H-share listing is close to that of its U.S. counterparts.
The leading domestic memory companies are primarily ChangXin Memory Technologies and Yangtze Memory Technologies Co., Ltd. (YMTC). Both companies are preparing to enter the capital markets soon. ChangXin has submitted an application to the STAR Market, and on May 19th, the China Securities Regulatory Commission announced the filing of YMTC's tutoring report for its initial public offering. If calculated based on a P/S ratio of 40x, ChangXin's market capitalization could exceed RMB 2.47 trillion. Considering dynamic growth, its market value might still have the potential to double.
However, the current issue is whether this wave of high valuations, driven by memory chip price increases, can be sustained. Specifically, can memory chip prices continue to rise, and does GIGADEVICE, dual-listed on the A and H markets, still present an investment opportunity?
AI Development Drives Solid Demand, Memory Chip Price Increase Cycle is Long The demand cycles in the memory industry are supported by different logics at different times. Each upturn cycle is accompanied by price increases and capacity expansion, followed by a downturn cycle with price declines due to overcapacity. Since 2016, the memory industry has experienced three distinct cycles: the 2016-2019 cycle driven by smartphone upgrade demand; the 2020-2023 cycle driven by work-from-home trends during the pandemic; and the cycle from 2023 to the present, driven by demand for advanced memory from the AI wave. The logic of this current cycle is more robust and the cycle is longer, leading to higher certainty regarding the price increase cycle.
Unlike previous memory cycles reliant on a single driving logic, the third memory cycle beginning in 2023 is a comprehensive, multi-dimensional upgrade. The development of AI is reshaping the entire industrial revolution, with demand fission from computing power, cloud, and intelligent agents comparable to an industrial revolution. Furthermore, AI has risen to become a pinnacle of national power competition, with major support for AI development from countries like the U.S. and China. The U.S. and China are the main arenas for AI high-tech development. In July 2025, the Trump administration formally released the "AI Action Plan," while China's State Council issued the "AI+" Action Plan in August of the same year. As both sides compete in AI, 2026 sees AI gradually being applied across major industries, with policy and market forces accelerating the arrival of the AI commercialization wave.
In the AI era, the demand for computing power continues to surge, creating a demand tailwind for the memory industry. However, the memory industry market is highly concentrated. In DRAM, three overseas giants—SK Hynix, Samsung, and Micron—held a combined market share of 97.5% in 2024. In NAND Flash, these three companies also held a combined market share of 69.9%, indicating a clear oligopoly.
With AI development, China has become one of the world's largest demand markets for memory chips, making domestic substitution a necessity. YMTC focuses on the NAND flash memory field and plans to commence full-scale mass production of advanced NAND flash memory products at its Phase III production line in Wuhan, Hubei in the second half of the year. If fully operational, its capacity is expected to surpass that of SK Hynix and Micron, ranking third in global NAND flash memory shipments. ChangXin Memory Technologies specializes in the DRAM memory market, with a global market share close to 5%, ranking fourth. With domestic substitution and capacity expansion, it is expected to gradually narrow the gap with the top three.
The aforementioned two leading domestic memory companies are not yet listed but have listing plans. According to the A-share IPO process, involving exchange review, registration, and issuance, if progress is smooth, YMTC and ChangXin are expected to list on the A-share market in 2027. Before that, GIGADEVICE, as the purest A+H listed memory chip play, benefiting from the "volume and price increase" of memory products and its Q1 2026 earnings doubling, may remain a main battleground for capital. Following the announcement of YMTC's IPO tutoring, GIGADEVICE's stock price surged over 13% the next day.
Earnings Double, Multi-Dimensional Drivers May Push Valuations Higher GIGADEVICE is a leading global Fabless chip supplier. Building on its traditional strength in Flash memory, it continues to advance new product lines in MCU, niche DRAM, sensors, and analog chips. Its main businesses include memory chips, MCU and analog products, and sensors, with the memory chip business being the core pillar of its performance and growth.
From 2023 to 2025, the company's revenue compound annual growth rate (CAGR) was 26.4%, with the memory chip business CAGR at 27.1%. Revenue contributions from this segment were 70.8%, 70.6%, and 71.6% respectively, with gross profit contributions of 67.8%, 74.8%, and 76%. In Q1 2026, the company's revenue doubled, primarily due to rising memory chip prices, and the performance contribution from this business is expected to further increase.
The memory chip business has three core products: niche DRAM, NOR Flash, and customized memory products. Since 2025, all have experienced simultaneous "volume and price increases," driving high business revenue growth.
DRAM product growth is particularly eye-catching. Research from AVIC Securities indicates that in Q1 2026, this product's revenue share increased to about one-third. ChangXin Group is the company's core foundry production supplier for DRAM. The expected procurement transaction amount for 2026 is RMB 5.7 billion, a year-over-year increase of over 3.8 times. The company continues to increase R&D efforts. Its LPDDR4 products and new D4 8Gb process products completed tape-out earlier this year and are expected to enter mass production in the second half. Driven by both capacity and price, the company is poised to fully benefit from the memory price increase cycle, leading to earnings release.
GIGADEVICE's NOR Flash products cover a capacity range from 512Kb to 2Gb, supporting various power supply types. It is one of the first companies to achieve large-scale mass production of 45nm node SPI NOR Flash, giving it a leading advantage. In 2024, it held an 18.5% global market share, ranking second globally and first in China. Benefiting from demand for AI agents, the industry is currently in a tight supply-demand balance, and prices are expected to continue rising throughout the year. Customized memory represents a new growth curve for the company. Some projects entered the customer sampling stage in the second half of 2025, including clients in automotive cockpits, AI PCs, and robotics. This segment will fully benefit from demand in the edge AI field, becoming a new growth point.
Beyond memory chips, the company's MCU and analog products also maintain steady growth. From 2023 to 2025, the business revenue CAGR was 30.5%, with its revenue contribution increasing from 22.86% to 24.4%. The company plans to develop AI MCU products integrated with NPUs, mainly targeting high value-added downstream scenarios such as automation, digital energy, and AIoT. It continues to deepen the layout of its MCU products in two high-growth fields: optical modules and power modules.
GIGADEVICE listed on the Hong Kong Stock Exchange in January this year. To date, its market capitalization has increased by 337.2%, and both its P/E and P/S valuations have risen significantly. However, considering growth, its dynamic valuations are 41.9x and 21.3x respectively, placing it in the middle to lower range among listed companies in the same sector in Hong Kong and the U.S. Furthermore, as a major customer of the leading domestic memory company ChangXin, it may attract capital interest influenced by ChangXin's planned listing on the STAR Market.
Overall, the memory chip price increase trend is not over. The rapid development of AI provides strong support for demand, while the global oligopoly stimulates accelerated domestic substitution. The upcoming listings of YMTC and ChangXin will present excellent investment opportunities for domestic memory chips. As a pure A+H play in the sector, GIGADEVICE reported doubled earnings in Q1 2026 and is expected to maintain high growth in the first half. Driven by price increases, earnings expectations, and its association with ChangXin, the company's short-to-medium-term valuation may reach a new level.
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