GigaDevice Sees 12x Profit Surge in First Half as Chinese Memory Chip Innovator

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GigaDevice Semiconductor, a leading Chinese designer of flash memory chips, anticipates a twelvefold increase in net profit during the first half of the year, fueled by rising memory chip prices driven by the artificial intelligence boom.

The company reported that its net profit likely soared by 1,099% to approximately CNY6.9 billion (around USD1 billion) for the six months ending June 30, compared to the previous year. Revenue is estimated to have jumped by 177%, reaching about CNY11.5 billion (USD1.7 billion).

Supply constraints in memory chips during the first half contributed to higher sales and increased product prices, boosting profit margins. The firm also noted that shipments of microcontroller products benefited from increasing demand across the industrial, consumer, and automotive sectors.

However, GigaDevice cautioned that the memory chip industry has traditionally experienced cyclical fluctuations, and future performance could be impacted by shifts in supply and demand, posing a potential risk to profitability.

Founded in 2005, GigaDevice specializes in designing flash memory chips and microcontrollers, operating as a fabless semiconductor company, meaning it focuses solely on chip design and outsources manufacturing to foundries.

As of today’s midday trading in Shanghai, GigaDevice’s stock was unchanged at CNY663.38 (USD97.84). Its shares listed in Hong Kong fell 7.1%, closing at HKD874 (USD111.50).

The company’s mainland stock hit a peak of CNY846.66 on June 29 but declined in seven successive trading sessions, dropping a total of 28%. Yesterday, the stock surged by the daily trading limit of 10% following the announcement of Chengxin Memory Technologies’ initial public offering (IPO) of CNY29.5 billion, expected to be the second-largest IPO on Shanghai’s Nasdaq-style Star Market.

GigaDevice’s founder, Zhu Yiming, led the establishment of CSMT in 2016, which has grown to become China’s only manufacturer capable of mass-producing dynamic random access memory (DRAM) wafers.