The surge in AI computing power is driving a corresponding boom in storage chip prices. On the first trading day of the new year, the three major A-share indices all rose, with the storage chip sector leading the charge. The sector leader, Gigadevice, saw its shares hit the daily limit-up on January 5th and continued its upward trajectory on January 6th.
The storage chip market is currently riding a wave of price increases, propelled by the AI computing revolution. This significant demand surge is not only reshaping the industry landscape but also foreshadowing a sustained upward market trend extending into 2026. The explosive growth in AI computing power is the core engine driving the massive increase in storage chip demand. As the scale of AI model training continues to expand, the requirements for data storage and processing capabilities are escalating daily. High Bandwidth Memory (HBM), a key technology for overcoming GPU bandwidth bottlenecks, is experiencing a sharp rise in demand. Fueled by robust AI demand, storage chip prices surged significantly in 2025. Data indicates that DDR4 16Gb prices soared by up to 1800%, while DDR5 16Gb prices increased by up to 500%. This powerful product price rally is a primary reason why the storage chip sector is favored by capital. Concurrently, enterprise-grade SSDs are comprehensively replacing traditional hard disk drives, accommodating the petabyte-level data storage required for training models with hundreds of billions of parameters, leading to a demand explosion amid persistently tightening supply. The recovery of the consumer electronics market also provides crucial support for storage chip demand growth. The rebound in storage requirements for end-products like smartphones and PCs, combined with the proliferation of autonomous driving technology in smart vehicles—where storage needs per vehicle can exceed 1TB—creates a multi-scenario demand resonance, propelling the overall storage chip market. Institutions are also optimistic about the future trajectory of storage chips. Guojin Securities stated in a recent report that the global storage chip market will remain in a state of short supply in 2026, with prices expected to continue rising. It forecasts DRAM bit supply growth of approximately 15% to 20% in 2026, while demand growth is projected to reach around 20% to 25%. Aijian Securities also pointed out that, benefiting from the sustained high demand for AI servers and the upgrade cycle for storage chip specifications in smartphones like the iPhone, the storage industry is embarking on a new development cycle, suggesting investors pay attention to investment opportunities in listed companies within the domestic storage industry chain. However, the storage chip market also faces numerous risks. The risk of a supply-demand reversal is not insignificant; if manufacturers expand production too rapidly or technological advancements lead to cost reductions, it could trigger a price war, causing prices to fall. Technological substitution is another potential hazard, as new storage technologies like PCM (Phase-Change Memory) could pose a challenge to the traditional storage market in the future, impacting the market position of existing storage chips.
As a leading domestic storage chip design company, Gigadevice's main business spans three areas: storage chips, microcontrollers (MCUs), and sensors, forming a dual-driver business structure centered on "Storage + Control." Looking at the core revenue structure, the storage chip business is the primary support for Gigadevice's revenue. Its 2025 interim report shows that storage chips accounted for 68.55% of the company's main business revenue, MCU business for 23.11%, and sensors for 4.65%. This structure highlights the central role of storage chips in the company's strategy, and with gross margins for both storage chips and MCUs exceeding 35%, they are also key drivers of profit growth.
Within the storage chip market, Gigadevice holds a leading industry position with its two main product lines: NOR Flash and niche DRAM. Public information indicates that Gigadevice is the world's top-ranked fabless Flash supplier and the top-ranked Arm-based general-purpose MCU supplier among Chinese brands. Building on its traditional strength in NOR Flash, Gigadevice has actively advanced new product lines in recent years in areas such as MCUs, niche DRAM, sensors, and analog chips. Through means like external mergers and acquisitions and internal incubation, these new businesses are accelerating their development, forming a diversified layout encompassing "Sensing, Storage, Computing, Control, and Connectivity." In the niche DRAM market, overseas giants like Samsung, SK Hynix, and Micron are gradually exiting the DDR3/DDR4 market as they shift capacity towards high-end HBM and DDR5, creating an opportunity for Gigadevice. By offering customized storage solutions and localized services, the company has rapidly captured market share, achieving both volume and price increases for its storage products.
The market recovery has also boosted Gigadevice's performance. Data shows that since 2025, Gigadevice's quarterly total operating revenue has grown for three consecutive reporting periods, with the company's Q3 2025 revenue reaching a recent high. Gigadevice reported Q3 2025 revenue of 2.681 billion yuan, a year-on-year increase of 31.40%; net profit was 508 million yuan, surging 61.13% year-on-year. For the first three quarters of 2025, revenue reached 6.832 billion yuan, up 20.92% year-on-year, while net profit was 1.083 billion yuan, an increase of 30.18% year-on-year. Simultaneously, the cash received from selling goods grew in tandem, and both inventory turnover and accounts receivable turnover rates improved significantly, reflecting strong market demand for Gigadevice's products.
Benefiting from improved performance and its status as a hot thematic stock, Gigadevice's share price also climbed throughout 2025, with a full-year gain exceeding 100%. Its dynamic P/E ratio reached 115 times, meaning that while Gigadevice at its highs attracts capital inflows, it also faces pressure from its historically elevated share price level. A high valuation implies that the market has lofty expectations for Gigadevice's future earnings growth. Should the company's actual performance fail to meet these market expectations, the share price would face adjustment pressure. Reviewing its historical performance reveals significant fluctuations, creating uncertainty about its ability to sustain high growth in the future. Looking back at Gigadevice's performance, volatility is quite evident. In 2023, the company's annual revenue was 5.761 billion yuan, down 29.14% year-on-year; net profit attributable to shareholders was 161 million yuan, plummeting 92.15% year-on-year. This performance decline was mainly attributed to weak end-market demand and fierce competition within the industry, leading to significant product price drops. However, Gigadevice's performance turned around in 2024 and continued its steady upward trend in 2025.
On the demand side, the storage chip market is significantly influenced by factors such as the macroeconomic environment and the consumer electronics market cycle. With the rapid development of emerging fields like AI, IoT, and automotive electronics, higher demands are being placed on storage chips. For AI at the edge, storage chips with low power consumption, high bandwidth, and high capacity are needed to support AI algorithm operation. In automotive electronics, automotive-grade chips require extremely high reliability and safety, involving long certification cycles and high barriers to entry. Although Gigadevice is actively expanding into these emerging areas—such as launching the automotive-grade GD32A MCU series and exploring customized storage solutions like near-memory computing—it still faces numerous challenges. For instance, in the automotive-grade chip market, Gigadevice must compete with established giants like Infineon and Renesas to increase its market share.
Amid the wave of surging AI computing demand, the storage chip market is experiencing vigorous growth. As a domestic industry leader, Gigadevice, leveraging its diversified business layout and keen market insight, has achieved record-breaking performance during the market upturn, with its share price climbing accordingly. However, the pressure from its high valuation looms large. Potential risks within the storage chip market itself, coupled with the challenges of competition in emerging fields, add uncertainty to its future development path.