GigaDevice: Memory product volume-price synergy drives gross margin expansion
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GigaDevice: Memory product volume-price synergy drives gross margin expansion
Nomura maintained its Buy rating on GigaDevice and raised its target price from CNY262 to CNY321, mainly on the back of rising memory prices, product portfolio expansion, and upward revisions to 2026 earnings forecasts.
- 2025 revenue was CNY9.2bn, up 25.1% year on year; net profit was CNY1.65bn, up 49.5% year on year.
- 4Q25 revenue was CNY2.37bn, up 39.0% year on year and down 11.5% quarter on quarter; net profit was CNY560mn, up 108.9% year on year and 11.2% quarter on quarter.
- 4Q25 gross margin rose 4.2 percentage points quarter on quarter to 44.9%, driven by price increases in niche DRAM and SLC NAND.
- NOR Flash prices also started rising from early 2026, and the report expects volume-price synergy across the entire memory portfolio.
- Nomura raised its 2026-27 revenue forecasts by 3%/6%, gross margin forecasts by 4.3/1.9 percentage points, and net profit forecasts by 29%/19%.
Report interpretation
Overview
This report is Nomura's company research and rating adjustment note on GigaDevice. Its core conclusion is that, as pricing improves for niche DRAM, SLC NAND, and NOR Flash, the company's memory business is entering a volume-price synergy phase and gross margin expansion has begun to show. Based on 2025 results and upward revisions to 2026 earnings outlook, Nomura maintained its Buy rating and raised the target price from CNY262 to CNY321.
Core views
The report believes GigaDevice's memory chip portfolio now covers three major product lines: NOR Flash, SLC NAND, and niche DRAM, serving consumer electronics, industrial, communications, and automotive applications. Although 4Q25 revenue declined quarter on quarter due to a high base from the traditional third-quarter peak season, gross margin improved significantly, showing that the earnings-quality lift from better pricing is being realized. After NOR Flash entered a price-up cycle in 2026, the company is expected to achieve simultaneous improvements in both volume and pricing across more memory categories, thereby driving earnings growth above peers.
Analysis framework
The report combines performance review, product-mix analysis, price-cycle assessment, earnings forecast revisions, and relative valuation. It first evaluates the 2025 annual results and 4Q25 performance, then analyzes memory product coverage, edge AI application breakthroughs, and related procurement plans, and finally derives the target price using 2026F EPS and target P/E.
Methodology notes
The target price is derived by multiplying 2026F EPS of CNY4.02 by the 80x target P/E.
The 80x target P/E is above the peer group 2026E average P/E of 76x because the report believes the company's earnings growth may outpace peers and that market expectations for the development potential of new businesses such as customized memory are relatively high.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- 603986.SSresearch coverage; A-share semiconductor memory chip company
- Strengths
- Covers NOR Flash, SLC NAND, and niche DRAM with a complete product matrix; 4Q25 gross margin has already expanded meaningfully; edge AI scenarios including AI phones, AI PCs, and robots have seen project breakthroughs.
- Weaknesses
- In the short term, the share price is under pressure from global tech-sector weakness and geopolitical uncertainty, and it has underperformed the CSI 300 by 11.1 percentage points over the past month.
- Comparison
- The target P/E is 80x, above the peer group 2026E average P/E of 76x; the report believes the company's earnings growth may be faster than peers.
- Risks
- Macroeconomic and industry volatility, supply chain disruptions, talent attrition, and foreign exchange risk.
Key data
- 2025 revenueCNY9.2bnUp 25.1% year on year.
- 2025 gross margin40.2%Up 2.2 percentage points year on year.
- 2025 net profitCNY1.65bnUp 49.5% year on year.
- 4Q25 revenueCNY2.37bnUp 39.0% year on year and down 11.5% quarter on quarter.
- 4Q25 net profitCNY560mnUp 108.9% year on year and 11.2% quarter on quarter.
- 4Q25 gross margin44.9%Up 4.2 percentage points quarter on quarter.
- 2026F EPSCNY4.02Previous forecast was CNY3.28.
- Target priceCNY321Previously CNY262, implying 25.9% upside.
- Current implied valuation63.4x 2026F P/EThe report says the stock is currently trading at this implied P/E.
Impact & implications
If the upward trend in memory prices continues and drives volume-price synergy across the full product line, GigaDevice's 2026 revenue, gross margin, and net profit may improve further. The report's upward earnings revisions and above-peer target P/E reflect a positive view on the company's memory-cycle leverage and the growth potential of new businesses.
Risks
- Macroeconomic and industry volatility may affect demand, pricing, and the realization of earnings forecasts.
- Supply chain disruptions may affect production, delivery, and costs.
- Talent attrition may weaken R&D and execution capabilities.
- Foreign exchange risk may affect financial performance.
- Global tech-sector and geopolitical uncertainty may continue to weigh on valuation and market sentiment.
What to watch
- Whether the upward cycle in NOR Flash prices can continue.
- Whether price increases in niche DRAM and SLC NAND continue to pass through into gross margin.
- Progress in the rollout of 8GB DDR4 and the revenue contribution from LPDDR4.
- Project execution by CreMemory Technology in edge AI scenarios such as AI phones, AI PCs, and robots.
- The implementation of the company's CNY5.71bn 2026F dedicated DRAM brand foundry procurement plan.
- Whether the company's 2026F EPS of CNY4.02 and gross margin uplift assumptions can be delivered.