GigaDevice's Stock Plunges from 846 Yuan to 364 Yuan, 330 Bn Yuan in Market Value Evaporated — What Happened? - YUAN TALKS
In just 22 trading days, GigaDevice Semiconductor lost 57% of its market value despite record first-half 2026 results, including an 11-fold increase in net profit and 177% revenue growth. The dramatic. . .
In just 22 trading days, GigaDevice Semiconductor lost 57% of its market value despite record first-half 2026 results, including an 11-fold increase in net profit and 177% revenue growth. The dramatic sell-off reflects a market that has shifted its focus from current earnings to fears that the AI-driven memory chip boom is approaching a cyclical peak. Investors were further unsettled by Chairman Zhu Yiming’s share sales and China Life Insurance’s well-timed reduction of its holdings, reinforcing concerns that insiders and institutional investors were taking profits near the top. ability has already been reached. On July 29, GigaDevice Semiconductor (603986. SH) suffered another sharp sell-off, with its shares closing 6. 81% lower at RMB 364. 03. Just 22 trading days earlier, on June 29, the stock had reached a record intraday high of RMB 846. 66. In little more than a month, it has tumbled 57%, wiping more than RMB 330 billion off the company’s market value and reducing its market capitalisation to approximately RMB 255. 5 billion. Ironically, on the very same day, another company associated with Chairman Zhu Yiming—ChangXin Memory Technologies (CXMT)—surged 12. 66%, adding about RMB 400 billion in market value in a single trading session. What has left the market even more puzzled is that GigaDevice’s own fundamentals remain exceptionally strong. On the evening of July 9, the company released its preliminary earnings forecast for the first half of 2026, projecting net profit attributable to shareholders of approximately RMB 6. 9 billion, representing a year-on-year increase of 1,099%; net profit excluding non-recurring items of approximately RMB 4. 85 billion, up 791%; and revenue of approximately RMB 7. 349 billion, an increase of 177% year on year. Such an explosive set of results nevertheless failed to stop the stock’s continued collapse. What market logic lies behind this apparent contradiction?From “King of Memory Chip Designers” to Super Bull StockAccording to public information, GigaDevice is the domestic leader in memory chip design. It is a leading fabless semiconductor company developing memory technologies, microcontrollers (MCUs), sensors, analogue products, and related solutions. Its four major product lines—NOR Flash, SLC NAND Flash, specialty DRAM, and MCUs—are all among China’s industry leaders. Its NOR Flash and MCU businesses rank among the world’s top three, earning it the reputation as the “king of memory chip designers. ”Beginning in February 2024, driven by the upturn in the global memory chip industry and demand from AI computing infrastructure, GigaDevice embarked on a spectacular bull run. Its share price climbed from RMB 54. 11 (adjusted for corporate actions) in February 2024 to an all-time intraday high of RMB 846. 66 on June 29 this year. Over just more than two years, the stock gained more than thirteenfold, with its peak market capitalisation approaching RMB 600 billion, making it one of the most representative high-flying semiconductor stocks in China’s A-share market. Yet the reversal from prosperity to decline came abruptly. On June 29, GigaDevice opened slightly lower before rallying to its record intraday high of RMB 846. 66. It then reversed course, and on July 1 fell 5. 27% after an intraday rebound, marking the beginning of the current collapse. The stock has declined almost continuously since then, closing at RMB 364. 03 on July 29, down 57% over 22 trading days, erasing an average of roughly RMB 15 billion in market value each trading day. Extreme Disconnect Between Fundamentals and Share PriceWhile the stock was in free fall, GigaDevice delivered what could only be described as a blockbuster first-half earnings report. On the evening of July 9, the company announced its preliminary results: first-half net profit attributable to shareholders was expected to reach approximately RMB 6. 9 billion, up around 1,099% year on year; net profit excluding non-recurring items was projected at approximately RMB 4. 85 billion, up around 791%; and revenue was expected to total approximately RMB 7. 349 billion, representing year-on-year growth of about 177%. The company explained that the profit surge was primarily driven by tight supply in the memory chip industry, leading to higher sales volumes and prices for its memory products, significantly boosting profitability. Meanwhile, MCU products benefited from demand in industrial, consumer, and automotive markets, with shipment volumes also recording solid growth, resulting in simultaneous improvements in both revenue and earnings quality. Yet this impressive earnings forecast failed to act as a “stop-loss” for the stock price. Following the announcement, GigaDevice’s shares stabilised only briefly before turning lower again. The market appeared almost immune to the positive news, reflecting investors’ deep concerns about the company’s future prospects. In fact, GigaDevice had already attempted to temper market expectations within the earnings announcement itself. The company explicitly warned:“The memory chip industry in which the Company operates has historically exhibited cyclical fluctuations. The Company’s future operating results may be affected by changes in industry supply and demand dynamics, and there exists the risk that future profitability may decline. The Company also holds investments classified as other non-current financial assets, and changes in their fair value generate gains or losses affecting non-recurring profit and loss. As the fair value of these securities fluctuates in the future, the Company’s net profit may also be correspondingly affected. ”This risk warning appears particularly meaningful at the present moment. The memory chip industry has always been characterised by pronounced cyclicality, with prosperity alternating with downturns. Is the booming environment of rising volumes and prices in the first half of 2026 the beginning of a new supercycle, or merely the final celebration at the top of the current cycle? The market appears to have chosen to believe the latter. Chairman’s Share Sales and Insurer’s “Perfect Exit”Behind the sharp decline in the stock price lies a series of well-timed share sales by key shareholders. On April 8 this year, GigaDevice announced that it had received a notice from Zhu Yiming regarding a planned share reduction. Due to personal funding needs, Zhu intended to reduce his holdings by no more than 11. 21 million shares—approximately 1. 60% of the company’s total share capital—through both open-market transactions and block trades between April 30 and July 29, 2026. Coincidentally, the final day of the reduction plan was exactly July 29. Between May 11 and May 25, Zhu sold approximately 6. 33 million shares through open-market and block trades, accounting for 0. 90% of the company’s total share capital. Following these transactions, the combined shareholding of Zhu and his concert party, Hong Kong Win Faith Limited, fell from 7. 90% to 7. 00%. The company also stated clearly: “The current share reduction plan has not yet been fully implemented. ” This means Zhu could still have continued selling shares during the more than two months between May 25 and the July 29 deadline. If the controlling shareholder’s sales already unsettled the market, China Life Insurance’s near-perfect exit was even more remarkable. On the evening of July 20, China Life disclosed that eight of its separately managed asset management accounts had sold approximately 1. 1097 million GigaDevice shares on July 8, realising around RMB 682 million. The shares were sold at average prices ranging from RMB 611. 46 to RMB 624. 61. At that time, GigaDevice’s stock had already retreated from its peak of RMB 843 to around RMB 600. Although China Life sold below the absolute high, compared with the closing price of RMB 364 on July 29, it still exited at an excellent price. From a timing perspective, China Life’s sale on July 8 came precisely during a brief rebound after the first leg of the stock’s plunge. The day after its sale, GigaDevice hit the daily upper trading limit, only to enter a prolonged decline thereafter. In hindsight, China Life’s sale above RMB 600 proved to be a textbook example of successful market timing. In addition, first-quarter data showed that as of the end of March, none of these eight China Life asset management accounts appeared among GigaDevice’s top ten circulating shareholders. This suggests the positions were likely accumulated during the second quarter, making them relatively short-term investments. After the stock’s substantial appreciation, the insurer quickly realised its gains, demonstrating the flexibility and risk discipline of insurance capital in equity investing. Can the Memory Chip Boom Continue?GigaDevice’s collapse is not an isolated event, but rather a concentrated expression of broader concerns about the memory chip industry’s cycle. From 2024 through the first half of 2026, the global memory chip industry experienced a supercycle driven by AI demand. Data centres’ surging demand for high-bandwidth memory (HBM), high-capacity solid-state drives (SSDs), and other memory products lifted both volumes and prices across the entire industry. As China’s leading designer of NOR Flash and MCUs, GigaDevice fully benefited from this cyclical boom. However, the highly cyclical nature of the memory industry means that the feast cannot last forever. Industry insiders believe that as the world’s major memory manufacturers gradually bring new production capacity online, supply-side pressures are beginning to build. Institutional data indicate that prices for certain categories of memory chips have already begun to soften, leading the market to adopt a more cautious outlook for supply and demand conditions in the second half of 2026 and into 2027. In its latest report, Morgan Stanley stated that the AI-driven “super celebration” in the memory industry is approaching a turning point. The bank expects memory contract prices to peak in the fourth quarter of 2026. Meanwhile, the proportion of earnings upgrades for memory manufacturers has declined from a peak of 92% to 77%, while the valuations of Samsung Electronics and SK Hynix have both retreated accordingly. It is precisely these concerns over a cyclical turning point that have led capital markets to interpret GigaDevice’s explosive earnings growth as a case of “good news already priced in. ” In investors’ eyes, first-half net profit of nearly RMB 7 billion and elevenfold year-on-year growth may represent the peak rate of earnings expansion during this cycle. Once the industry enters a downturn, slowing growth—or even declining earnings—is considered the more probable scenario. Notably, many institutions remain optimistic about the sustainability of the memory cycle. Guotai Haitong believes that the memory industry has shifted from merely being a beneficiary of AI computing investment to becoming the critical bottleneck constraining AI infrastructure. Structural shortages driven by AI demand continue across the entire supply chain, with the supply-demand gap still widening. A slower pace of price increases, they argue, does not necessarily indicate the cycle has peaked. They expect the current uptrend in pricing to continue through 2027, even though contract price increases are expected to moderate in the third quarter of 2026. Morgan Stanley likewise emphasised that structural constraints on HBM supply and ongoing AI capital expenditure will continue to provide support. Going forward, the fortunes of commodity DRAM and high-end memory products are expected to diverge further, with the industry exhibiting an extended cycle rather than a sudden collapse. When Super Bull Stock Meets Cyclical Turning Point“The story of GigaDevice losing RMB 330 billion in market value in just 22 trading days provides investors with a classic case study of how growth stocks interact with cyclical turning points,” said a veteran industry expert. From a fundamental perspective, the company’s first-half performance was nearly flawless: revenue rose 177% year on year, net profit increased elevenfold, memory chips enjoyed both higher prices and volumes, while the MCU business maintained solid growth. For almost any company, such figures would normally be sufficient to support a strong share price. However, capital markets often price the future rather than the present. After a stock has risen fourteenfold over two and a half years, its valuation may already fully reflect—or even overstate—the most optimistic earnings expectations. Once the market begins to question the sustainability of the cycle, even outstanding earnings may be insufficient to prevent investors from rushing to lock in profits. Chairman Zhu Yiming’s share reduction plan, together with China Life’s timely disposal of shares, sent signals that the market found difficult to ignore. When those who know the company best and institutions most focused on risk management are both choosing to reduce their exposure, ordinary investors may have reason to exercise greater caution. As of the close on July 29, GigaDevice’s shares stood at RMB 364. 03, down 57% from their peak. For investors who bought near the highs, those 22 trading days have been deeply painful. For China’s entire A-share semiconductor sector, GigaDevice’s experience serves as a warning: while enjoying the benefits of a supercycle, investors must also remain mindful of cyclical turning points. As GigaDevice itself stated in its earnings forecast: the memory chip industry is subject to cyclical fluctuations, and future profitability may decline. When such risk warnings come directly from the company itself, and when both the controlling shareholder and institutional investors are effectively “voting with their feet,” perhaps the most important thing ordinary investors can do is maintain a clear head amid the market’s euphoria.