The mobile giant laments "pain," while this storage manufacturer’s profits surge by 429%

Ask AI · How does the inventory strategy of 佰维存储 balance growth with cash flow pressure?

21st Century Business Herald reporter Wu Jianan, Shenzhen report

The chip price-hike wave in the memory market is sweeping across the entire consumer electronics industry chain with unprecedented intensity. Recently, the price-hike expectations for branded smartphones such as OPPO and vivo have been realized one after another; even Xiaomi Group President Lu Weijiong said bluntly that “it’s really painful to carry.”

Fueled by an AI demand surge, this price-hike whirlwind has delivered a “V-shaped” turnaround in performance for China’s memory makers caught in the eye of the storm.

On March 20, 佰维存储 (688525.SH), a star company in China’s A-share memory sector, released an annual performance report that can only be described as “explosive.” Both revenue and net profit increased, with net profit up as much as 429% year over year, far exceeding market expectations.

“Memory industry recovery has driven a substantial growth in our business.” Regarding the reasons for the performance growth, 佰维存储 said that in 2025 the company closely seized opportunities from the upcycle, strongly expanded global top-tier customers, achieved breakthrough growth in both the market and business, saw a significant year-over-year increase in product sales volume, and generated a 68.82% year-over-year increase in operating revenue.

However, even as the industry recovered, the company still faced a trade-off between inventory and procurement, resulting in net cash flow from operating activities of -1.965 billion yuan during the reporting period.

As of the time of publication, on March 20, 佰维存储 fell 1.77%, to 238.88 yuan per share, with a total market value of 111.6 billion yuan.

Inventory growth: 122.44%

According to the company’s announcement, during the reporting period the company achieved operating revenue of 11.302 billion yuan, up sharply 68.82% year over year; it achieved net profit attributable to shareholders of listed companies of 853 million yuan, up 429.07% year over year.

For the growth in performance, the company stated that the main reason is that with the recovery of the memory industry, the company closely seized opportunities from the industry upcycle, strongly expanded global top-tier customers, achieved breakthrough growth in both the market and business, and saw a significant year-over-year increase in product sales volume.

佰维存储 is a leading independent semiconductor memory solutions provider for the AI era. Its main products and services include semiconductor memory solutions and advanced packaging and testing services. Application areas include intelligent mobile and AI emerging on-device storage, PC and enterprise-level storage, intelligent vehicles and other application storage, among others.

In the intelligent mobile segment, the company’s products have already entered the supply chains of well-known customers such as OPPO, VIVO, Honor, TRANSSION HOLDINGS, Motorola, HMD, ZTE, and TCL. In the PC segment, its SSD products are currently already in the supply chain of domestic and international well-known PC manufacturers such as Lenovo, Xiaomi, Acer, HP, and ASUS. In the intelligent vehicle segment, the company’s products have successfully entered the supply chains of more than 20 mainstream domestic OEMs and core Tier1 suppliers, and achieved batch delivery and large-scale sales of automotive-grade storage products.

In the AI emerging on-device segment, the company’s products are currently being used by well-known domestic and international companies such as Meta, Google, Alibaba, Xiaomi, Xiaotiantcai, Rokid, and Nebula Innovation on intelligent wearable devices including AI/AR glasses and smartwatches. In 2025, the company’s revenue from AI emerging on-device storage products was about 1.751 billion yuan; of this, revenue from AI glasses storage products was about 960 million yuan.

佰维存储 said that in 2026, as AI glasses scale up in volume, the company will deepen its collaboration with key customers such as Meta, which will drive continued growth in the company’s related memory product businesses.

In 2025, challenges and opportunities coexisted in the memory industry, and the market showed a notable “low first, then high” reversal trend. According to TrendForce data, due to the impact of periodic supply oversupply, in Q1 2025 the contract prices for NAND Flash and DRAM fell by about 15%-20% and 8%-13%, respectively, quarter over quarter; in the second half of 2025, as AI applications accelerated penetration, the supply-demand landscape reversed, driving a strong rebound in product prices—especially in Q4 2025, when the contract prices for NAND Flash and DRAM rose by about 33%-38% and 45%-50%, respectively, quarter over quarter.

佰维存储’s performance also followed suit with ups and downs. In 2025 Q1 and Q2, 佰维存储’s net profit attributable to shareholders of listed companies was a loss of 197 million yuan and 28 million yuan, respectively. In the second half, performance turned around: net profit attributable to shareholders of listed companies reached 256 million yuan in Q3 and 823 million yuan in Q4, respectively.

（2025 佰维存储 performance, image source/enterprise announcement）

佰维存储 said that facing a complex and ever-changing market environment, the company controlled inventory in the first half, and in the second half accurately grasped AI and semiconductor industry trends while making strategic inventory purchases, effectively ensuring rapid business growth and stable deliveries.

Previously, in its cooperation with major global memory wafer manufacturers, 佰维存储 continuously signed long-term supply agreements to lock in memory wafer capacity; against the backdrop of tight global capacity, it prioritized getting capacity support.

In terms of inventory buildup, as of the end of 2025, the company’s inventories were 7.868 billion yuan, up 122.44% compared with the end of 2024. By maintaining overall sufficient inventory, the company aims to support long-term stable operations.

Overall, the memory market scale remained highly favorable last year. According to TrendForce data, driven by the acceleration of AI-related applications and the continued growth in demand for computing and data center infrastructure, the global memory market saw strong growth in 2025, with the overall scale reaching 235.4 billion USD, up 45.7% year over year.

From the perspective of R&D investment, 佰维存储 has continued to increase R&D spending in areas such as solutions development, chip design, advanced packaging and testing, and testing equipment. In FY 2025, R&D expenses were 632 million yuan, up 41.34% year over year.

In particular, the company is stepping up investment in wafer-level advanced packaging and testing manufacturing projects. By enabling high-density fine-pitch fan-out packaging and vertical packaging through wafer-level packaging, it aims to alleviate the severe constraints that “the storage wall” and “the power-consumption wall” impose on further increases in computing power and to enable low-power computing in the AI era.

During the reporting period, the company has already invested 960 million yuan into the project; cumulative actual investment is 1.34 billion yuan. As disclosed, the project is steadily progressing sample-making and verification work according to the customers’ schedules. It plans to reach monthly production capacity of 5,000 wafers by the end of 2026 and increase to 10,000 wafers/month by the end of 2027. The company expects the project to contribute revenue starting from the end of 2026.

Domestic manufacturers face opportunities

In industry views, the semiconductor memory market in 2026 is expected to continue warming up.

The driving forces are clear. In 2026, major cloud service providers will continue with relatively aggressive capital expenditure plans, focusing on computing-center infrastructure dominated by AI servers, strengthening research and development of multi-modal AI large models, and deeply integrating with their respective core cloud service products. Combined with the continued expansion of emerging application scenarios such as AI edge devices, intelligent vehicles, and embodied intelligence, memory product prices are expected to maintain an upward trend, and the memory industry is expected to continue to rise.

CFM data shows that in 2026, potential NAND demand and DRAM demand from Microsoft, Google, Meta, AWS, and Oracle are expected to grow year over year by approximately 265% and 110%, respectively. North American CSP server storage demand is consuming a large amount of original equipment manufacturer capacity. Benefiting from strong demand from CSPs and OEMs, global shipments of AI servers grew rapidly in 2025, significantly increasing demand for HBM3E, DDR5, and enterprise SSDs.

According to TrendForce estimates, due to limited capacity and continuously growing demand, memory prices will keep rising. The market size for global memory in 2026 is expected to reach 551.6 billion USD, and will further grow to 842.7 billion USD in 2027. The CAGR from 2025 to 2027 is expected to be 89.2%.

While the industry outlook is broad, the stability of raw-material procurement and cost control are challenges that semiconductor memory R&D and packaging/testing integrated manufacturers represented by 佰维存储 must directly face.

The company’s core raw materials are NAND Flash and DRAM wafers. The global supply-demand structure for these impacts the company’s profitability. There are relatively few global manufacturers of memory wafer production, and expansion cycles are long. Capacity is mainly concentrated in a few wafer manufacturers such as Samsung, Micron, SK hynix, Kioxia, and Western Digital. This makes wafer production capacity relatively rigid. Meanwhile, demand in the downstream memory wafer market for electronic products can change faster, and downstream demand for AI-related applications may change rapidly as well.

Therefore, the memory wafer market is prone to temporary shortages or supply oversupply, which leads to frequent price fluctuations. 佰维存储 said directly that if memory wafer prices fluctuate significantly, the prices of the company’s products and profit margins may also experience substantial changes.

In addition, expected increases in wafer prices may prompt downstream players to stock up in the short term, while expectations of price declines may lead to delayed procurement. Both situations could exacerbate supply-demand imbalances and trigger further price volatility, thereby affecting the company’s profitability.

From 2022 to 2025, although the company’s operating revenue increased year over year, its net profit attributable to the parent company was 710 million yuan, -624 million yuan, 161 million yuan, and 853 million yuan, respectively—showing clear volatility. From 2022 to 2025, 佰维存储’s consolidated gross margin also showed volatility, at 13.73%, 1.71%, 18.19%, and 21.44%, respectively.

Because the market is also vulnerable to raw-material price fluctuations, the company faces a trade-off between inventory and procurement. From 2022 to 2025, the book value of the company’s inventories was 1.95 billion yuan, 3.55 billion yuan, 3.54 billion yuan, and 7.87 billion yuan, respectively. As a proportion of the company’s total assets, inventories accounted for 44.30%, 56.10%, 44.43%, and 50.70%, respectively.

A relatively large inventory scale ties up the company’s working capital to a certain extent. From 2022 to 2025, the net cash flows generated by the company’s operating activities were negative during all periods except 2024, when they were 530 million yuan. The net cash flows were -693 million yuan in 2022, -1.966 billion yuan in 2023, and -1.965 billion yuan in 2025.

佰维存储 said that the net cash flow from operating activities being negative is mainly because the company is in a phase of rapid development and implements strategic procurement strategies for key raw materials such as memory wafers; in the reporting period, the cash outlay for purchasing raw materials was high.

It is worth noting that the impact of overseas raw-material price volatility is expected to be improved through the penetration of domestic memory wafer manufacturers.

From the domestic market perspective, the localization rate of memory is low. According to TrendForce data, in 2025 the domestic DRAM share was about 5%, and the domestic NAND Flash chip market share was below 10%. The domestic memory industry still has significant room for development.

At present, domestic memory wafer manufacturers represented by Yangtze Memory and ChangXin Memory leverage the broad demand in the Chinese market and are facing historical opportunities in downstream customer onboarding and penetration-rate increases, further strengthening domestic memory supply capacity.

As the domestic memory industry chain gradually develops and becomes more complete, upstream wafer manufacturers’ capital operations and expansion schedules will increase the supply of domestic DRAM/NAND chips and also drive demand growth in packaging and testing, solutions, and other related segments. This creates development opportunities for semiconductor memory R&D and packaging/testing integrated manufacturers represented by 佰维存储.

“The company places a consistently high priority on building and managing its supply chain management system.” 佰维存储 said that on one hand, the company will continuously deepen strategic partnership relationships with global leading memory wafer manufacturers, and will secure upstream memory wafers through diversified measures such as signing long-term supply agreements. On the other hand, the company will rely on end-market demand orientation to dynamically optimize cooperation and communication mechanisms with original manufacturers, actively seek more favorable capacity quota allocation, and thus support the company’s business growth.