Baiweiwei Storage Net Profit Increases Over 4 Times, 7.868 Billion in Inventory Betting on Recovery

In the new cycle of storage industry prosperity, storage manufacturers are experiencing a “profit recovery + demand explosion” double window period.

Recently, Beiwei Storage (SH688525) released its 2025 annual report, achieving operating revenue of 11.3 billion yuan, a year-on-year increase of 68.82%; net profit of 853 million yuan, a surge of 429.07% year-on-year. From a loss of 624 million yuan in 2023 to a profit of over 850 million yuan in 2025, the company has completed a performance turnaround in just two years.

Regarding profit growth, Beiwei Storage explained that one of the main reasons is that its representative storage products, such as ePOP (Embedded Storage Technology), have advantages like low power consumption, fast response, and lightweight design. These products are now used by companies like Meta, Google, Alibaba, Xiaomi, TianGai, Rokid, and Thunder Bird Innovation in AI (Artificial Intelligence)/AR (Augmented Reality) glasses, smartwatches, and other smart wearable devices. As AI glasses ramp up in 2026, and with deeper cooperation with key clients like Meta, the company’s smart wearable storage business will continue to grow.

However, while profits are soaring, Beiwei Storage’s cash flow pressure has also become a focus of external attention. In 2025, the net cash flow from operating activities was -1.965 billion yuan. The company explained that this was mainly due to increased operating procurement expenses, as “the company is in a rapid development stage, implementing strategic procurement strategies for key raw materials like storage wafers, resulting in high cash outflows for raw material purchases during the reporting period.” Data shows that by the end of 2025, the company’s inventory reached 7.868 billion yuan, a 122% increase year-on-year, accounting for about 50.70% of total assets.

Against the backdrop of industry-wide optimism about storage price hikes, many investors believe that inventory has become a key indicator of whether storage module companies can seize opportunities and expand profits. “You can see who is ahead in the price hike wave from inventory,” “Storage price increases basically depend on who has more inventory,” etc. During an upward price cycle, low-cost inventory can bring higher gross margins. However, industry attributes suggest that storage remains a cyclical industry, and inventory strategies test companies’ ability to predict industry cycles: if future storage prices rise less than expected, there is a risk of inventory devaluation or backlog.

Long-term high inventory levels

Public data shows that Beiwei Storage mainly engages in R&D, design, packaging, testing, manufacturing, and sales of semiconductor memory, with core products and services including semiconductor memory and advanced packaging and testing services. Semiconductor memory is divided into embedded storage, PC storage, automotive and industrial storage, enterprise storage, and mobile storage.

From an industry perspective, 2025 saw a significant “bottom-up, then rebound” reversal in the storage market. According to TrendForce, affected by temporary oversupply, NAND Flash and DRAM contract prices in Q1 2025 fell approximately 15-20% and 8-13% quarter-on-quarter, respectively. But in the second half of 2025, with accelerated AI application penetration, supply-demand dynamics reversed, driving product prices to rebound strongly. In Q4 2025, NAND Flash and DRAM contract prices increased approximately 33-38% and 45-50%, respectively.

Price increases are gradually passing through to end products, with several mobile phone brands raising prices to varying degrees.

In this context, Beiwei Storage’s various business segments all achieved different levels of growth. Among them, embedded storage, one of the company’s core businesses, achieved revenue of 6.878 billion yuan in 2025, with a gross margin of 22.13%, up 4.22 percentage points year-on-year. Its products have entered the supply chains of well-known clients such as OPPO, vivo, Honor, Transsion Holdings, Motorola, ZTE, and TCL in the smart mobile field.

In PC storage, the company achieved revenue of 3.695 billion yuan, with a gross margin of 18.99%, up 1.14 percentage points. In the pre-installed PC market, it supplies HP, Lenovo, Acer, Asus, Xiaomi, and other PC manufacturers. In contrast, the automotive and industrial storage segment generated 277 million yuan in revenue, with a gross margin of 27.51%, down 11.92 percentage points year-on-year.

In the enterprise (server) sector, Beiwei Storage has entered the core supply chain systems of leading OEMs, AI server manufacturers, and top internet companies, providing products like PCIe (high-speed expansion bus interface) and SSD (solid-state drives) in bulk. In the smart automotive field, the company has supplied over 20 domestic mainstream automakers and key Tier 1 suppliers, achieving mass delivery and sales of automotive-grade storage products.

It is worth noting that as AI demand continues to grow, the supply-demand relationship in the storage industry is becoming increasingly tight.

In this environment, many storage manufacturers are increasing inventories. Damingli (SZ001309) reported that by the end of 2025, its inventory reached 7.058 billion yuan, accounting for 65.05% of total assets. Beiwei Storage’s financial reports show that from 2022 to 2025, its inventory book values were 1.954 billion yuan, 3.552 billion yuan, 3.537 billion yuan, and 7.868 billion yuan, respectively, accounting for 44.30%, 56.10%, 44.43%, and 50.70% of total assets.

High inventory levels also pose potential risks

Beiwei Storage stated in its financial report: “Currently, the company’s overall inventory is relatively sufficient. At the same time, the company is deepening cooperation with major global wafer manufacturers, continuously signing LTAs (Long-Term Agreements) to lock in storage wafer capacity. Major North American clients are also actively participating in supply chain coordination, communicating and coordinating with manufacturers to help the company prioritize capacity support amid global capacity tightness. This will enhance the company’s supply certainty for key raw materials.”

From an industry perspective, pre-stocking during price upcycles can indeed lock in low-cost inventory, improve future gross margins, and capture market share. However, from a risk management standpoint, high inventory also means large capital occupation, which can drag down cash flow and increase potential inventory devaluation risks.

Looking back at the previous storage cycle, in 2023, due to declines in shipments of smartphones and laptops, the storage chip market entered a down cycle. Gartner reports that 2023 was a relatively difficult year for the semiconductor market, with memory markets experiencing significant revenue declines—global memory market shrank by 37%. Under these conditions, Beiwei Storage’s gross margin in 2023 fell by 11.97 percentage points year-on-year, to just 1.56%.

However, industry expectations for the current AI-driven storage price increase suggest a “super cycle” lasting several years. Wu Yating, Vice General Manager of TrendForce, noted that it takes at least two years from the announcement to the completion of a new factory, with the earliest new plants expected to be operational by late 2027. Production ramp-up also takes time, so the capacity shortage is unlikely to be effectively alleviated before the end of 2027. This provides some logical support for Beiwei Storage’s high inventory strategy, though its sustainability still depends on the continued industry prosperity.

In addition to operational data, management compensation changes have also attracted market attention. The financial report shows that in 2025, the pre-tax management compensation totaled 62.52 million yuan (compared to 22.36 million yuan in 2024).

From a governance perspective, the increase in compensation is directly related to the company’s high performance growth, reflecting a stronger incentive for core management during rapid expansion.

(Edited by: Zhang Yang HN080)

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