The world of storage chips is witnessing a revival, breaking through the cold winter that has plagued the market for several yearsAs we step into 2024, the global semiconductor sector is showing signs of recovery, signaling a new dawn for storage chips, which play an integral role in our increasingly data-driven lives.

Industry forecasts project that by 2025, the global market for storage chips could potentially soar past the $200 billion markNot only does this reflect a growing demand, but it also indicates that the share of storage chips in the overall semiconductor market is expected to rise from 17.52% in 2023 to approximately 30% by 2025. This dramatic increase elucidates the crucial role that storage plays across various electronic fields such as smartphones, consumer electronics, and smart devices.

But what exactly are storage chips? Often referred to as memory devices, these chips utilize electrical energy to store dataTheir applications are vast, spanning across memory modules in computers, USB flash drives, and various consumer electronicsAs our reliance on data storage continues to multiply exponentially, the significance of these chips is increasingly undeniable.

Looking at the supply chain, the upstream components of storage chip manufacturing are comprised of semiconductor materials, equipment, and wafer fabricationThis includes vital elements like photoresists, photolithography machines, etchers, and assembly/testing proceduresDownstream, these components find their way into consumer electronics, automotive applications, and an array of IoT solutions leveraging artificial intelligence (AI).

In terms of classification, the most prominent storage chips currently available in the market fall into three primary categories: DRAM, NAND Flash, and NOR FlashDRAM is known for its low power consumption, cost-effectiveness, and compact size, making it a favorite for smartphones and serversIn contrast, NAND Flash is commonly used in high-capacity products like solid-state drives (SSDs), eMMC, and USB drives

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Finally, NOR Flash finds its niche in smart wearables and automotive electronics.

The competitive landscape for global storage chips is intense, given the substantial market opportunity at stakeIn 2023, DRAM dominated the storage market, making up approximately 55.9%, while NAND Flash accounted for about 44%. Key players such as Samsung, SK Hynix, and Micron dominate the DRAM market, together controlling around 95% of market share as of the second quarter of 2024. This concentration highlights the challenges facing newer entrants looking to carve out their own market share.

The same trend applies to NAND Flash, where the top five suppliers collectively command over 90% of the global marketSamsung, SK Hynix, and Kioxia are leading the charge with market shares of 34%, 21%, and 15%, respectivelyNotably, Chinese storage chip suppliers still hold a relatively minor share, yet they stand poised to gain significant ground as technology evolves and domestic manufacturing capabilities improve.

So, who are the key players in the domestic storage chip market in China? Among publicly traded companies, firms like Gigadevice, Jibo Technology, Beki Storage, and Dongxin Electronics have made notable strides in recent yearsAdditionally, newer entrants such as Yangtze Memory Technologies and ChangXin Storage are noteworthy for their rapid growth trajectories.

For example, Yangtze Memory Technologies made headlines by achieving mass production of 232-layer 3D NAND flash memory in 2022, and they followed it up by breaking through the 300-layer technical barrier in 2023. Meanwhile, ChangXin intends to debut DDR5 chips for mass production, further showcasing the advancement of technology in domestic supply chainsSuch developments suggest that Chinese companies are narrowing the technological gap with international giants and are on the brink of a resurgence in the global market.

One company that stands out for its growth potential is Gigadevice, given its strategic positioning and investments

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Their holdings of ChangXin Storage place them firmly among the industry leadersChangXin is recognized as China's largest DRAM manufacturer, primarily focusing on DDR4 chipsRecently, they launched an LPDDR5 series of DRAM products, which are undergoing validation on domestic smartphone brands such as Xiaomi and Transsion.

Before 2022, DDR4 chips dominated the market, but projections indicate that by 2026, DDR5 shipments could surpass 90% of total salesRecently, ChangXin has reportedly achieved mass production for DDR5 memory chips with a yield rate close to 80%. To put this achievement into perspective, only a handful of companies globally, namely Samsung, SK Hynix, and Micron, are currently capable of producing DDR5 chipsSuch advancements are undoubtedly a strong indication of the vitality within the Chinese semiconductor industry.

It is important to note the strong connections between Gigadevice and ChangXin StorageBoth companies share a pivotal figure—Zhu Yiming, who is the actual controlling person of Gigadevice and the chairman of ChangXin Technology, holding a significant 25.27% of voting rightsThis relationship places ChangXin at the forefront of China's DRAM sector, and as they ramp up production, Gigadevice is likely to benefit hugely.

An additional area of growth for Gigadevice is the automotive microcontroller (MCU) market, which is witnessing a surge due to increasing penetration of smart driving technologiesReports suggest that by 2024, the automotive MCU market could reach nearly $13.7 billion, representing an annual growth rate of 11.4%. At present, Gigadevice holds the top spot as a domestic producer of 32-bit Arm microcontrollers, with a successful track record of producing over 51 product series and more than 600 MCU products.

Summarizing the performance outlook for Gigadevice, the firm did experience a dip in revenue and profit in 2023 due to sector-wide inventory adjustmentsHowever, with a resurgence in market demand, the first three quarters of 2024 saw their revenue climb 28.6% year-on-year, reaching ¥5.65 billion, while net profit saw an astounding jump of 91.87% to ¥832 million

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