GigaDevice 1Q26 Results Confirm Broad Pricing Upcycle; DRAM Now One-Third of Revenue

Core Conclusion

1Q26 revenue of Rmb4,188mn (+77% Q/Q, +119% Y/Y) beat consensus by 29%. Gross margin of 57.1% expanded 12.2ppt Q/Q, exceeding estimates by 11.8ppt. EPS of Rmb2.18 came in 81% above consensus. The magnitude of the beat was driven by a synchronized pricing recovery across all major product lines (DRAM, NOR, SLC NAND, MCU). DRAM revenue more than doubled sequentially and now constitutes roughly one-third of total sales. This step-change in earnings power is not yet reflected in street estimates. Management guides for continued DDR4 price increases through 2026 and 20% MCU revenue growth for the full year, both of which support further upside.

What the Market May Be Underestimating

The breadth and duration of the pricing upcycle are wider than anticipated. DRAM’s rapid ramp from a minor contributor to ~33% of revenue in a single quarter signals that the segment is transitioning from a diversification play to a primary growth engine. The 81% EPS beat implies consensus lags the pace of margin expansion by nearly a full quarter. DDR4/3 pricing momentum is expected to persist through 2026, and MCU revenue guidance of 20% may prove conservative given component-cost-driven price hikes that are being passed through.

Evidence Chain

DRAM: Revenue More Than Doubled Q/Q; Pricing Momentum Intact

DRAM revenue exceeded 100% Q/Q growth, reaching ~33% of total revenue mix.
Management expects DDR4 pricing to continue rising through the rest of 2026.
Small-density LPDDR4 and DDR4 8Gb products are on track for volume production in 2H26, providing a catalyst for further revenue expansion.
Investment implication: DRAM is shifting from a niche to a primary earnings driver, supporting a structural re-rating of GigaDevice.

NOR Flash: Volume-Driven Growth with Mild Price Tailwind

NOR revenue grew strongly Q/Q, driven by volume from automotive, optical modules, edge AI, and server end-markets.
A moderate price increase is expected to persist for the remainder of the year.
Investment implication: The combination of volume growth and stable pricing provides a supportive backdrop for margin sustainability across the NOR segment.

SLC NAND: Dual Drivers of Price Hike and 25% Volume Growth

Revenue increased Q/Q primarily from a price hike amid supply tightness, plus 25% Q/Q volume growth from capacity expansion.
8Gb SLC NAND has been sampled to overseas customers, opening a new revenue stream.
Investment implication: SLC NAND adds diversification and a second growth vector beyond DRAM and NOR, with overseas sampling as a leading indicator.

MCU: Reaccelerating Growth; Price Increases Offset Higher Component Costs

MCU revenue posted high Q/Q growth. Prices are rising directly due to higher component costs, which are being passed through.
Management expects full-year MCU revenue growth of 20%.
Investment implication: MCU is benefiting from market share gains in China and a pricing recovery that supports margin recovery. The 20% guidance may prove conservative if pricing momentum continues.

Key Risks

NOR down-cycle: Weaker end-market demand or inventory correction could reverse pricing gains in NOR Flash, which remains a significant product.
DRAM development delays: Yield issues or slower-than-expected ramp of LPDDR4/DDR4 8Gb volume production could cap upside from DRAM.
Competition in China: Intensifying competition in MCU or NOR markets from local players could limit pricing power and share gains.

Valuation & Trading Implications

Price target of Rmb348 implies 13% upside from current Rmb308.89. Valuation is based on a residual income model (COE 8.9%, terminal growth 3%). The 1Q26 beat and positive outlook support a re-rating. Key catalysts include further pricing announcements, DRAM product milestones (LPDDR4/DDR4 volume production in 2H26), and potential upward revisions to consensus estimates. Maintain Overweight.

GigaDevice 1Q26 Results Beat Estimates; Strong Pricing Power Across Products