New Stock Outlook | Can Xintianxia Benefit from the Upturn in the Flash Memory Industry and Achieve Performance Reversal, Seize the Opportunity to Lay Out "AI+" to Break Free from Cyclical Constraints?

Since 2026, driven by the AI boom, flash memory has entered a new super cycle. Industry data shows that the global flash memory chip market was approximately $74.5 billion in 2025, and this figure is expected to surge to $264.4 billion this year, more than 2.5 times the previous year. The maturity and widespread application of AI technology undoubtedly serve as the key driver for the flash memory chip industry market. According to forecasts by relevant organizations, by 2030, the global flash memory chip market size will further expand to $538.5 billion, with a compound annual growth rate of 48.5% during the period from 2025 to 2030. Following the industry's economic cycle, Chipworld Technology Co., Ltd. (referred to as "Chipworld") submitted its listing application to the Hong Kong Stock Exchange for the second time this year. As a fabless storage chip supplier specializing in the development, design, and sales of code-type flash memory chips, Chipworld mainly provides code-type flash memory chips ranging from 1Mbit to 8Gbit in storage capacity to the market. According to Zhishi Consultancy, based on the revenue generated from code-type flash memory chips in 2025, Chipworld ranks fifth among all fabless companies worldwide. Performance fluctuates with the industry cycle The flash memory chip industry has a certain cyclicality, with a typical cycle lasting three to four years. The cyclicality of the flash memory chip industry is also reflected in Chipworld's financial data. From the revenue perspective, the company's operating income was 663 million, 442 million, and 519 million in 2023, 2024, and 2025, respectively. The revenue in 2024 fell by over 30% year-on-year, mainly due to the company's strategic decision to accelerate the digestion of inventory accumulated from a strategic procurement in 2023, leading to a 16.9% and 25.4% decline in the average selling price of NOR Flash and SLC NAND Flash products, respectively. In 2025, Chipworld's revenue hit a bottom and rebounded, but it is worth noting that the company's recovery lagged behind the industry: in 2024, the global flash memory chip market had already grown by 67% year-on-year, but Chipworld's revenue was still declining, creating a sharp contrast with the industry trend. In the first quarter of 2026, benefiting from the high industry prosperity, Chipworld's revenue further soared to 224 million, with a year-on-year growth rate of a staggering 77.4%. Among them, the revenue from SLC NAND products surged from 67.99 million in the same period of the previous year to 149 million, an increase of nearly 120%. Behind the explosive growth is the significant jump in the average selling price of the product from 3.89 per unit to 13.04 per unit, reflecting a severe imbalance in supply and demand caused by upstream wafer manufacturers cutting production capacity. The volatility of profitability is even more pronounced. Chipworld's gross profit was 103 million, 61.86 million, and 118 million in 2023, 2024, and 2025, respectively, with gross profit margins declining from 15.5% in 2023 to 14.0% in 2024, then rising to 22.8% in 2025, and soaring to 55.6% in the first quarter of 2026. The gross profit margin of SLC NAND products skyrocketed from 14.2% in Q1 2025 to 67.5% in Q1 2026, demonstrating the most direct manifestation of the "elastic dividend" given by the cyclical reversal. On the net profit level, Chipworld incurred a net loss of 14.03 million in 2023, which widened to 37.14 million in 2024. The turning point occurred in 2025 when the company achieved a net profit of 27.22 million, turning from loss to profit. In the first quarter of 2026, the quarterly net profit reached 75.89 million, with a net profit margin soaring to 33.9%. In terms of business model, Chipworld adopts a typical fabless model, outsourcing wafer manufacturing and testing. Sales are mainly through distribution channels, with distribution income accounting for 84.7%, 71.2%, and 83.4% in 2023, 2024, and 2025, respectively. By the end of the first quarter of this year, the company had a total of 83 distributors. This model helps the company penetrate the market quickly but also brings hidden concerns about channel management and customer concentration - by the first quarter of 2026, the revenue share of the top five customers had risen to 52.8%. Overall, Chipworld's performance curve clearly outlines the typical characteristics of a chip company deeply tied to the industry cycle: pressure during the downturn period and explosive growth during the upturn. The data from the first quarter of 2026 has already proven that when the cycle turns favorable, the company's profit elasticity is astonishing. However, the key issue is whether Chipworld, aiming to go public, can demonstrate its ability to navigate through the cycle, rather than relying solely on the "luck of the draw". The sustainability of growth remains to be tested Chipworld chose to knock on the door of the Hong Kong Stock Exchange at the industry's peak, but for investors, amidst the attractive chaos of various AI concept stocks, truly identifying a growth stock requires a comprehensive assessment of long-term growth potential from multiple dimensions. In terms of industry positioning, Chipworld holds a certain market position in the field of code-type flash memory chips. As mentioned earlier, based on revenue in 2025, the company ranks fifth among all fabless manufacturers worldwide. Its products have successfully entered the supply chain systems of the world's top five communication equipment manufacturers, three major OLED display device manufacturers, and three major household appliance manufacturers. This recognition from top customers itself forms a strong competitive barrier, as code-type flash memory chips have extremely high requirements for reliability and stability. Once customers complete product verification and implementation, the high cost of replacement often results in strong customer loyalty. On the technological front, Chipworld's independently developed enhanced flash programming technology can extend the erasure life of NOR Flash by 2 times; the 24nm process node of SLC NAND products reduces the area by 20% compared to mainstream products. The company is also one of the few domestic manufacturers that can meet customers' demands for NOR Flash and SLC NAND Flash products simultaneously. In addition, the company has successfully mass-produced a 2Gbit high-capacity SPI NOR Flash based on a 55nm process, breaking the monopoly of overseas manufacturers in high-end applications such as communication base stations and AI servers. More crucially, Chipworld is trying to break out of the role of a simple storage chip supplier. The prospectus reveals that the company has established a dual-drive strategy of "storage+" and "AI+" by expanding into analog chips and MCUs, building a more comprehensive product ecosystem on one hand, and deploying AI chips based on the new ReRAM storage medium for in-storage computing (CIM) on the other, attempting to directly execute AI inference tasks inside memory. If this strategy can be realized, Chipworld may be able to reshape its valuation logic from a "cyclical stock" to a "growth stock". However, the elasticity of the cycle and the resilience of internal growth are ultimately two different things. For Chipworld to achieve growth beyond the cycle, it still faces multiple challenges in the future: firstly, the sustainability of the industry supply-demand pattern is difficult to predict - the core drive of the current surge in SLC NAND prices is the supply contraction due to upstream capacity cuts; once major manufacturers resume production capacity or the industry enters a new round of expansion cycle, there is considerable uncertainty about whether the current ultra-high gross profit margin of 67.5% can be sustained. In addition, the strategic transformation still requires time for validation. The direction of "storage+" and "AI+" is indeed in line with industry trends, but from technical research and development to commercialization, and then to generating scalable revenue, there is a long validation period in between. Finally, the balance between R&D investment and short-term profitability will continue to test Chipworld; the company's R&D expenses decreased by over 40% from 2023 to 2025, in the rapidly evolving semiconductor industry, how to ensure that the company stays ahead in technology reserves while maintaining profit elasticity is a topic that the management team must face. For Chipworld, transitioning from a company deeply embedded in a strong cyclical industry to a growth-oriented enterprise with counter-cyclical capabilities may still be a long journey ahead. As for its listing on the Hong Kong stock market, whether it will become a key springboard for the company to reach new heights in the future, GMTEight will continue to keep an eye on it.