China’s Storage and Semiconductor Sector Sees Historic Growth Opportunity
China’s storage and semiconductor industry is experiencing explosive growth across the entire supply chain, with more than 80 percent of A-share semiconductor companies reporting positive first-half earnings forecasts, according to CCTV News. Industry analysts describe the moment as a historic inflection point, as the sector transitions from “following” to “running alongside” global leaders.
Earnings Explosion Across the Supply Chain
As of July 31, 55 A-share semiconductor companies had disclosed first-half earnings forecasts, with 46—or 83.64 percent—reporting turnaround, increase, or slight increase results. The surge spans the entire value chain, from storage module makers to chip distributors, chip designers, and packaging and testing firms.
Storage module maker Jiangsu Long expects first-half net profit of 9.2 to 11 billion yuan, up 62,204 to 74,394 percent year-over-year. Baiwei Storage projects net profit of 7 to 7.5 billion yuan, up 3,200 to 3,421 percent, while Demingli forecasts net profit of 5.7 to 6.5 billion yuan, a turnaround from a loss of 118 million yuan in the same period last year, as reported by 中新经纬. Chip designer GigaDevice expects revenue of approximately 11.5 billion yuan, up 177 percent, with net profit rising about 1,099 percent.
“The storage and semiconductor cycle has reached an accelerating upward inflection point,” said Hu Yang, chief electronics analyst at Southwest Securities. “More and more domestic semiconductor manufacturers are participating in various segments of semiconductor manufacturing, and many companies have delivered strong results on both the earnings and operational fronts.”
AI Reshapes Storage from Cyclical to Structural Growth
The current boom differs fundamentally from previous storage cycles. Data center demand for storage has jumped from just over 20 percent two years ago to more than 60 percent today, driven by the AI computing power explosion, according to Sun Rixin, president of the Shenzhen Memory Industry Association.
“In the past, storage products showed clear cyclical characteristics,” Sun said. “After the AI application explosion, data center demand for storage has jumped from just over 20 percent two years ago to over 60 percent now. The cyclical nature of storage is being transformed by AI-driven structural growth.”
This structural shift is reflected in unprecedented price movements. Q1 2026 conventional DRAM contract prices rose 90-95 percent quarter-over-quarter, while NAND Flash prices rose 55-60 percent in the same period. Q2 prices continued their surge, with DRAM up 58-63 percent and NAND Flash up 70-75 percent quarter-over-quarter—increases not seen in over a decade of storage industry cycles, according to TrendForce data cited by Sina Finance.
The impact is cascading through the supply chain. A Dongguan-based chip mounting equipment company reported that first-half 2026 shipments doubled compared to the same period in 2025, prompting a 50 percent expansion of its production facility. An IC packaging substrate company executive noted that customers have shifted from small-batch rolling orders to large-volume purchases.
Equipment Localization Accelerates
China’s semiconductor equipment localization rate has been climbing steadily, rising from 16 percent in 2024 to 21 percent in 2025, with projections of 26 percent in 2026 and 43 percent by 2028, according to a Bernstein report cited by CCTV News.
Changxin Storage, China’s largest DRAM manufacturer, launched a new round of equipment bidding in Q2 2026 with an annual procurement budget of $5-6 billion, explicitly prioritizing domestic equipment. While the most advanced EUV lithography equipment still relies on overseas supply, most process equipment outside of lithography can now be sourced from domestic manufacturers.
One semiconductor packaging equipment company reported that domestic sales now account for 90 percent of total sales, reflecting the growing willingness of domestic storage companies to purchase domestic equipment. As noted by 投资界, the global wafer fab equipment market is projected to reach $135 billion in 2026, up from $110 billion in 2025—a 22.7 percent increase.
Changxin Storage’s Rise and the Road Ahead
Changxin Storage’s market share in DRAM has risen from 3 percent to 8 percent, ranking fourth globally, according to Counterpoint Research data cited by 21st Century Business Herald. The company expects first-half 2026 net profit exceeding 50 billion yuan and has announced a 29.5 billion yuan IPO fundraising plan on the STAR Market, as reported by 钛媒体. Tencent has signed a 20 billion yuan long-term supply agreement with Changxin for DRAM memory chips.
Industry observers see this as a systemic transformation rather than a temporary upswing. “In this upward cycle of storage and semiconductors, domestic semiconductor and storage capacity is climbing steadily, the localization rate of core components is rapidly improving, and advanced packaging levels are also rising,” said Hu Yang. “This represents a historic opportunity for China’s storage and semiconductor industry to transition from ‘following’ to ‘running alongside’ global leaders.”
What to Watch
Analysts expect the supply-demand gap in storage chips to persist at least through the end of 2027, with some projections extending through the first half of 2028. Key indicators to monitor include Changxin Storage’s IPO progress, Yangtze Memory’s planned production ramp to 300,000 wafers per month in the second half of 2026, and continued equipment localization rates.
“Only when the entire supply chain works together can domestic substitution move from single-point breakthroughs to systemic construction,” Sun Rixin emphasized. “True localization cannot rely on individual company breakthroughs alone, but on upstream and downstream co-iteration. It’s not just about installation rates, but also about utilization rates, yield rates, and the ability to support advanced processes.”
As China’s semiconductor industry moves from a “policy support period” to an “earnings realization period,” the sector’s trajectory will be shaped by how effectively it can sustain this momentum, deepen equipment localization, and close the remaining technology gap in advanced processes such as HBM. The coming quarters will reveal whether this historic opportunity translates into lasting global competitiveness.