Single-season net profit increased by 1105%, and this storage manufacturer is still stepping on the gas.

The surge in storage prices has mostly benefited module manufacturers, but Demingli has not “taken off” much, as its net profit growth for 2025 is not outstanding.

Recently, Demingli, one of the “three heroes” of domestic storage chips, announced its 2025 financial report, achieving a net profit of 688 million yuan, with a growth rate of 96.35%. In the same period, Biwei Storage’s net profit skyrocketed by 429.07%, while Jiangbolong’s projected net profit growth range is also between 150.66% and 210.82%.

Data source: Announcement

The slow growth in net profit is due to Demingli’s failure to capitalize on this wave of “immense wealth” promptly. However, through adjusting its product matrix, actively managing inventory, and significantly expanding production capacity, it is expected to secure more “tickets” in the supply chain by 2026.

On March 23, Demingli announced its stock option assessment goals, stating that revenue in 2026 should not be less than 20 billion yuan. This expectation nearly doubles the 10.7 billion yuan performance of 2025, indicating a high probability of explosive growth in this year’s performance.

This also fueled Demingli’s popularity in the capital market. On March 25, Demingli’s stock rose over 7.3%, closing at 375.17 yuan, hitting a historical high and pushing its market value beyond 85 billion yuan.

High Inventory as an Entry Ticket

The recent widespread price increase in storage products is simple to explain: the rapid development of AI has driven up demand for memory due to soaring computing power. Meanwhile, major overseas manufacturers like Micron, Samsung, and SK Hynix have shifted DDR4 capacity to DDR5 and HBM, reducing mid- to low-end capacity and consequently increasing related product prices.

In addition to the three overseas giants reaping substantial profits, domestic storage players like Demingli have also periodically benefited from this wave of dividends. After purchasing storage chips from upstream, they engage in packaging, testing, and producing SSDs, memory sticks, and embedded storage chips, then selling them to downstream smartphone manufacturers, PC manufacturers, and server manufacturers.

In just the fourth quarter of 2025, Demingli’s net profit reached 719 million yuan, a staggering year-on-year increase of 1105.46% and a quarter-on-quarter growth of 687.29%, surpassing the total profit for 2025.

However, in terms of growth rate, Demingli’s net profit release rhythm is relatively slow, which is closely related to its business and product structure.

According to the financial report data, before the arrival of the “storage super cycle” in 2025, Demingli mainly sold mobile storage products, such as consumer-grade SSDs, which are not standard for AI data centers, thus missing the fast lane.

However, starting from the third quarter of last year, enterprise-grade SSDs required by AI data centers began to be rolled out and entered the supply chains of several major clients, significantly boosting revenue. This also explains why Demingli incurred losses of over 100 million yuan in the first two quarters of 2025 but managed to turn a profit of 600 million yuan for the entire year.

Additionally, embedded storage also constitutes a basic revenue foundation. This product mainly targets edge devices in the AI era, such as advanced driver-assistance systems, AR/VR devices, and other AI terminals, which are also consuming storage at an astonishing rate. By 2025, Demingli’s LPDDR4X and LPDDR5/5X products had already achieved mass production and shipping.

This means that besides the surge in storage prices, Demingli also has the story of being an AI glasses supplier to sell to the market, opening up new ceilings.

In contrast, Jiangbolong and Biwei Storage have consistently maintained a large-capacity SSD matrix, and their proactive inventory management has allowed these two companies to release profits more quickly.

Another deeper reason affecting net profit is that Demingli is more “daring” with its inventory, betting that storage prices will continue to rise in 2026.

As of the end of 2025, Demingli’s inventory on the books reached 7.058 billion yuan, accounting for 65.05% of total assets. In comparison, Jiangbolong and Biwei Storage had these figures at 43.67% and 43.17%, respectively.

In many past years, the storage chip market has exhibited a cyclical rule of iron: good for two years, bad for two years. When prices begin to rise, those with high inventory are more likely to secure wafer capacity from upstream.

Thus, Demingli’s “aggressive” inventory management appears to be a proactive strategy, aimed at obtaining an “entry ticket” into the supply chains of major clients.

From Demingli’s perspective, the rapid increase in inventory value since 2023, particularly in raw materials and semi-finished products, is mainly due to the company’s strategic reserves based on business development needs, customer demand, and market conditions.

Demingli’s confidence also stems from the positive expectations of various stakeholders in the industry. A recent tracking report on the storage chip industry published by Nomura Securities indicates that this round of the “storage super cycle” will last at least until 2027, and meaningful new supply will not emerge until early 2028 at the earliest.

Therefore, in its financial report, Demingli’s provision for inventory depreciation is only 0.5%. Out of the 7 billion yuan in inventory, only 0.36 million yuan is accounted for as inventory depreciation losses, with the 0.5% provision ratio significantly lower than that of its peers. In contrast, Jiangbolong and Biwei Storage’s provisions for inventory depreciation for the first three quarters of 2025 were 1.75% and 5.05%, respectively.

This ratio is not baseless, reflecting Demingli’s confidence in an order explosion in 2026, which can also be glimpsed from its inventory structure and contract liabilities.

Looking at Demingli’s latest growing inventory, it consists more of semi-finished products and in-transit materials, focusing on the latter part of the product lifecycle. By the end of 2025, Demingli’s semi-finished products alone reached 2.539 billion yuan, a year-on-year increase of 166.42%.

These inventories are already quite close to the order shipment stage. By the end of 2025, Demingli’s contract liabilities reached 624 million yuan, up from only 34 million yuan the previous year, corresponding to high inventory. If they can be quickly converted into delivery orders, they will soon contribute to revenue in 2026.

Expansion Bet

With the backing of the super cycle, the “three heroes” of domestic storage are all focusing on expansion.

On March 7, Demingli released a revised proposal for its 3.2 billion yuan private placement project, with the raised funds mainly used for new solid-state drive and memory stick production capacity, as well as an investment of 1.17 billion yuan to establish a new R&D headquarters.

At the same time, Jiangbolong also announced plans to raise no more than 3.7 billion yuan for the research and development of AI high-end storage, master control chips, and packaging and testing construction. Biwei Storage completed a 1.9 billion yuan private placement in the first half of 2025, further increasing its packaging and testing capacity in Huizhou. According to estimates, the production capacity after investment is expected to double from the current approximately 300,000 pieces per year to 600,000 pieces per year.

From a timing perspective, expansion projects typically take at least 2-3 years from initiation to production, so this round of concentrated expansion by the “three heroes” of domestic storage is aimed at meeting the needs of the next dividend cycle. However, whether the investment will succeed ultimately depends on whether the storage market is still in an upward phase when the new capacity comes online.

The good news is that Demingli’s expansion this time has a relatively high degree of certainty, primarily targeting the memory stick business. In 2025, its revenue from memory sticks grew over 200%. If combined with the newly raised capacity of 6.9 million memory sticks from the fundraising project, it will cover mainstream specifications like DDR5 and LPDDR5X. If it can establish deep ties with upstream Yangtze Memory and Changxin Memory, it is expected to directly benefit from domestic substitution.

However, market trends are often unpredictable. If the market experiences a downturn after production, there is a risk of unsold inventory, which will pose a significant test for Demingli’s financing and inventory management. After all, its net cash flow from operating activities has consistently been negative and is trending worse. From 2021 to 2025, Demingli’s net cash flow from operating activities was 11 million yuan, -331 million yuan, -1.015 billion yuan, -1.263 billion yuan, and -2.241 billion yuan, respectively.

This also forces Demingli to shift from a “consumer-grade assembly factory model” to a more resilient “enterprise-level storage solution provider,” gathering more AI dividends to “stop the bleeding and regenerate.” This is reflected in its proactive investment in R&D.

Looking ahead, on the one hand, Demingli will increase its self-research investment in master control chips and algorithms, which are essential for the enterprise market. Customers in this field place great importance on security and stability; only with absolute self-research and control can they advance further in domestic adaptation, and profits will naturally rise.

On the flip side, the three overseas giants have become wealthy by providing the HBM chips crucial for AI, offering valuable experience and insights to the industry chain. Demingli also wants to share in the profits and has begun researching CXL protocols and HBM collaborative technologies to lay a solid foundation for the future high-end storage market.

(Edited by: Kang Jialin)

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