兆易创新（A）：DRAM增长动力强劲及MCU/模拟份额提升，上调至买入

Upgrade to Buy on stronger DRAM growthmomentum and MCU/analog share gain Rating Change:BUY| PO:382.00 CNY| Price:265.09CNY Expectingan earnings upcycle led by DRAM expansionWe upgrade GigaDevice (GD) to Buy from Neutral given 1) stronger growth ahead for its DRAM business driven by price hikes and share gains, underpinned by a significantlyhigher connected party transaction quota (Rmb5.7bn in FY26E vs. Rmb1.16bn in FY25)with CXMT, 2) continued market share gain for its MCU and analog business throughnew product expansion. We expect GD to enter an earning upcycle driven by ameaningful scale-up of its DRAM business from 1Q-2Q26E, alongside GPM expansion. Inview of improved growth outlook, we raise our FY26-27E revenue / net earningsestimates by 19-30% / 65-66%. Accordingly, our PO is raised to Rmb382 (fromRmb282), based on 50x 2H26-1H27E P/E (prior 60x), in line with the average valuationof China fabless companies. Our PO implies 0.6x PEG ratio based on an 80% EPS CAGRin FY25-27E. NOR flashremains solid; DRAM to drive stronger growth Revenue from memory segment grew 26% YoY to Rmb6.6bn with the GPM expanding2.6ppts YoY to 42.8% in FY25. NOR flash biz. achieved stable growth in FY25 thanks tobetter demand from auto, industrial and price hikes starting from 2H25. DRAM acts asthe key growth driver with the industry-wide price hikes. The DRAM biz. contributedc.28% / c.20% of memory segment revenue / total revenue in FY25, per our estimate.GigaDevice announced that the connected party transaction quota regarding itspurchase of DRAM-related products from CXMT will be c.Rmb1.54bn / c.Rmb5.71bn in1H26E / 2026E (vs. Rmb1.16bn in 2025), which should support stronger rev rise ahead. SolidMCU/analog growth driven by share gainMCU segment achieved 13% YoY growth to Rmb1.9bn in FY25, mainly driven by shipment growth (+22% YoY). By sector, revenue from consumer electronics, industrial,auto and computing & storage all achieved positive YoY growth. Looking into FY26E, weexpect MCU segment to achieve c.15% YoY rev growth thanks to new product expansionespecially in auto and industrial. In addition, we expect 20% YoY revenue growth foranalog in FY26E supported by business synergies with the acquired Suzhou Xysemi. iQprofileSMGigaDevice (A) Company SectorSemiconductors Company Description Founded in 2005 and headquartered in Beijing, GigaDeviceoperates in fabless model and is the biggest local vendor inmainland China for NOR Flashand MCU. Its major productlines include flash memory, MCU and sensor. Investment Rationale We rate GigaDevice at Buy given (1) stronger growth of itsDRAM business on price hike and share gain, (2) solidrecovery of NOR from modest price hike and demandrecovery, (3) market share gain potential in China MCUmarket and promising long-term growth outlook for itsauto MCU business. Stock Data Price to Book Value7.6x DRAM business to become the key growth driverDRAM acts as the key growth driver with the industry-wide price hikes. The DRAM biz. contributed c.28% / c.20% of memory segment revenue / total revenue in FY25, per ourestimate. In addition, GigaDevice announced that the connected party transaction quotaregarding its purchase of DRAM-related products from CXMT will be c.Rmb1.54bn /c.Rmb5.71bn in 1H26E / 2026E (vs. Rmb1.16bn in 2025). We think DDR4 products willbe key revenue contributors in 1H26E before LPDDR4 products strongly ramp-up in2H26E. By assuming 50-60% gross profit margin for GD’s DRAM business, we expectmuch stronger DRAM revenue contribution in FY26E for GigaDevice, even afterassuming only modest contracted price rise for DDR4/DDR3 memory products. In detail,we project its DRAM revenue to reach Rmb7.6bn in FY26E (+c.3x YoY), accounting for49% of total revenue. Connected party transaction quota & actual realized amount (Rmb bn) for GigaDevice Exhibit4:We expect rising revenue contribution of DRAM businessin FY26-28E Exhibit5:Memory business contributed 76% of total gross profit inFY25 GigaDevice-gross profit breakdown by segment GigaDevice-revenue breakdown by segment GigaDevice - income statement forecast Memory upcycles to continueAccording to BofA Global Memory Tech Team (report on 5 Apr), the memory“super- cycle”is expected to continue into 2027-2028. Key catalysts should be tight chip supplyvs strongly rising AI chip demand. The capex is strongly rising, but actual chip productionvolume is unlikely to grow much even in 2027-28. Most chipmakers seem to beexpecting sub-20% annual bit growth (for DRAM and NAND) in 2028-30 even with newlyconstructed fabs. Exhibit8: DRAM spot price softened in 2H March after an exceptionally strong rally from Sept-25 to Jan-2026.DRAM price hit the highest levels in the past25 yearsas the current mainstream DRAM 16Gb DDR5 stood at US$38 and 16Gb DDR4 at $75 as chipmakers reallocated production to HBM andserver-grade DRAM. Previous high level was hit in Oct-17, but it was only $10 range.DRAM spot price–long-term trend (2000-2025) Glos