New Stock Outlook | Four major dividends boost performance release acceleration, can Ingenic Semiconductor (300223.SZ) go to Hong Kong for a "scarcity" price reevaluation?

The global storage market is booming, with the three major DRAM manufacturers collectively entering the "trillion-dollar market value club." On May 26th, Micron Technology, Inc. (MU.US) surged by 19.29% in a single day, surpassing a market value of $1 trillion and becoming the second storage giant to achieve this milestone after Samsung Electronics. Following this, on May 27th, SK Hynix soared again by over 10% in midday trading, firmly establishing its market value at the trillion-dollar mark. Behind the collective trillion-dollar market value of the three major manufacturers lies the market's reevaluation of storage from a "cyclical stock" to a scarce bottleneck in AI infrastructure. This "revaluation" is not just happening to the giants - when the narrative of storage evolves from bulk commodity price fluctuations to issues of capacity allocation and global supply security, it will lead to a reevaluation of the value of companies throughout the entire industry chain. The key lies in who can turn the winds of the era in their favor within their ecosystem and turn it into a stepping stone for crossing class boundaries. One of the most direct overflow effects of this storage supercycle is the surge of A-share storage companies towards the "A+H" dual-listing trend. GigaDevice Semiconductor Inc. and leading memory interface manufacturer Montage Technology saw strong stock performance after listing in Hong Kong, with even a rare phenomenon of "Hong Kong stock valuation surpassing A-share valuation"; following them, Biwin Storage Technology, Shenzhen Longsys Electronics, and Ingenic Semiconductor joined the race. Ingenic Semiconductor submitted its second IPO application to the Hong Kong Stock Exchange on May 26th, with Guotai Haitong as the exclusive sponsor. As a global "storage+computing+analog" chip provider, Ingenic Semiconductor does not engage in the fierce competition in the front line but rather focuses on the high-reliability niche areas with strict access and long certification processes. The company has successfully positioned itself in the global leading positions - ranking first in automotive grade SRAM, fifth and fourth in automotive grade DRAM and NOR Flash, respectively. Additionally, the company is among the top three in the end-side visual SoC segment, particularly dominating the battery class IPC market. In the background of A-share storage companies achieving strong premiums in the Hong Kong stock market, providing a new path for "valuation counterattack" for A-share storage companies, the question for Ingenic Semiconductor, which has just submitted its listing application for the second time, is both an opportunity and a challenge: can Ingenic Semiconductor impress international capital and achieve a reshaping and leap in valuation in the Hong Kong stock market with its leading positions in multiple niche markets. With a diverse income structure, the resonance of three factors drives a significant increase in performance Ingenic Semiconductor's business model mainly focuses on chip research and design without owning a wafer fab, while collaborating with leading foundries and packaging and testing companies to ensure outstanding manufacturing levels and business scalability. The company offers integrated solutions combining chips, hardware, software, tool chains, and algorithms to serve various application scenarios. Looking at the product structure, Ingenic Semiconductor's product portfolio covers three main product lines: storage chips, computing chips, and analog chips. By 2025, the revenue share of these three product lines was 61.4%, 27.28%, and 10.67%, respectively, with storage chips accounting for the majority. In terms of downstream application scenarios, by 2025, Ingenic Semiconductor's revenue from the automotive, industrial medical, consumer, and other sectors accounted for 33.5%, 23.6%, 35.1%, and 7.8%, respectively. While Ingenic Semiconductor holds a leading position in multiple niche products in the automotive grade sector, the company's revenue structure is relatively diverse and does not overly rely on a single application scenario. In terms of performance, with the sustained high prosperity of the storage cycle, Ingenic Semiconductor's performance has started to gradually improve. By 2025, Ingenic Semiconductor's revenue was 4.741 billion yuan, a year-on-year increase of 12.54%, with adjusted net profit of 431 million yuan, a year-on-year increase of 5.31%. The growth in annual performance was mainly driven by the fourth quarter, where Ingenic Semiconductor's revenue increased by 28.98% to 1.305 billion yuan, and non-GAAP net profit attributable to shareholders increased by 108 million yuan, a year-on-year increase of 1889.45%, successfully achieving a bottom-up recovery at the quarterly level. In the first quarter of 2026, Ingenic Semiconductor's performance growth accelerated once again. In the quarter, Ingenic Semiconductor's revenue increased by 47.12% to 1.56 billion yuan, with non-GAAP net profit of 312 million yuan, a year-on-year increase of 370.58% and a quarter-on-quarter increase of 188.89%, surpassing the full-year non-GAAP net profit of 309 million yuan in 2025. The accelerated performance in the first quarter of 2026 for Ingenic Semiconductor is a result of the resonance of three factors - "increase in ASP to expand gross profit margins x release of operating leverage x trough improvement from a low base". Benefiting from the rapid rise in wafer/packaging and testing costs and smooth transmission to downstream customers, this has driven the increase in ASP and boosted revenue and gross profit levels. Specifically, the revenue growth for storage chips was 53.63%, with a gross margin of 38.89%, an increase of 6.94 percentage points year-on-year; computing chip revenue growth was 49.09%, with a gross margin of 51.90%, an increase of 21.04 percentage points year-on-year; and analog and interconnect chip revenue growth was 11.02%, with a gross margin of 50.88%, remaining relatively stable. With a significant increase in revenue and improvement in gross profit margins, the real lever to triple profit elasticity for Ingenic Semiconductor was the operating leverage on the expense side - in the first quarter of 2026, total expenses increased by only about 4.2% year-on-year, with the expense rate reduced from 27.73% in the same period last year to 19.64% (-8.09 percentage points) - this means that while revenue is increasing, the fixed R&D and management expenses are being diluted faster, leading to a significant amplifier effect on profit release. In addition, the low base from the first quarter of 2025, which was still at the bottom of destocking/cyclical trough, naturally widened the year-on-year growth. The acceleration of performance driven by the four major dividends, with the supply side "reflexivity" becoming the most core risk While the storage industry is a typical cyclical industry, this current market trend is not a simple repetition of history. Since the start of this storage trend in the third quarter of 2025, the underlying DRIVE has shifted from the traditional "supply-demand mismatch" to the "predatory occupation of advanced process capacity by AI computing power". The three major manufacturers (Samsung/SK Hynix/Micron) have allocated over 80% of their advanced capacity to HBM, DDR5, and enterprise SSD, essentially strategically surrendering capacity expansion in mature processes and niche categories. This structural "capacity squeeze" has led to a far greater intensity and sustainability of price elasticity in the niche storage market under supply rigidity constraints than in the past. For Ingenic Semiconductor, the opportunity in this current storage supercycle lies not in competing with Samsung/SK Hynix for HBM, but in the fact that after the major manufacturers "abandoned the low end for the high end," it seized the "price increase elasticity + intelligent incremental growth + market share improvement + domestic substitution" in the high-barrier, low-alternative, and supply-rigid niche market of automotive grade storage. The restoration of pricing power for automotive grade DRAM due to this "capacity squeeze" will be the biggest source of alpha for Ingenic Semiconductor in this cycle. After the major manufacturers gave up low-end production capacity, the supply elasticity of automotive-grade DDR3/DDR4 chips was significantly reduced, with automotive customers showing greater tolerance for prices and longer validation barriers, laying a solid foundation for a significant price increase. While the supply-side rigidity boosts product price increases, structural growth on the demand side will continue to solidify the company's fundamentals. With ADAS transitioning from L2 to L3/L4, storage capacity per vehicle has doubled, and the demand for LPDDR4LPDDR5 bandwidth and capacity in intelligent cockpits and automated driving domain controllers is on a continuous upward trajectory, driving the "quantity and price rise" of in-vehicle storage through automotive intelligence. Ingenic Semiconductor is the only domestic enterprise with a full lineup of mass-produced automotive-grade LPDDR4/4X chips, with LPDDR5 in research and a complete product system. Additionally, the company's products cover over 70% of the world's leading automakers (such as Tesla, Volkswagen, BYD Company Limited, etc.) and with the lengthy automotive Grade certification process lasting 2-3 years, it is expected to continue benefiting from the progress in automotive intelligence and steadily increase its market share. Furthermore, Ingenic Semiconductor's automotive product line is expected to continue benefiting from the structural window of domestic substitution. Currently, the domestic localization rate of automotive-grade storage in China remains low - especially in automotive DRAM, where Micron alone holds about 40-45% market share, and Samsung and SK Hynix together account for over 40%, with the top three overseas giants controlling 90% of the supply. In the current geopolitical environment and supply chain security concerns, domestic automakers and tier-one suppliers have a strong demand for diversified supply sources, leading to a significant acceleration in the adoption of certified domestic solutions. Ingenic Semiconductor is the most qualified and with the highest barriers among the domestic manufacturers in this window, being the only Chinese storage company covering a full range of automotive-grade SRAM+DRAM (including LPDDR4/4X) + NOR Flash and possessing a complete global automotive-grade customer certification system. Therefore, it naturally occupies a leading position in the migration wave of secondary suppliers. At the same time, the second growth curve for Ingenic Semiconductor, computing chips, is expected to benefit from the price boost in the "capacity squeeze" cycle, and the company is currently actively expanding into the printer, LED display, and other markets, accelerating the opening up of AIOT growth space. The company is also increasing its research and development investment in end-side computing power, extending its product line to include AI MCU categories. Despite the high-growth and strong predictability of Ingenic Semiconductor, there are several potential factors that could impact the release of the company's performance that investors need to focus on. First and foremost is whether wafer capacity can be adequately guaranteed. The pace of Ingenic Semiconductor's performance release is mainly constrained by the supply side rather than the demand side. After major manufacturers abandoned lower-end production capacities, there is a continued tightness in wafer capacity in the market, and the availability of capacity directly determines the speed of performance release. In the past two years, Ingenic Semiconductor has added three DRAM foundries to further increase upstream capacity, but it remains to be seen whether they can be released smoothly, as it usually takes several quarters from signing foundry cooperation agreements to stable migration of automotive-grade chips (yield, reliability, customer re-certification acceptance, cost curve). Before this migration is completed, the contribution to performance release is more of "increasing the ceiling" rather than "increasing profit immediately," which is also the area where investors are most likely to overestimate the timeline. Secondly, the market needs to be rational about the price transmission pace of automotive-grade storage. Unlike consumer-grade storage's immediate and flexible price adjustments, automotive-grade products are subject to long-term agreements and price adjustments need to be executed gradually and in batches within existing frameworks, making the increase in pricing more gradual but sustainable over a longer period. Ingenic Semiconductor has stated that price increases for domestic customers in the first quarter of 2026 have already been implemented, and new price adjustments for overseas customers will be concentrated in the second and third quarters. It is expected that prices will continue to rise in subsequent quarters - meaning that the performance release will be of a continuous growth nature rather than a burst of growth. Furthermore, another significant yet often overlooked tail risk is the "reflexivity" on the supply side, which is the most easily masked yet the hardest core potential risk. The high prosperity of this current automotive grade DRAM cycle is essentially built on the "artificial gap" created by three major manufacturers strategically redirecting mature process capacity to HBM/DDR5. Once the industry logic reverses - whether it is the major manufacturers replenishing niche grade capacity for profit considerations, or domestic IDM such as Changxin and Changcun (original manufacturers with independent wafer fabs) significantly exceeding production expectations - it could rupture the existing supply-demand equilibrium. At that point, the logic of price power restoration brought about by "capacity squeeze" would collapse, and there would be a risk of the prosperity cycle being forcibly interrupted. This day will inevitably come.