Key Takeaways
China's semiconductor sector posted its strongest half-year earnings on record, with storage chip maker Longsys reporting net profit surged as much as 74,400% as AI demand cascaded from cloud GPUs to edge devices.
China's semiconductor supply chain posted a collective earnings explosion for the first half of 2026, with storage chip maker Longsys leading a 74,400% net profit surge as AI demand cascaded from cloud GPUs to edge devices. At least a dozen companies across storage, GPU design, FPGA, testing equipment and advanced packaging all reported triple-digit profit growth in their semi-annual earnings previews released this month.
"AI demand for memory will keep the market in a state of tight supply and demand extending to 2028," a J.P. Morgan report said, citing server upgrades and high-bandwidth memory consumption. The bank's view echoes a broader industry reality: HBM's 3D-stacked structure consumes more than three times the wafer area of standard DRAM, and the three major memory makers have diverted clean-room resources toward HBM, squeezing general-purpose DRAM and NAND supply.
Longsys, a mid-stream memory module maker, expects net profit of 92 billion yuan to 110 billion yuan ($12.6 billion to $15.1 billion) for the six months ended June 30, up from roughly 148 million yuan a year earlier. Revenue is seen at 220 billion yuan to 250 billion yuan, up 116% to 145% year over year. The company locked in supply through long-term agreements with major wafer suppliers, securing scarce capacity as HBM expansion consumed fab resources. Rival Biwin Storage forecast net profit of 70 billion yuan to 75 billion yuan, up 3,200% to 3,422%, while GigaDevice posted a 1,099% profit jump to about 69 billion yuan on strength in NOR Flash and niche DRAM — categories that major overseas suppliers have been exiting.
Storage Dominates, But the Boom Is Broad
The earnings wave extended well beyond memory. GPU makers Haiguang Information and Moore Threads reported revenue growth of 56% to 70% and 135% to 149%, respectively, signaling that domestic computing chips are moving beyond "backup" status to capture real AI inference workloads. China's AI chip market is projected to grow from 142.5 billion yuan in 2024 to 1.3 trillion yuan by 2029, a compound annual growth rate of 54%, according to Frost & Sullivan.
FPGA and SoC makers also posted standout results. Fudan Microelectronics forecast net profit of 8 billion yuan to 10 billion yuan, up 313% to 416%, as its FPGA products (reprogrammable chips used in edge AI inference) saw surging demand from industrial automation and smart devices. Rockchip and Allwinner, two leading system-on-chip designers, reported profit gains of 60% to 71% and 195% to 220%, respectively, as AI workloads migrated from cloud-only to edge and terminal devices.
Equipment and Packaging Ride the Wave
Testing equipment maker Changchuan Technology forecast net profit of 9 billion yuan to 10 billion yuan, up 111% to 134%, benefiting from three simultaneous cycles: AI chip testing, memory chip testing driven by domestic memory makers' capacity expansion, and advanced packaging testing for Chiplet and CoWoS architectures. SEMI data shows the global semiconductor equipment market is projected to grow from $116.6 billion in 2024 to $155.6 billion by 2027, with test equipment growing at a 21.1% compound rate — the fastest segment.
Advanced packaging emerged as another profit center. Tongfu Microelectronics, which counts a major global AI chip maker as its anchor customer, forecast net profit of 16 billion yuan to 18 billion yuan, up 288% to 337%. Huatian Technology posted a 231% to 275% profit gain. The bottleneck in CoWoS packaging — TSMC's capacity shortfall exceeded 30% in early 2026 — has pushed packaging prices up across the industry, with ASE Technology and others announcing 30% price increases on advanced packaging services.
The question for investors is whether this pace is sustainable. The product cycle transition from 800G to 1.6T optical interconnects, the pace of cloud vendor capital expenditure in the second half, and the potential for technology route changes in co-packaged optics all introduce variables. But for now, the income statements are speaking louder than any narrative: China's semiconductor supply chain is converting AI demand into real revenue at a scale that few predicted even 12 months ago.
This article is for informational purposes only and does not constitute investment advice.
