Domestically developed AI large models are gaining pricing power—will the industry chain undergo a r

阿尔法工场

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The moment of truth has arrived for Montage Technology.

Lead: Strong earnings guidance and an overseas investigation hit on the same day.

July 16 was destined to be a turbulent day for $MONTAGE TECH (06809.HK)$ .

In the evening, an impressive earnings preview once again drew market attention to this core player in the AI supply chain.

According to the earnings preview, the company expects revenue of approximately RMB 3.335 billion for the first half of 2026, up roughly 26.6% year-over-year; net profit attributable to shareholders of the listed company is projected to reach RMB 19.00 billion to RMB 21.00 billion, representing a year-over-year increase of 63.9% to 81.2%.

Revenue growth and profit improvement continue, with benefits from the new round of AI infrastructure investment still being realized.

However, on the same evening, another piece of news instantly cooled market sentiment.

The company announced that the Fair Trade Investigation Department of the Seoul Central District Prosecutors’ Office in South Korea conducted an on-site search and evidence collection at Montage Technology’s Korean office regarding potential violations of antitrust regulations. The company has not received any allegations from the prosecutors’ office or any government agency accusing it or its directors and employees of misconduct, and operations remain normal.

On one hand, earnings continue to surge; on the other, uncertainty has suddenly emerged.

The capital market reacted swiftly and directly.

On July 16, $Montage Technology (688008.SH)$ the stock price plunged 16.44%, wiping out over RMB 50 billion in market value in a single day based on rough estimates.

Subsequently, Yang Chonghe, Chairman and CEO of the company, proposed a share repurchase plan worth between RMB 300 million and RMB 600 million in an effort to restore market confidence.

Within a single day, three key themes—earnings, investigation, and buyback—became intertwined.

Montage Technology now faces a severe test.

01 AI: The Making of Success

Over the past two years, Montage Technology has been defined by a single label: AI.

In the AI supply chain, NVIDIA provides GPUs, Taiwan Semiconductor handles advanced manufacturing, and Montage Technology occupies a position that is often overlooked yet indispensable: high-speed server interconnects.

The company’s core products are memory interface chips and complementary memory module chips. Simply put, within a server, high-speed data transmission between CPUs, GPUs, and memory relies on high-speed interconnect interfaces.

With the rapid growth in demand for AI large-model training and inference, servers now require greater memory capacity, higher speeds, and enhanced data throughput—making DDR5 a critical direction for industrial upgrading.

Montage Technology has perfectly aligned itself with this wave of technological transition.

According to data, in 2024, the company reported revenue of RMB 3.639 billion, up 59.2% year-over-year; net profit attributable to shareholders reached RMB 1.412 billion, surging 213.1% year-over-year. In 2025, the company maintained strong growth momentum, achieving revenue of RMB 5.456 billion, an increase of 49.94% year-over-year, and net profit attributable to shareholders of RMB 2.236 billion, up 58.35% year-over-year.

Excluding the impact of share-based compensation, the company’s net profit attributable to shareholders in 2025 reached RMB 2.647 billion, up 81% year-over-year—a remarkably impressive performance. The core drivers behind this growth were precisely the following: rising DDR5 adoption rates, growing demand for AI servers, and increased shipments of high-speed interconnect chips.

The company disclosed that in 2025, its interconnect chip product line generated RMB 5.139 billion in sales, an increase of 53.4% year-over-year, becoming its primary source of revenue.

In the first half of 2026, Montage Technology’s continued earnings growth followed the same underlying logic.

On one hand, as DDR5 adoption increases and successive generations continue to iterate, the company’s DDR5 RCD chip shipments have risen significantly, with third- and fourth-generation RCD chips accounting for a further increased share of total shipments. On the other hand, revenue from new products—including MRCD/MDB, PCIe Retimer, CKD, and CXL MXC chips—has grown notably.

Over the past two years, Montage Technology has benefited from a typical supply chain tailwind: AI server deployments have expanded rapidly, driving rising demand for server memory, and DDR5 has swiftly replaced DDR4.

As a key supplier, Montage Technology has naturally become one of the biggest beneficiaries.

02 A Question That Must Eventually Be Answered

Montage Technology’s business model closely resembles that of a 'shovel seller' in the semiconductor industry.

During a gold rush, those who consistently make money are rarely the prospectors themselves, but rather the sellers of tools.

The same holds true in the AI era.

The market pays attention to NVIDIA GPUs, as well as to server systems and optical modules.

Yet within the vast AI infrastructure ecosystem, there are numerous critical components—and memory interface chips are among them.

However, unlike GPUs—which determine the upper limit of computing power—memory interface chips primarily serve a connectivity function, though their importance is undeniable.

However, growth potential remains constrained by industry cycles.

NVIDIA sells more GPUs, cloud providers increase capital expenditures, demand for AI servers rises, server memory demand grows, and only then does this effect ultimately reach Montage Technology.

This is a complete industrial chain—any slowdown in growth at any link will affect final demand.

Therefore, the market’s core concern has already shifted.

In the past, the focus was whether AI had demand; now, the question is how long AI demand can sustain high-speed growth.

There is a pattern in the semiconductor industry: during the early stages of technological upgrades, leading companies often enjoy rapid growth, markets expand quickly, competitive dynamics remain unsettled, and profit margins stay relatively high.

As technologies mature, growth rates gradually normalize—and DDR5 is no exception. Fortunately, it is still in the penetration-boosting phase.

But in the future, once DDR5 becomes the standard configuration for servers, can the company still maintain its current growth pace? This is a question Montage Technology will inevitably have to answer.

03 Seeking a Second Growth Curve

For growth-oriented tech companies, the biggest risk isn’t slowing growth—it’s having only one growth curve.

Over the past two years, Montage Technology's first growth curve has been very clear: DDR5.

However, the company also recognizes that relying solely on a single technology cycle makes it difficult to sustain long-term growth.

Therefore, new directions are emerging: MRCD/MDB, PCIe Retimer, CKD, and CXL MXC.

Behind these products lies the increasingly complex high-speed interconnect requirements of AI servers.

As AI server architectures continue to evolve, the volume of data exchanges between GPUs, between GPUs and CPUs, and between chips and memory keeps expanding, elevating the importance of high-speed interconnects.

If these products can generate substantial revenue at scale, Montage Technology’s future growth narrative will shift—from a company benefiting from the DDR5 cycle to a platform provider for high-speed interconnects in AI infrastructure.

This is also the core reason why the market assigns the company a growth valuation.

However, challenges remain.

A large market opportunity does not guarantee that a company will capture it.

In the semiconductor industry, competition ultimately comes down to technology, customers, ecosystem, scale, and the ability to iterate continuously.

04 Re-evaluation

For capital markets, the greatest pressure on a high-quality company often stems not from poor past performance, but from having performed exceptionally well in the past.

When a company achieves high growth for multiple consecutive years, market expectations continue to rise.

At this point, investors no longer focus on whether there is growth, but on whether that growth can still exceed expectations.

Montage Technology is currently at this stage.

Over the past two years, the company has benefited from the AI boom, DDR5 adoption, rising server demand, and multiple expansion.

Looking ahead, the company must address three key questions.

First, how long will the DDR5 tailwind last?

If DDR5 penetration continues to increase, the company could sustain its growth; however, if the industry enters a mature phase, growth may slow.

Second, can new products take over the growth baton?

If products such as PCIe Retimers and high-performance interconnect chips achieve significant scale, the company could unlock new growth opportunities; otherwise, the market may reclassify it as a cyclical semiconductor company.

Third, can its global operations withstand scrutiny?

The incident is still under investigation, and the company has stated that its operations remain normal. However, for a globally oriented semiconductor company, changes in overseas regulatory environments could still affect market sentiment.

05 The Signal Behind the Buyback

Facing a sharp stock price correction, Montage Technology opted for a share repurchase.

On July 16, Yang Chonghe, Chairman and CEO of the company, proposed a share buyback plan worth between RMB 300 million and RMB 600 million.

For a company with a market capitalization exceeding RMB 260 billion, this amount is not decisive for its intrinsic value.

But what the market cares about is not the amount—it’s the signal.

Following a rapid pullback in the stock price, management used the buyback to express confidence in the company’s long-term value.

However, buybacks can only improve short-term sentiment; future fundamentals will ultimately determine valuation.

If, over the next few quarters, the company can consistently demonstrate strong AI demand, ongoing DDR5 adoption, and sustained revenue growth from new products, then this correction may simply be a temporary fluctuation within the growth stock cycle.

Conversely, if the AI industry enters a slowdown phase and new products fail to pick up the baton, valuation pressures will persist.

06 The Big Test

Over the past two years, Montage Technology has proven one thing: it successfully rode the AI wave.

But going forward, it needs to prove something else: that it can continue to grow even as industry tides shift.

If products such as MRCD/MDB, PCIe Retimer, and CXL successfully take over, the company could evolve from a beneficiary of the DDR5 era into a key chip platform player in the AI infrastructure era.

However, if growth remains primarily dependent on the DDR5 cycle, the company may revert to being viewed through the lens of a cyclical semiconductor stock.

Meanwhile, uncertainties stemming from the South Korean investigation have become an additional variable affecting current market sentiment.

For investors, what truly matters is not any single figure in the first-quarter or half-year report.

Rather, it’s how much AI-driven upside remains over the next year, whether a second growth curve can materialize, and if the company can sustain its position in global competition.

The semiconductor industry has never lacked for hype cycles; what’s truly scarce are companies that can sustain growth after the hype fades.

Moving from the DDR5 era into the age of AI-driven high-speed interconnects, Montage Technology is undergoing a critical transformation.

Whether this transformation will succeed remains to be seen—the answer will gradually emerge in the company's financial results over the coming quarters.

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