The primary driver behind strong earnings rise for memory chip-related companies is the explosive growth in AI demand, a Chinese expert said. As AI applications continue to expand across industries, the need for data storage and rapid data access has grown significantly, providing sustained support for memory chip sales.

On Friday evening, Shenzhen Longsys Electronics Co (Longsys) released earnings forecast for the first half of 2026, saying half-year earnings far exceeded expectations. The company expects net half-year profit to range from 9.2 billion yuan ($1.36 billion) to 11 billion yuan, representing a year-on-year increase of around 622- to 744-fold.

A breakdown by quarter shows that the Shenzhen-based technology company posted a net profit of 3.862 billion yuan in the first quarter, while net profit in the second quarter are expected to range from 5.338 billion to 7.138 billion yuan, representing a quarter-on-quarter increase of 38 percent to 84 percent.

The earnings surge was driven by strong demand in the global memory chip market. Rapid growth in AI boosted demand for data storage and fast access, while tight wafer supply supported selling prices, Xiang Ligang, a veteran telecom industry observer, told the Global Times on Sunday.

Longsys operates in the midstream segment of the memory chip chain. It procures wafers from upstream manufacturers such as Samsung, SK Hynix and Micron, and leverages its self-developed controller chips and firmware algorithms to carry out packaging, testing and product design before supplying downstream customers, the Economic Observer reported on Saturday. According to the report, the company's products cover consumer, enterprise, automotive and industrial-grade storage, with customers including smartphone makers, PC makers and internet companies.

Storage chip stock firm, China Electronics Port, also released earnings forecast, expecting net profit to reach 500 million to 530 million yuan in the first half of the year, up 176.43 percent to 193.01 percent year-on-year, the Securities Times reported on Friday.

The company said that strong demand from artificial intelligence, data centers and advanced computing drove sustained price increases in core products such as memory chips, significantly boosting revenue growth, the Securities Times said.

Global supply shortage in memory chips may persist as a report from Goldman Sachs indicates that the market is approaching the most severe supply shortage in 15 years. The key driver is the explosive growth in demand for AI servers, the Xinhua News Agency reported.

According to Goldman Sachs, AI servers account for more than 50 percent of total DRAM demand.

Positive earnings results from leading companies reflects the supply-demand dynamics in the market, with the A-share memory chip supply chain benefiting from this trend. Among 39 listed companies in the memory chip industry chain that have disclosed first-quarter results, 35 reported year-on-year revenue growth, with companies such as Shenzhen Techwinsemi Technology Co and Puya Semiconductor (Shanghai) Co all posting revenue growth of more than 200 percent year-on-year, Xinhua reported.

Rising earnings expectations for memory chips makers are partly driven by rising AI demand, Xiang said, noting that AI servers, data centers and edge AI applications in smartphones require large volumes of high-speed memory chips. Other factors, such as market speculation, have also contributed to rising expectations across the sector, the expert said.

As global supply continues to expand with major manufacturers ramping up capacity, prices of related products are expected to come down and supply-demand conditions are likely to rebalance by the end of this year or early next year, Xiang said.