The leading storage company with a valuation of hundreds of billions commits to 90% of its revenue.

Ask AI · Why is 佰维存储 locking in long-term supply at the high end of storage pricing?

Reporter Zheng Chenye

On the evening of March 24, one of the leading A-share storage sector companies—佰维存储 (688525.SH), with a market value already exceeding 8B yuan—issued an announcement stating that the company signed a storage wafer purchase contract with “a certain storage original equipment manufacturer (OEM).” The contract’s total value is $1.5 billion, which—at the exchange rate on the day—equates to about 10.3 billion yuan.

According to the announcement, the contract commits to a total purchase term of 24 months, from Q2 2026 through Q1 2028. Purchases are distributed evenly across eight quarters, with pricing locked in.

佰维存储 is a leading domestic storage module manufacturer. It listed on the STAR Market in 2022, and its full-year revenue for 2025 was 11.3B yuan. In other words, the amount of the above purchase contract is nearly the company’s full-year revenue for 2025. The announcement also explicitly states that the contract total amount is “more than 50% of the company’s audited operating revenue and total assets from the most recent accounting year.”

The market backdrop for this contract is that the current prices of storage wafers have rebounded sharply from the low point in Q1 2025. According to data from TrendForce, a well-known industry research institution, the NAND Flash (i.e., NAND flash memory, a type of non-volatile semiconductor memory) contract price in Q4 2025 rose quarter-over-quarter by 33% to 38%. Entering Q1 2026, the increase accelerated further, with a quarter-over-quarter gain exceeding 90%.

So why would 佰维存储 place such a heavy bet right now—signing a two-year long-term contract in one go?

A 10.3 billion yuan procurement contract

The announcement discloses the contract’s key terms. The subject is a certain type of storage wafer; the supplier’s name is exempt from disclosure due to commercial secrets. For each 12-month period, the purchase volume of this product accounts for 11.1% of 佰维存储’s total NAND Flash procurement in 2025. The contract sets the purchase price as locked unit pricing. Purchases are distributed evenly over eight quarters, effective from the date the authorized representatives of both parties sign, and to be fulfilled through March 31, 2028.

To understand this contract, first you need to understand the business model of storage module companies.

Storage module manufacturers occupy the middle position in the industrial chain. Their upstream includes wafer OEMs such as Samsung, SK hynix, Micron, Kioxia, Yangtze Memory, and others. These players control the main manufacturing capacity for storage wafers globally. Their downstream consists of end customers such as smartphone makers, PC makers, server makers, and other terminal clients.

Specifically for 佰维存储’s business, in short, it purchases NAND Flash and DRAM (dynamic random-access memory) wafers from upstream OEMs, then performs packaging and testing to produce storage products such as eMMC (embedded multimedia storage chips), UFS (universal flash storage chips), SSDs (solid-state drives), and memory modules, which are then sold to end customers.

For storage module companies, wafers are the most core raw material in their business model. 佰维存储’s 2025 annual report shows that direct material costs account for 94% of its operating costs. This also means that the wafer procurement price has a major impact on 佰维存储’s performance.

In the purchase contract disclosed by 佰维存储 on the evening of March 24, the two sets of figures, when viewed together, form a comparison. On one hand, the contract total is 10.3 billion yuan, close to about 90% of the company’s full-year revenue for 2025, and also exceeding 50% of the company’s revenue and total assets. On the other hand, within each 12-month period, the company’s procurement volume of this product accounts for 11.1% of its total NAND Flash procurement in 2025 and 18.01% of its NAND Flash sales volume. The announcement characterizes the latter as “the proportion is relatively small,” and says the contract locks in “part of the basic volume for the next 24 months.”

Based on its annual report, for all of 2025, 佰维存储 achieved revenue of 11.3B yuan, up 68.82% year over year; attributable net profit to the parent company was 853 million yuan, up 429%; attributable net profit to the parent company after deducting non-recurring gains and losses was 785 million yuan, up 1,072%; gross margin was 21.45%, up 3.04 percentage points from the prior year.

Looking at quarterly trends, 佰维存储’s 2025 operating performance was a curve that climbed out of losses: Q1 loss of 197 million yuan, Q2 loss of 28 million yuan, Q3 profit of 256 million yuan, and Q4 profit of 823 million yuan. Q4 single-quarter revenue was 4.73B yuan, accounting for 42% of full-year revenue.

If broken down by product line, embedded storage is its largest revenue source. In 2025, related revenue was 6.88B yuan, up 62.19%; PC storage revenue was 3.7B yuan, up 83%; automotive-grade storage has a smaller base but grew by 241%.

Entering 2026, 佰维存储’s revenue growth rate is even faster. According to the company’s disclosed performance forecast, for January to February 2026 the company expects to achieve revenue of 4.0 billion to 4.5 billion yuan, up 340% to 395% year over year; attributable net profit is expected to be 1.5 billion to 1.8 billion yuan.

The expected profit for the first two months of 2026 is 1.5 billion to 1.8 billion yuan. Using the upper limit, this figure is more than double its full-year 2025 attributable net profit of 853 million yuan.

In related announcements, 佰维存储 attributes this growth to “the sustained rise in DRAM/NAND prices driven by AI compute power and domestic substitution, with supply in the industry failing to meet demand.”

In terms of inventory and cash flow, as of the end of 2025, 佰维存储’s inventory was 7.87B yuan, up 122% from the end of the prior year; net cash flow from operating activities was -1.97B yuan, compared with 532 million yuan in the same period last year. The annual report attributes the negative cash flow to “increased operating procurement expenditures.”

Regarding supplier concentration, in 2025 佰维存储’s procurement spend with its top five suppliers was 8.67B yuan, accounting for 66.41% of its total procurement for the full year. Among them, procurement with its largest supplier was 3.84B yuan, accounting for 29.41% of its total procurement for the full year.

On March 20, 佰维存储 held its 2025 annual results and earnings call. In response to investor questions, company management said, “We will continue to do a good job executing LTA (Long-Term Agreement, long-term supply agreement) in 2026, and at the same time we will actively advance long-term procurement contracts to ensure supply resources.”

A few days later, this $1.5 billion contract was disclosed.

“Long-term contracts” have become an industry trend

The supply-and-demand landscape in the storage industry started to change clearly in the second half of 2025. Storage OEMs such as Samsung, SK hynix, and Micron redirected large amounts of advanced production capacity to HBM (high-bandwidth memory) to prioritize satisfying AI server demand; correspondingly, the capacity left for consumer-grade DRAM and NAND Flash shrank.

In this regard, Wang Xudong, a semiconductor analyst at Isaiah Consulting, told Economic Observer that in 2026 global storage capacity is expected to grow only 7% to 8% year over year. If the portion occupied by HBM is excluded, global DRAM capacity supply would decline by about 3% year over year.

According to Isaiah Consulting’s forecast, global AI-server-related chip sales in 2026 will reach $169 billion, up 55% year over year. In addition, according to TrendForce’s forecast, the global storage market size in 2026 will reach $551.6 billion.

With limited capacity expansion and continued demand growth, prices rise accordingly. TrendForce’s data shows that in Q4 2025 NAND contract prices rose 33% to 38% quarter over quarter, while DRAM contract prices rose 45% to 50% quarter over quarter. In Q1 2026, the NAND increase exceeded 90%, and DRAM increased by more than 50%.

Wang Xudong also said, “The tight supply situation in the global storage industry in 2026 will be difficult to relieve. Prices will keep rising, but the magnitude of later price increases may narrow.”

At the March 20 annual report earnings call, 佰维存储’s management’s view was similar to Wang Xudong’s: “This round of storage price hikes was triggered by the surge in AI compute power demand. The supply-demand gap is difficult to ease in the short term. The storage market remains relatively healthy this year.”

The reporter also noted that against the backdrop of improving industry conditions, “long-term contracts” are becoming a new industry trend. In the past, procurement in the storage industry was mainly short-term contracts; signing by quarter or by year was the norm. Prices moved with the market, and both the buyer and seller assumed their respective cycle risks. But now, from OEMs to end customers, the entire industrial chain is moving toward long-term contracts.

For example, on March 18, Micron Technology disclosed in its 2026 fiscal second-quarter earnings that the company’s first five-year strategic customer agreement had been revealed and also stated it was negotiating similar deals with several large customers. On the same day, Samsung Electronics co-CEO Jun Young-hyun also said at a shareholders’ meeting that the company is considering extending contract terms from quarterly or annual schedules to three to five years.

That is to say: recently, upstream OEMs are signing long-term contracts with cloud providers, and module makers are also signing long-term contracts with upstream OEMs. 佰维存储’s 10.3 billion yuan contract appears during the period when the storage industry chain collectively is shifting from short-term contracts to long-term contracts.

The company’s own demand side is also providing support for this contract. According to its annual report, the company’s fastest-growing business in 2025 was AI emerging edge storage, with full-year revenue of 1.75B yuan; among that, revenue from AI glasses storage products was about 960 million yuan, and the CAGR from 2023 to 2025 was 378%. According to data from Frost & Sullivan, based on related revenue for 2024, 佰维存储 has already become the world’s largest supplier of semiconductor storage solutions for AI emerging edge applications.

In its annual report, 佰维存储 mentioned that as AI glasses ramp up in volume, the company’s cooperation with customers such as Meta in 2026 will continue to deepen. The annual report also mentioned a detail: “The company’s important North American customers are also proactively participating in supply-chain coordination, actively communicating and coordinating with OEMs, and helping the company to prioritize obtaining capacity support in a context of tight global production capacity.”

At the earnings call mentioned above, 佰维存储’s management also said that long-term supply agreements involve purchasing on a quarter-by-quarter basis, with purchase prices likely to be higher, but product prices follow the market—“the price transmission path is relatively smooth.”

The contract announcement dated March 24 also disclosed related risks. The announcement pointed out that the market price and demand for the contract products may fluctuate during the contract term. Under conditions where purchase quantities, prices, and timing are locked in, if the NAND Flash market price falls or demand declines during the contract period, the company may incur losses. In addition, since the transaction currency is USD, exchange-rate fluctuations are also one of the risks.

In the storage module industry, Jiangbo Long (301308.SZ) and De Mingli (001309.SZ) are companies similar to 佰维存储, facing largely consistent upstream supply environments and downstream demand trends. But as of the time of this release, Jiangbo Long and De Mingli have not yet issued similar announcements regarding procurement contracts.

As of the close on March 25, 2026, 佰维存储 surged 9.44% that day. Its stock price gain for the year-to-date had already reached 120%, and its total market capitalization was 118.3 billion yuan.