On July 17th, leading memory interface chip company Montage Technology Co., Ltd. (A-share: 688008.SH H-share: 6809.HK) issued an announcement revealing 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 its Korean office regarding potential violations of antitrust regulations. This development coincides with a significant correction in the Memory Chip Index (Code: 980138.CNI), raising questions about the resilience of Montage Technology's price-to-earnings ratio, which exceeds 100 times.

In response to the investigation, Montage Technology stated that, as of the announcement date, neither the company nor its directors or employees have been charged with any misconduct by the prosecutors or any government authority, and operations are proceeding normally. An early market note from Minmetals Futures on July 17th suggested the investigation involves potential price-fixing of semiconductor components, also noting that Renesas Electronics and Rambus's Korean offices were similarly targeted.

South Korean Market's Crucial Role

According to the company's 2025 annual report, Montage Technology's domestic operating revenue was RMB 1.546 billion, accounting for 28.33% of the total, a year-on-year increase of 47.04%. Its international operating revenue reached RMB 3.901 billion, representing 71.49% of the total and growing 51.35% year-on-year. A supplementary H-share announcement indicated that revenue from South Korean clients in 2025 was approximately RMB 2.925 billion. This figure constitutes about 74.98% of its international revenue and roughly 53.70% of its total operating revenue, signifying that the South Korean market contributes over half of the company's income.

Historically, Montage Technology has heavily relied on overseas markets. International revenue accounted for 70.83% of total revenue in 2024, 84.02% in 2023, 66.86% in 2022, and 62.47% in 2021, marking five consecutive years where overseas markets contributed more than 50% of revenue.

From a product perspective, the company has two main lines. While its integrated circuit products are not classified as semiconductor components, its memory interface chips are considered components within the server/memory module context. Revenue from memory interface chips has shown rapid growth: RMB 5.139 billion in 2025 (up 53.43%), RMB 3.349 billion in 2024 (up 92.04%), RMB 2.185 billion in 2023 (down 20.11%), RMB 2.735 billion in 2022 (up 74.47%), and RMB 1.717 billion in 2021 (down 4.31%). This segment represents a fast-growing "second curve" for the company.

Furthermore, gross margins are consistently higher internationally and for the memory interface chip product line. International gross margins from 2021 to 2025 were 67.17%, 58.84%, 62.05%, 62.82%, and 66.04%, respectively, compared to domestic margins of 16.30%, 21.35%, 42.66%, 46.87%, and 52.79%. Similarly, memory interface chip product margins (66.72%, 58.72%, 61.36%, 62.66%, 65.57%) have generally exceeded those of integrated circuit products (48.08%, 46.43%, 59.00%, 58.20%, 62.28%) over the same period.

Given the strategic importance of the South Korean market and the memory interface chip product line, the market is paying close attention to the implications of this investigation. Founded in 2004 and headquartered in Shanghai, Montage Technology is a globally leading designer of data processing and interconnect chips, focusing on high-performance, low-power solutions for cloud computing and data centers. It listed on the STAR Market on July 22, 2019.

A Conservative Player in a Volatile Sector

As of July 17th, Montage Technology's A-shares fell 13.04%, reducing its total market capitalization to RMB 224.1 billion, while its H-shares dropped 8.47%, bringing its Hong Kong market cap to HKD 311.2 billion, despite net main fund inflows of RMB 78 million. On the same day, alongside the investigation notice, the company announced preliminary results for the first half of 2026 and a share buyback proposal from its Chairman and CEO, Yang Chonghe.

The preliminary results indicate H1 2026 revenue of approximately RMB 3.335 billion, a year-on-year increase of about 26.60%, with net profit attributable to shareholders projected between RMB 1.900 billion and RMB 2.100 billion, representing growth of 63.90% to 81.20%.

Historically, the company's financial performance has been stable. From 2021 to 2025, operating revenue was RMB 2.562 billion, RMB 3.672 billion, RMB 2.286 billion, RMB 3.639 billion, and RMB 5.456 billion, respectively, with corresponding net profits of RMB 829 million, RMB 1.299 billion, RMB 451 million, RMB 1.412 billion, and RMB 2.236 billion. The company has been profitable every year since its listing. As of Q1 2026, it reported revenue of RMB 1.461 billion, net profit of RMB 847 million, cash and equivalents of RMB 14.624 billion, financial assets at fair value of RMB 2.131 billion, receivables of RMB 620 million, and payables of RMB 247 million, indicating strong liquidity.

However, its A-share market performance since listing has been somewhat unexpected. Data shows that from its listing date on July 22, 2019, to September 18, 2024, the stock declined 32.61% cumulatively, with a maximum intra-period gain of 89.62% and an average daily turnover rate of 2.79%. This performance lagged behind the broader semiconductor sector during that period. In contrast, from September 18, 2024, to July 17, 2026, the stock surged 261.83% cumulatively, with a maximum gain of 602.42% and an average daily turnover of 3.62%, aligning more closely with the performance of the memory chip sector.

Among 41 memory chip component stocks, Montage Technology ranked 27th for cumulative performance and 34th for average daily turnover in the earlier period (July 22, 2019, to September 18, 2024). In the later bull market period (post-September 18, 2024), it improved to 22nd in performance and 31st in turnover. This trajectory differs from the typical "star company" narrative often associated with high foreign and institutional ownership, possibly linked to its conservative corporate strategy.

In its six years as a public company, Montage Technology has not engaged in any major external mergers or acquisitions. Instead, it has focused on endogenous growth through sustained R&D investment, launching new products like DDR5, PCIe Retimer, and CXL MXC chips. It has also pursued strategic collaborations, such as the joint development of the Jintide server platform with Intel and Tsinghua University, and made investments in the industry chain through industrial funds and direct investments. This self-reliant approach, building a moat through proprietary core technologies and participation in international standard-setting, represents a minority path in the industry but may offer a sustainable model.

Montage Technology has established advantages in technology, market presence, and standards. The ongoing investigation in South Korea may serve as a critical test of its operational resilience. If the company demonstrates robust compliance, its valuation endurance could be noteworthy, especially during a sector-wide correction. The semiconductor industry is no stranger to hype cycles, but true value lies in companies capable of sustained growth long after the prevailing winds have shifted.