Shares of Montage Technology Co.,Ltd. (ASX: 688008) and MONTAGE TECH (ASX: 06809) experienced a significant decline in both the A-share and H-share markets. The A-share price dropped 16.44% to close at 211.13 yuan, bringing the company's total market capitalization to 257.7 billion yuan. Over the past five trading days, the A-share has fallen more than 20%. The H-share price fell 22.95%, with a cumulative decline of nearly 30% over the same period.

Reports indicate that the integrated circuit design company, along with the South Korean offices of Japan's Renesas Electronics and America's Rambus, were subject to surprise raids by South Korean prosecutors. The investigation is related to alleged collusion in semiconductor component pricing.

A person familiar with the matter confirmed the incident, stating that the company is actively communicating with South Korean authorities to understand the full situation. The source suggested the stock price decline was partly due to the investigation and partly due to broader weak market conditions. Relevant departments are now verifying the details.

Company's Official Response

In the evening, the company issued three separate announcements. The first confirmed that the Seoul Central District Prosecutors' Office conducted an on-site search and evidence collection at its South Korean office on July 15th regarding a potential violation of anti-monopoly regulations. The company stated it is fully cooperating with the investigation.

As of the announcement date, neither the company nor its directors and employees have been charged with any wrongdoing by the prosecutors or any government agency. Operations remain normal, and the company continues to focus on product development and customer service. Given the early stage of the investigation, the duration and outcome cannot be predicted. The company pledged to follow developments and fulfill disclosure obligations.

Strong Earnings Projection

In a second announcement, the company provided a voluntary forecast for the first half of 2026. It expects revenue of approximately 3.335 billion yuan, a year-on-year increase of about 26.6%. Net profit attributable to shareholders is projected to be between 1.9 billion and 2.1 billion yuan, representing growth of 63.9% to 81.2%.

The company attributed the strong performance to robust industry demand driven by AI trends. Key factors include increased shipments of DDR5 RCD chips, particularly the third and fourth-generation products, and significant revenue growth from new interconnect chip products like MRCD/MDB, PCIe Retimer, CKD, and CXLMXC. Revenue from the interconnect chip product line reached approximately 3.111 billion yuan in H1 2026, up about 26.4% year-on-year. The profit increase was driven by growth in operating revenue, gross profit, investment income, and gains from changes in fair value.

Share Buyback Proposal

In a third announcement, Chairman and CEO Yang Chonghe proposed a share repurchase plan for the company's A-shares. The proposal suggests using the company's own funds to repurchase between 300 million and 600 million yuan worth of shares via centralized bidding. The repurchase price would not exceed 150% of the average trading price of the A-shares over the 30 trading days prior to the board's approval of the resolution. The repurchase period would be three months from the date of board approval.

Recent Analyst Action

It is noteworthy that on July 9th, Bernstein raised its price target for the company's A-shares from 220 yuan to 400 yuan and for its H-shares from 320 Hong Kong dollars to 520 Hong Kong dollars, maintaining an "Outperform" rating.

Company Background

Founded in 2004, Montage Technology is a leading global fabless integrated circuit design company. It is dedicated to providing innovative, reliable, and energy-efficient interconnect solutions for cloud computing and AI infrastructure. Its current product lines include interconnect chips and the Jintide® server platform.