Memory price increases are lifting profits, while equity revaluation is boosting assets. Changxin Technology simultaneously serves as both supplier and investment target, testing the sustainability of these two income streams and the transparency of related-party transactions. In the first half of 2026, GigaDevice Semiconductor Inc. (ASX: 603986) reported net profit attributable to shareholders of 6.857 billion yuan, which is 4.16 times its full-year net profit for 2025. Two profit drivers jointly propelled the financial statements upward. Memory supply tightness generated operating profit, while upward revaluation of held semiconductor equity stakes produced investment income and equity appreciation. Both are backed by financial data, yet they should not be regarded as cash-realizable earnings of equal quality.

The memory business contributed 96.32% of incremental gross profit. First-half revenue reached 11.566 billion yuan, up 178.67% year-on-year. Non-GAAP net profit attributable to shareholders was 4.883 billion yuan, up 796.90% year-on-year. Net cash flow from operating activities was 6.048 billion yuan, up 531.47% year-on-year. The synchronized growth of cash inflows and non-GAAP profit proves that this round of operational improvement was not driven solely by financial asset valuation. What truly changed the earnings curve was the memory business. Memory chip revenue was 9.827 billion yuan, up 245.44% year-on-year. Gross profit was 6.641 billion yuan, with the gross margin jumping from approximately 38.50% in the prior-year period to 67.57%. Based on the company's main business composition and financial report calculations, the memory business contributed 96.32% of incremental gross profit in the first half. This was not the result of simultaneous upgrades across all chip products, but rather a pricing dividend from industry supply changes concentrated in NOR Flash, SLC NAND, and niche DRAM.

GigaDevice Semiconductor Inc. (ASX: 603986) explained in its interim report that international manufacturers shifted capacity toward HBM, DDR5, and 3D NAND, reducing supply of certain mature memory products. The supply gap gave niche products pricing elasticity. It is worth noting that although R&D expenses rose 34.73% year-on-year to 765 million yuan in the first half, R&D expenses as a share of revenue fell from 13.68% to 6.61%. This change was mainly driven by rapid revenue expansion, but it also indicates that margin expansion far outpaced changes in R&D investment intensity. If supply recovers, whether the current gross margin can be sustained through technology and customer structure remains to be tested in the next cycle.

Two types of book gains cannot be placed in the same profit pocket. First-half fair value change gains were 2.228 billion yuan, of which other non-current financial assets contributed 2.213 billion yuan. The interim report's securities investment table shows that Lianxun Instruments, Zhenbao Technology, and Qiangyi Shares contributed 1.263 billion yuan, 512 million yuan, and 328 million yuan in fair value change gains, respectively, totaling 2.102 billion yuan. Their common feature is upward valuation of held equity stakes, not sales profit from chip products. These pre-tax gains entered current-period profit and loss, but do not mean cash has actually been received.

A larger-scale appreciation came from Changxin Technology. As of June 30, 2026, the company held 1.086 billion shares of Changxin Technology, with cumulative investment cost of 2.300 billion yuan and book fair value of 10.062 billion yuan, exceeding investment cost by 7.762 billion yuan. Changxin Technology was not yet listed at that time, so this valuation was not a direct post-listing transaction price. The relevant equity is classified as other equity instrument investments, and its fair value changes are in principle recorded in other comprehensive income, not in current-period net profit. The 7.762 billion yuan is cumulative book appreciation relative to historical cost. It is neither net profit for the first half of 2026, nor can it be simply added to the 2.228 billion yuan in fair value change gains for the same period.

The four categories of investment-related assets combined rose from 4.790 billion yuan at end-2025 to 16.020 billion yuan at end-June 2026, with their share of total assets increasing from 22.39% to 37.78%. These assets include long-term equity investments accounted for under the equity method, equity assets measured at fair value, and wealth management products. The increase of 11.230 billion yuan includes both new investments and valuation changes, and does not mean the company actually injected the same amount of new cash.

After Changxin Technology's listing on July 27, uncertainty over asset value further magnified. Based on a closing price of 48.34 yuan on October 12 as shown in public data and assuming GigaDevice Semiconductor Inc. (ASX: 603986) still holds 1.086 billion shares, the corresponding market value of the stake would be approximately 52.481 billion yuan. This is a static value calculated by multiplying market price by historical share count. It is not confirmed book value, still less cash that can be sold at any time. Lock-up restrictions, subsequent shareholding changes, and valuation discounts all need verification. The listing unlocked a price reference and also amplified the impact of stock price volatility on investor expectations.

A hundred-billion-yuan asset is also a massive supplier. What needs more scrutiny than the stock price is the transaction relationship. Changxin Technology is both GigaDevice Semiconductor Inc.'s (ASX: 603986) most significant equity investment and an important procurement and foundry partner for its DRAM products. The interim report shows that in the first half of 2026, GigaDevice Semiconductor Inc. (ASX: 603986) purchased raw materials and other items from Changxin Group worth 1.986 billion yuan, compared with only 433 million yuan in the prior-year period, an increase of 358.20%. The chairmen of both companies are Zhu Yiming, making the relevant procurement a related-party transaction.

A September 29 announcement raised the estimated amount of daily related-party transactions with Changxin Group for 2026 from 5.711 billion yuan to 7.854 billion yuan, an increase of 2.143 billion yuan. The estimated amount for the first four months of 2027 is 4.411 billion yuan. The company disclosed that actual transactions from January to August totaled 3.596 billion yuan. The raised quota is not the actual transaction amount. The company said the adjustment was mainly due to rising DRAM foundry prices. Zhu Yiming recused himself from voting during board review, and the relevant proposal still awaits shareholder meeting approval. Related-party transactions do not inherently imply tunneling of benefits. The question is that GigaDevice Semiconductor Inc. (ASX: 603986) earns gross profit through sales of its own-brand DRAM on one hand, while holding equity in its upstream manufacturer on the other. How procurement prices and profits are distributed across different links of the industry chain cannot yet be quantified from existing public financial statements.

Yunfeng Fund investment tests the boundaries of capital allocation. In August, GigaDevice Semiconductor Inc. (ASX: 603986) through its Hong Kong subsidiary subscribed for $100 million in Yunfeng Investment V, L.P., accounting for 25.00% of the $400 million fund size. The underlying fund has a target size of $2 billion. The announcement stated that the contribution uses its own funds and does not constitute a related-party transaction. Annual management fees during the investment period are accrued at 2.00% of the committed amount, which based on the company's committed scale would be approximately $2 million on a static basis. There is also a 20.00% performance sharing arrangement on excess returns.

It is worth noting that two companies indirectly controlled by Yu Feng, the controller of the fund's general partner, previously served as cornerstone investors in GigaDevice Semiconductor Inc.'s (ASX: 603986) H-share offering. The company stated that the two parties have no relevant legal related-party relationship or interest arrangement, and existing public materials are insufficient to infer an exchange of interests. However, the actual fees and offsets at both fund levels, underlying investment projects, installment payment progress, and strategic returns should still be key disclosure priorities for capital allocation. Subscription commitments do not equal full paid-in capital.

GigaDevice Semiconductor Inc.'s (ASX: 603986) current profit expansion is not a book-keeping game. The memory business generated real operating cash flow, and the equity portfolio accumulated considerable assets. However, earnings growth and asset appreciation require different discounting logic. Memory prices may retreat, equity valuations cannot guarantee realization, and the fairness of related-party procurement cannot be confirmed merely by procedural compliance.