Baiwei Storage signs a $1.5 billion storage wafer procurement contract: locking in part of the usage for the next 2 years to reduce price fluctuation risks

Biwei Storage, a leading storage company, has signed a $1.5 billion contract for the procurement of storage wafers.

On March 24, Shenzhen Biwei Storage Technology Co., Ltd. (Biwei Storage, 688525.SH) issued an announcement regarding the signing of a major contract for daily operating activities. The company said that it signed a daily operating purchase agreement with a certain storage original equipment manufacturer (referred to below as “the supplier”). Under the contract, the company agreed to purchase a certain type of storage wafer (referred to below as “the contract product”) from the supplier in accordance with the quantity, price, and time stipulated in the contract. The total contracted purchase amount under the agreement is $1.5 billion, and the committed purchase period totals 24 months. According to the agreement, this agreement applies not only to the parties to the agreement, but also to their respective subsidiaries under their control. The contract performance period runs from the date it becomes effective through March 31, 2028.

According to the relevant terms of the contract, within any 12-month period, Biwei Storage’s purchase volume of this product accounts for 11.1% of the company’s total NAND Flash procurement volume in 2025 and 18.01% of the company’s total NAND Flash sales volume in 2025; the proportions are both relatively small. By signing the contract to lock in certain base volumes for the next 24 months in advance, the company’s plan aligns with the company’s business scale and business planning, and overall risks are controllable.

Regarding the impact on the company, Biwei Storage said in the announcement that this contract is a major purchase contract related to the company’s daily operations. “If the contract can be performed smoothly, it will help enhance the stability of the company’s long-term supply of storage wafers and reduce the impact of storage wafer price volatility on costs.” The specific financial impact will be subject to the company’s future periodic reports. Relevant matters will be recognized in accordance with the contract performance and the relevant provisions of enterprise accounting standards and the company’s accounting policies.

Biwei Storage also highlighted contract risks in the announcement. The market price and market demand for the contract product may fluctuate during the contract term. In the scenario where the purchase quantity, price, and time are locked in under the contract terms, the company may suffer substantial losses during this period due to declines in the market price of the contract product and/or a downturn in market demand. Also, because the transaction currency under this contract is U.S. dollars, significant exchange-rate fluctuations may have an adverse effect on the company.

According to information from its official website, Biwei Storage was established in 2010. The company focuses on the R&D design, packaging, testing, production, and sales of semiconductor memory devices. Its main products are semiconductor memory devices, and its main services are advanced packaging and testing services. Among semiconductor memory devices, according to different application areas, they are further divided into embedded storage, PC storage, automotive-grade storage, enterprise-class storage, and mobile storage, among others. The company is a company listed on the STAR Market and a constituent stock of the STAR 50 index. Relying on the semiconductor memory industry chain, the company has built an integrated operating model covering R&D, packaging, and testing, and has laid out key links in the industry chain, including R&D of storage solutions, design of control chips, packaging/testing of memory/advanced wafer-level packaging and testing, and storage testing machines. The company’s storage chip products are widely used in information technology fields such as mobile intelligent terminals, PCs, industrial terminals, data centers, smart cars, and mobile storage.

What is noteworthy is that the current global memory chip price increase cycle continues to build momentum. At the 2025 annual performance conference, Biwei Storage stated that this round of memory price increases is driven by a surge in AI computing power demand. According to market views, supply-demand gaps may be difficult to relieve in the short term. The company believes that the memory market remains relatively buoyant this year, and it will continue to track the development trends of the storage industry in the future.

Biwei Storage also mentioned that on costs, the company secures supply through long-term supply agreements (LTA). Since purchases are made quarter by quarter, the purchase price will rise somewhat and costs will increase. The company values costs using the moving weighted average method, and overall cost changes remain relatively smooth. In addition, the company’s product prices follow market conditions. From the current point in time, the transmission path of product price changes is relatively smooth.

In terms of performance, Biwei Storage’s recently released annual report shows that in 2025, the company achieved revenue of RMB 11.302 billion, up 68.82% year over year; net profit attributable to shareholders of RMB 853 million, up 429.07% year over year. The company plans to distribute cash dividends of RMB 2.141 per 10 shares to all shareholders (including tax).

In addition, Biwei Storage’s disclosed performance forecast for January to February 2026 shows that, based on preliminary calculations by the finance department, the company expects revenue of between RMB 4.0 billion and RMB 4.5 billion for January to February 2026, representing an increase of 340% to 395% year over year; net profit attributable to shareholders of between RMB 1.5 billion and RMB 1.8 billion, representing an increase of 921.77% to 1086.13% year over year.

For the significant year-on-year increase in performance for January to February, Biwei Storage explained that “the storage industry in 2026 enters a highly favorable cycle. Driven by AI computing power and domestic substitution, DRAM/NAND prices continue to rise. The industry is in short supply. The company benefits significantly. At the same time, to enhance the company’s market competitiveness of its products in the AI era, the company continues to increase investment in areas such as chip design, solutions, advanced packaging and testing, and testing equipment.”

According to Great Wisdom VIP, as of the close on March 24, Biwei Storage was quoted at RMB 231.50 per share, up 2.89%, with a total market capitalization of RMB 108.1 billion.

Pengpai News reporter Guo Shasha