The SLC NAND flash memory maker is capitalizing on strong demand for its chips, which lifted it into the black this year

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Key Takeaways:

  • XTX Technology has filed to list in Hong Kong, reporting it swung to a profit in this year’s first quarter on booming demand for its memory chips
  • Prices for the company’s SLC NAND flash memory more than tripled during in the first three months of 2026 from a year earlier

The global AI explosion is shining a spotlight on the importance of related infrastructure, touching off parallel booms for related hardware like servers, computing chips and data centers. That’s lit a fire under many companies’ stocks, especially makers of computing and memory chips used in high-end AI computing.

Now, XTX Technology Inc., one of China’s leading fabless code storage flash memory chip makers, is hoping to ride that wave to a Hong Kong IPO, shifting gears from its previous plan to list on the country’s domestic markets in Shanghai and Shenzhen. The company submitted its IPO application to the Hong Kong Stock Exchange earlier this month, with heavyweight Citic Securities and the smaller GF Securities as joint underwriters.

XTX was founded in April 2014 by Chairman Long Dongqing, a chip veteran whose resume includes engineering stints at Japan’s Renesas (6723.T), Europe’s STMicroelectronics (STM.US), and America’s Freescale Semiconductor, now part of Dutch firm NXP (NXPI.US). Long currently holds 34.9% of the company, while Ningbo Hongshan Zhisheng holds 9.6%. Pu Xun, a managing director at private equity firm HSG, formerly Sequoia China, also serves as a non-executive director.

XTX designs and sells code-storage flash memory chips, a category that includes NOR flash and SLC NAND flash, which are manufactured by third-party fabs. As AI gains traction, it is rapidly generating strong demand for such chips to meet the technology’s high performance computing needs. XTX ranks fourth globally among fabless makers of SLC NAND flash, its main product. Boasting high endurance and low error rates, such chips are widely used in server system drives, industrial equipment, caching solutions and medical and military equipment.

The global market for SLC NAND flash was worth $5.1 billion in 2025. But with the widespread adoption of AI, the figure is expected to balloon to $42.7 billion by 2030, growing at a breakneck average annual rate of 53% over that time, accounting for 7.9% of the overall flash memory market, according to third-party market data in the listing document.

Global tech giant exodus

Current global leaders in the SLC NAND flash sector include multinationals such as U.S.-based Micron Technology (NASDAQ:MU) and Japan’s Kioxia (285A.T). But most of those have announced plans to discontinue or downsize their legacy SLC NAND flash production to pivot toward the mid- to higher-end of the memory market.

Despite their retreat, demand for legacy SLC NAND flash remains strong, with downstream clients aggressively stockpiling inventory in the second quarter of this year. As supplies shrink, the average price of SLC NAND flash skyrocketed between 130% and 150% in the first half of this year alone.

Analysts expect price increases to moderate slightly in the second half of the year, but are still forecasting additional gains of 70% to 75%. The strongest gains are expected for industrial and automotive-grade products, which require more rigorous specifications.

XTX derives most of its revenue from SLC NAND flash. Its revenue reached 224 million yuan ($33 million) in the first quarter of this year, up 77.4% year-over-year. SLC NAND flash generated 149 million yuan during the quarter, accounting for about two-thirds of total revenue and up 120% annually. The segment’s gross profit hit 101 million yuan, up more than 10-fold year-on-year, accounting for 81% of the company’s overall gross profit.

Sliding volume, soaring prices

It’s worth noting that XTX’s sales volume actually fell this year, even as its revenue and profit soared. The company sold just 11.5 million units in the first quarter, down 34.4% year-over-year. Constrained by a tight supply of semiconductor wafers, one of the main components for chip manufacturing, XTX strategically allocated its limited inventory to higher-value clients.

Skyrocketing prices for SLC NAND flash more than offset the lower chip output, as XTX’s average selling price more than tripled from 3.89 yuan per unit in 2025 to 13.04 yuan per unit this year. That surge lifted the company to a 75.89 million yuan profit in the first quarter of this year from a 2.7 million yuan net loss a year earlier.

While surging prices lifted XTX into the black, ongoing shortages of upstream wafers remain one of the company’s biggest risk factors over the near-term, especially if its sales volumes continue to slide. Potential reversals by international giants Micron and Kioxia, if they decide to re-focus on the segment again, remain another major variable that could dictate whether XTX can sustain its newfound profits.

At the same time, the global memory chip sector has historically been very cyclical. Its boom-and-bust cycles were deeply intertwined with the smartphone and PC sectors, which traditionally depressed their valuations below 15 times forward price-to-earnings (P/E). Such levels were far lower than the multiples enjoyed by other semiconductor peers, such as CPU or GPU firms, whose valuations often exceed 30 times.

Investors are currently laser-focused on whether explosive growth in AI demand could perhaps strip memory chip stocks of their cyclical label and lead to a longer-term expansion, lifting the stocks to higher multiples. But skeptics question if real-world AI applications can meaningfully boost these chipmakers’ earnings, since prices will inevitably come down as producers boost their capacity. Should the AI narrative fail to materialize or stumble, memory chip valuations across the board could come under intense pressure.

Despite their recent stock run-ups, shares of Micron and Kioxia still only trade at modest estimated P/E ratios of 8 times and 9 times, respectively. That means XTX might need to be conservative in pricing its IPO shares to attract investor interest. It could try to be more aggressive by targeting investors who believe that memory chip stocks are set to shed their cyclical nature, though that could scare away many of the AI skeptics. Either way, XTX looks relatively well positioned to ride the upside of expanding valuations as long as chip prices keep rising and that translates to growing profits.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.