Gigadevice Semiconductor Inc. (ASX: 603986) has issued a public announcement regarding significant fluctuations in its A-share stock price.

The company's stock price has experienced substantial cumulative gains over recent trading periods. From June 15, 2026, to June 29, 2026, the closing price increased by a cumulative 73.42% over ten consecutive trading days. Furthermore, from May 18, 2026, to June 29, 2026, the cumulative increase reached 125.60% over thirty consecutive trading days. Due to these large short-term gains, there is a risk of a rapid price correction in the future.

As of June 29, 2026, the company's latest trailing price-to-earnings (P/E) ratio stands at 200.17. This is significantly higher than the latest trailing P/E ratio of 128.83 for its industry sector, "Integrated Circuit Design" (Code: 45301010) under the China Securities Index. This indicates a high valuation risk.

Industry Cyclicality and Price Risks

The memory chip industry in which the company operates has historically exhibited significant cyclical volatility. Current product prices are already at historically high levels, and the trend of substantial further price increases is unsustainable. Industry supply and demand will eventually move towards rebalancing. Future changes in macroeconomic conditions, industry cycles, and market supply-demand dynamics could lead to considerable price declines for its main products. Such declines would negatively impact the selling prices and gross margins of the company's memory business, potentially reducing overall profitability and posing a risk to its operating performance.

Niche Market Dynamics

The company's current memory products belong to the niche storage segment, serving a broad and fragmented downstream market beyond mobile phones, PCs, and servers, including consumer electronics, industrial, networking, and automotive applications. The recent price increase is primarily driven by significant AI-related demand in the mainstream memory market, which has shifted the focus of major international memory manufacturers, indirectly benefiting the niche market through supply tightness.

Unlike the mainstream market, total downstream demand in the niche storage market is relatively stable. During the period of rapid industry price increases, downstream demand has already been somewhat suppressed. As marginal capacity increases in the niche storage market, prices are expected to experience a significant correction.

Operational and Technological Challenges

Operating as a fabless company, there is a risk of further tightening in the supply of wafer production capacity from its upstream partners amid the overall supply shortage in the niche storage market.

The company continues to expand its research and development and new product iterations in key business areas such as niche DRAM and 2D NAND Flash. However, these technologies involve high complexity and long development cycles, carrying the risk that technological progress and product upgrades may not meet expectations.

The company advises all investors to make rational investment decisions, considering these potential risks.