A Shenzhen-based couple's timely bet on memory chips has paid off handsomely, turning their company into a major player in the AI-driven semiconductor boom.
A strategic stockpile of memory chips has generated a ¥32 billion windfall in just five months for the founders of Shenzhen-based Demingli, as the AI boom drives insatiable demand for their products.
"Industry景气度高 (jǐngqìdù gāo - the industry is booming), supply and demand are tight, and we are capable of maintaining steady and positive performance," Chairman Li Hu said at a recent earnings briefing.
Demingli's inventory surged to ¥12.19 billion by the end of the first quarter, a 72.7% increase from the previous year. This led to a staggering Q1 profit of ¥3.346 billion, a more than 2x increase over the company's total profits from the past decade. The company's Q1 2025 inventory stood at ¥43.951 billion, a 177.4% year-over-year increase.
This high-stakes inventory strategy highlights the immense opportunities in the semiconductor supply chain created by the AI revolution. For investors, Demingli's success underscores the potential for significant returns in companies that can accurately anticipate and meet the surging demand for AI-related hardware, a market that is also boosting giants like Nvidia and Amazon.
Li Hu, a 51-year-old industry veteran with a background in flash memory sales, and his wife Tian Hua, a former IT market director, founded Demingli and navigated the treacherous semiconductor landscape for years. Initially, they acted as distributors for overseas chipmakers, but they reinvested their earnings into developing their own controller chip technology. Their perseverance paid off when Demingli went public on the Shenzhen Stock Exchange in 2022.
The company's recent success is a direct result of its forward-thinking strategy. As the AI wave began to swell, Demingli astutely anticipated the surge in demand for high-performance memory products for servers and data centers. The company's enterprise-grade solid-state drives (SSDs) and memory modules are now critical components in the AI infrastructure being built by internet and server companies.
Demingli's decision to build up a massive inventory was a calculated risk. In the volatile semiconductor market, where prices can fluctuate dramatically, holding a large stockpile can be a double-edged sword. However, in this case, the bet paid off spectacularly. With demand far outstripping supply, Demingli has been able to command premium prices for its products.
The company's success is not just a matter of luck. Li Hu emphasized in a meeting with investors that Demingli has been making "forward-looking layouts in enterprise-level, embedded, and domestic production." This suggests a deep understanding of the market and a long-term vision that goes beyond simply riding the current AI wave.
Demingli's story is a microcosm of a larger trend reshaping the technology industry. The race to build out AI infrastructure has created a voracious appetite for all types of semiconductors, from the high-end GPUs made by Nvidia to the custom AI chips being developed by hyperscalers like Amazon.
Amazon's own AI accelerators, known as Trainium, are in high demand, with the company reporting a backlog of over $225 billion in revenue commitments. This has been a boon for Amazon's design partner, Marvell Technology, whose stock has doubled in 2026. The custom AI processor market is projected to grow at a compound annual rate of 27% through 2033, according to Bloomberg.
With its enterprise business expanding rapidly, Demingli plans to start disclosing operational data for this segment separately. This will provide investors with greater visibility into the company's most profitable and fastest-growing division.
The company's stock has already seen a significant run-up, but if the AI boom continues, there could be more upside ahead. However, investors should also be mindful of the risks. The semiconductor industry is notoriously cyclical, and any slowdown in AI-related spending could have a significant impact on Demingli's fortunes. Furthermore, the company's high inventory levels, while a source of strength in the current market, could become a liability if demand were to suddenly cool.
This article is for informational purposes only and does not constitute investment advice.
