Montage Technology forecasts up to 81% profit jump, plans 600m yuan buyback

Montage Technology, a Chinese semiconductor company, said first-half net profit could rise as much as 81%, driven by AI demand and DDR5 adoption, while separately disclosing a share buyback and a Korean antitrust probe.

"The AI industry trend has driven strong demand across our product lines, with DDR5 penetration deepening and interconnect chip revenue accelerating," the company said in a filing Thursday.

The Shanghai-listed chipmaker expects revenue of about 33.35 billion yuan ($4.6 billion) for the six months ended June, up 27% from a year earlier. Net profit attributable to shareholders is forecast between 19 billion yuan and 21 billion yuan, compared with 11.6 billion yuan in the year-ago period. Interconnect chip revenue — which includes PCIe Retimer, MRCD/MDB, CKD and CXL MXC products — reached 31.11 billion yuan in the first half, up 26% year over year, with second-quarter revenue of 16.94 billion yuan accelerating to 28% growth.

The strong earnings come as China's semiconductor self-sufficiency push and the global AI buildout create tailwinds for domestic chip suppliers. Montage's DDR5 RCD (registering clock driver) chips, used in server memory modules, are seeing rising shipments as data center operators upgrade infrastructure. The company competes indirectly with Rambus Inc. and Renesas Electronics in the memory interface market, though Montage holds a dominant position in China's server DIMM supply chain.

Buyback Signals Management Confidence

Chairman and Chief Executive Officer Yang Chonghe proposed a 300 million yuan to 600 million yuan A-share buyback, citing the stock's more than 20% decline over 20 consecutive trading days — a drop that triggered Shanghai Stock Exchange rules allowing repurchases. The buyback, to be funded from cash reserves, would be executed within three months of board approval, with shares either sold after 12 months or canceled if unsold after three years.

The proposal suggests management views the recent selloff as disconnected from fundamentals. Montage's stock had fallen sharply even as the company delivered accelerating profit growth, a gap the buyback aims to address.

Korea Antitrust Probe Adds Uncertainty

On July 15, the Seoul Central District Prosecutors' Office raided Montage's Korea office, investigating potential violations of antitrust regulations. The company said it is cooperating fully and that neither the company nor any employees have been charged with wrongdoing. Operations continue normally, though the company said it cannot predict the investigation's duration or outcome.

The probe introduces regulatory overhang for a stock that already trades under scrutiny as a Chinese semiconductor firm with U.S. defense designation risks. Montage's exposure to global memory supply chains — its products are used in server modules sold worldwide — means any antitrust finding in Korea could disrupt customer relationships with major memory makers such as Samsung Electronics and SK Hynix.

Investor Implications

Montage's earnings trajectory — net profit nearly doubling year over year — reflects the structural demand shift from AI computing, where every new data center buildout requires more DDR5 memory modules and high-speed interconnect chips. The buyback provides a near-term floor for a stock down more than 20%, but the Korea investigation introduces legal uncertainty that could cap upside until resolved. Investors should watch for the board's decision on the buyback and any developments in the antitrust probe, which could take months to conclude.

This article is for informational purposes only and does not constitute investment advice.