tkal
Earnings deep dive · Tier M Memory

Puya (688766.SH) H1 2026 — The Cycle Paid the Bill; the Acquisition Is the Asset

Revenue up 337%, attributable net profit up 1,930%, a record 51.15% gross margin — and fifty-nine percent of the revenue came from a 2D NAND business that Puya reached through a carve-out purchased from an SK hynix subsidiary for about US$69 million. That business has now earned back its entire purchase price in a single half-year. The market is paying for the NOR price cycle. The NOR price cycle is the part that mean-reverts.
Published · Post-print analysis · 688766.SH · For analysts covering memory, niche flash, and China semis

The setup

Puya Semiconductor (Shanghai) is a fabless designer of non-volatile memory: NOR Flash and EEPROM at the core, built on a dual SONOS + ETOX process platform, with a "storage-plus" adjacency in MCUs and analog drivers (VCM, and now Iris) that ride the same customer sockets. It is a niche-memory house, not a fab — which matters, because in a shortage the fabless niche player captures price without carrying the capex.

Two things happened to that business at once. The first is industry-wide and well understood: as HBM and high-layer 3D NAND absorbed capital and capacity, the majors pulled 55/65nm capacity away from small-density NOR, and the resulting squeeze pushed NOR Flash and SLC NAND contract prices up more than 100% across the first half of 2026 — with AI server BIOS, optical modules, DDR5 SPD, and on-device AI wearables all adding new demand into a shrinking supply base. HBM4 alone is credited with raising NOR content per AI server roughly 50%.

The second is company-specific. In , Zhuhai Noah Changnan bought 100% of SkyHigh Memory Limited — the Hong Kong-domiciled high-performance 2D NAND franchise, SLC NAND and eMMC and MCP, automotive- and industrial-qualified — from an SK hynix subsidiary for US$69.392 million. Three months later Puya took its Noah Changnan stake from 20% to 51% for RMB 144 million and began consolidating. In it moved to buy the remaining 49%.

Read the H1 print without that second fact and you conclude Puya had a very good cycle. Read it with that fact and you conclude something narrower and more durable.

Puya Semiconductor H1 2026 Income Statement H1 2026 · six months ended · PRC GAAP consolidated · RMB in millions Revenue RMB 3,959M +336.7% Y/Y RMB 3,959M +336.7% Y/Y Operating revenue NOR flash, EEPROM and MCUs Gross profit RMB 2,025M 51.1% margin from 31.0% a year ago Cost of revenue (RMB 1,934M) 48.9% of revenue Operating profit RMB 1,565M 39.5% margin Operating expenses (RMB 460M) Net profit RMB 1,304M 32.9% margin Income tax (RMB 189M) 12.6% of total profit Credit impairment losses (RMB 26M) Asset impairment losses (RMB 46M) Non-operating expenses (RMB 0M) R&D (RMB 226M) 5.7% of revenue Selling (RMB 134M) 3.4% of revenue General & administrative, net of finance income (RMB 96M) RMB 97M G&A less RMB 1M of net finance income Taxes & surcharges (RMB 5M) Source: Puya 2026 interim report, consolidated statement of profit or loss · chart: tkal.news
Where Puya's H1 2026 revenue yuan went: 51.1% survives cost of sales, 39.5% survives the other operating costs, 32.9% lands as profit before the gains booked below the operating line — and minority interests take 37% of what is left. RMB 3,959M − RMB 1,934M = RMB 2,025M gross profit; less RMB 460M of the remaining costs the filing groups under total operating cost = RMB 1,565M. That is not the filing's operating-profit subtotal of RMB 1,499M, which is struck after impairments, other income, investment income and fair-value changes; the chart puts each of those below the operating line instead. Inflows there — RMB 6M other income, RMB 0M non-operating income — cannot be drawn against a flow, so the chart shows profit excluding them: RMB 1,565M − RMB 260M = RMB 1,304M; that plus RMB 6M = RMB 1,310M net profit, of which RMB 827M is attributable to owners of the parent and RMB 483M to minority interests. Minority interests took RMB 483M of the RMB 1,310M net profit, leaving RMB 827M attributable to owners of the parent — the figure the release headlines. Y/Y on revenue against RMB 907M in H1 2025. Six months ended .

The numbers

Revenue of RMB 3.959 billion, up 336.67% against RMB 907 million a year ago. Attributable net profit of RMB 827 million, up 1,929.65%. Ex-items net profit of RMB 825 million, up 2,994.08% — and the fact that the ex-items number is essentially the headline number, with non-recurring gains of only RMB 2.19 million, is the first quality tell. Nothing here is a disposal gain or a subsidy. Basic EPS RMB 5.58 against RMB 0.35. Weighted ROE 28.73%, against 1.82%.

The sequential shape is steeper than the year-on-year shape, which is what you want in a cycle you think is still inflecting: Q1 attributable net profit RMB 251 million, Q2 RMB 576 million — up 129% quarter on quarter. Gross margin reached 51.15%, the best in the company's history, and for a fabless niche-flash designer that number is not a normal-world number.

Cash confirmed it. Operating cash flow swung to +RMB 945 million from −RMB 42 million, on cash collected from sales of RMB 3.447 billion (+322%) — collection growing faster than revenue. That is the line that separates a real upcycle from a shipped-and-hoped one, and it is the single most reassuring figure in the release.

H1 2026 · the split that explains everything
SegmentH1 2026 revenueYoYWhat it is
"Storage" — NOR + EEPROMRMB 1.284B+90.79%The legacy franchise. >3.7B NOR units shipped (record); >870M EEPROM units.
"Storage X" — SHM 2D NANDRMB 2.346Bn/a (new)SLC NAND, eMMC, MCP. 59.3% of group revenue. Consolidated from Q4 2025.
"Storage +" — MCU, driversRMB 0.329B+41.20%Cortex-M0+/M4 MCUs, VCM and Iris drivers. >3.3B MCUs cumulative.

Strip SHM out and the legacy business still did RMB 1.613 billion of revenue, up 77.9%, with roughly RMB 319 million of net profit against RMB 41 million — a genuinely excellent cyclical result that would have been the story in any other year. But the acquired business contributed roughly 59% of revenue and about 61% of profit, and no amount of segment enthusiasm makes that a second-order detail.

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