Sales Soar 873%, Margins Overtake the 'Top 3 Memory Makers'... Why China’s CXMT Is a Major Threat [Click e-Stock]

CXMT's Expansion Pace
Set to Become a Key Factor to Watch

It has been suggested that the future expansion speed of China’s memory company, Changxin Memory Technologies (CXMT), will be the most critical factor to watch from the perspective of global DRAM pricing.

Reuters Yonhap News

According to Hana Securities on September 1, CXMT completed the transition to the fourth-generation B1 process, approximately 16nm class, in the second quarter of this year. Yields are estimated to have exceeded 90%. Their DDR5 products currently support 5600MHz, with plans to expand to 6400MHz in the future. However, due to reliance on multi-patterning, the process requires more steps, so CXMT remains at a disadvantage relative to leading companies in terms of bits produced per wafer and cost. For high-bandwidth memory (HBM), the goal is to begin mass production of 12-stack HBM3E in 2027. Seunghye Baek, a researcher at Hana Securities, stated, “If CXMT can produce approximately three to four million HBM3E stacks in 2027, it would be sufficient to alleviate key bottlenecks for AI graphic processing units (GPUs) within China.”

In the mid-to-long term, from a global memory industry perspective, what is even more important than CXMT’s technological level is the speed at which its production capacity can expand, the resulting supply surplus, and the corresponding impact on the price floor. Baek added, “CXMT’s production capacity is expected to expand from 500,000 wafers per month in 2028 to around 800,000 wafers per month after 2030. If CXMT maintains its aggressive expansion stance around 2028—when DRAM supply shortages are expected to ease—the company could become a key variable intensifying volatility in generic DRAM prices during the downcycle. For this reason, the pace of CXMT’s capacity expansion is set to become the most critical factor to watch regarding global DRAM prices.”

In its recent first-half results announcement, CXMT revealed that its self-developed LPDDR6 product has completed both sample supply and verification and is now accelerating the transition to mass production. Baek commented, “CXMT’s LPDDR6 product reaches a maximum transfer speed of 12.8Gbps and a single-chip maximum capacity of 16GB, which is close to Samsung Electronics and SK hynix’s LPDDR6 products, unveiled this year, with peak speeds of 14.4Gbps and 10.7Gbps and maximum capacities of 16GB each. Going forward, CXMT will strive to secure competitiveness in the high-end smartphone, server, and smart car markets.”

CXMT’s first-half sales reached 150.3 billion yuan, representing an 873% increase year-on-year and beating the upper end of its guidance range (110 to 120 billion yuan) by 25%. Net profit attributable to the parent company reached 77.6 billion yuan, exceeding the top end of its guidance (50 to 57 billion yuan) by 36%, turning around from a 2.3 billion yuan deficit in the same period last year to a surplus. Baek explained, “With global DRAM supply shortages persisting throughout the first half of the year, the surge in DRAM prices—centered on DDR5 and LPDDR—and soaring sales volumes drove strong financial results. The gross profit margin for the first half stood at 84.8%, up by 72.1 percentage points from 12.7% in the previous year, and significantly exceeded the average of the global top three memory makers (SK hynix, Samsung, Micron), which was 76.1%. In addition to the spike in DRAM prices, the dramatic profitability improvement was attributable to CXMT’s capacity expansion, yield improvements, and growing domestic demand for localized memory products in China.”

This content was produced with the assistance of AI translation services.