ChangXin Memory Technologies (CXMT), China's largest memory chipmaker, posted a more than 700% surge in first-quarter revenue this year, riding the artificial intelligence (AI) chip super cycle. While Samsung Electronics (005930.KS) faces a strike threat from its labor union over performance-based bonuses, Chinese rivals are rapidly improving their earnings and investment capacity. Concerns are growing that internal conflicts could allow China to close the gap on Korea's semiconductor industry.
According to China's Kechuangban Daily and Hongxing News on Tuesday, CXMT, which is pursuing an initial public offering (IPO), said in a prospectus the previous day that its first-quarter revenue surged 719.13% year-on-year to 50.8 billion yuan (about 11.1 trillion won).
Profitability improved even more sharply. First-quarter net profit jumped 1,268.45% year-on-year to 33.012 billion yuan (about 7.2 trillion won). Net profit attributable to the parent company soared 1,688.3% to 24.762 billion yuan (about 5.4 trillion won). Net profit attributable to the parent company refers to the portion of consolidated net profit that goes to shareholders of the parent company.
CXMT's first-quarter performance is exceptional even within China's semiconductor industry. Both revenue and net profit attributable to the parent company exceeded those of companies listed on the STAR Market, including SMIC, China's largest foundry. Based on net profit attributable to the parent company, CXMT ranked 13th among all A-share listed companies in mainland China.
CXMT's earnings improvement is accelerating as it benefits from the AI super cycle. After posting a loss of 7.87 billion yuan (about 1.7 trillion won) in 2024, CXMT swung to profit last year, and earnings are surging this year.
The market expects CXMT's earnings to grow steeply. First-half revenue is forecast to increase 612.53% to 677.31% year-on-year to 110 billion to 120 billion yuan, or about 24.2 trillion to 26.4 trillion won. Net profit attributable to the parent company is projected to swell to 50 billion to 57 billion yuan, or about 11 trillion to 12.5 trillion won.
Like Korean companies, CXMT is benefiting greatly from the global rise in DRAM prices and supply shortages. The company said, "Since the second half of last year, semiconductor prices have continued to rise, leading to a rapid increase in gross margin and a successful turnaround to profitability. Amid continuously growing global computing demand, DRAM supply could not keep up with demand in the first quarter of this year due to the impact of major memory makers' production capacity allocation."
The global DRAM market has entered a super cycle as demand for high-performance memory surges with the spread of AI servers. The three leading firms — Samsung Electronics, SK hynix (000660.KS) and Micron — dominate production capacity, focusing on high-bandwidth memory (HBM) and server DRAM. But as their supply capacity has fallen short, latecomer CXMT is reaping strong benefits.
CXMT currently operates three 12-inch DRAM wafer plants in Beijing and Hefei, Anhui Province. According to market research firm Omdia, CXMT is China's No. 1 and the world's No. 4 DRAM maker by production capacity, shipments and revenue. While the three major players — Samsung Electronics, SK hynix and Micron — still control more than 90% of the global DRAM market, CXMT's presence has been growing recently. Based on DRAM sales in the fourth quarter of last year, CXMT's market share rose to 7.67%.
China's financial investment industry is paying particular attention to CXMT's technological progress. Guo Yan-yang of Taixin Capital Investment said, "CXMT's strong performance is the result of a combination of the memory price upcycle, technological progress and production efficiency. CXMT is the largest and most technologically advanced integrated DRAM company in China."
CXMT's rise is a threat to Korean memory companies. The immediate problem is that Samsung Electronics, the world's largest memory chipmaker, faces the risk of production line shutdowns as it struggles in performance-based bonus negotiations with its labor union. The Samsung Electronics union is demanding that 15% of operating profit be paid as performance-based bonuses, arguing that the profits earned from the AI chip super cycle should be shared with employees. The union has warned of a general strike on the 21st if its demands are not met.
For this reason, observers point out that if a strike materializes, it could affect not only short-term production but also the trust of global customers. In the memory chip industry, stable supply capability is as important as price cycles. In particular, big tech companies expanding investment in AI servers and data centers place high value on long-term contracts and supply stability. If Korean companies face disruptions in production and investment decisions due to labor-management issues, it is hard to rule out the possibility that customers will look for alternative supply chains.
The industry expects Chinese companies to actively fill the production gap caused by Samsung Electronics' general strike. CXMT plans to raise 29.5 billion yuan (about 6.4 trillion won) through its IPO and invest the proceeds in expanding wafer production lines and upgrading DRAM technology. China's 21st Century Business Herald, citing a report by Guosheng Securities, analyzed that CXMT plans to begin operating an HBM production line around the end of this year. HBM is a key product for AI chip demand, and a market where SK hynix and Samsung Electronics are fiercely competing for leadership.
Of course, it is not easy for CXMT to catch up with Korean companies' technology in a short period. HBM and AI server DRAM are products with very high entry barriers, including design, processing, packaging and customer certification. U.S. semiconductor regulations against China are also restricting Chinese companies' access to advanced equipment. Nevertheless, the fact that a virtuous cycle is being created — gaining share in the commodity DRAM market and reinvesting cash secured during the price upturn into facilities and technology development — poses a significant threat to Korean companies.
An industry official said, "The semiconductor industry is one in which competitiveness can be shaken in an instant if profits earned during boom times are not connected to investments for the next cycle. If labor-management conflicts over the distribution of the AI super cycle's gains are prolonged, Korean memory companies could be at a disadvantage in both investment plans and customer responsiveness."
