ChangXin Memory Technologies (CXMT), China's leading memory chipmaker, saw first-quarter revenue surge more than eightfold from a year earlier. As the artificial intelligence (AI) boom drives a string of strong earnings among global memory makers, analysts say China's state-led semiconductor self-sufficiency strategy is delivering significant results despite U.S. restrictions. There is also analysis that CXMT, armed with aggressive capacity expansion and price competitiveness, is rapidly catching up with the three major memory players—Samsung Electronics, SK hynix and Micron.
According to Bloomberg and other sources on Tuesday, CXMT's first-quarter revenue reached 50.8 billion yuan (about 11.1 trillion won), up 719.13% from a year earlier. Over the same period, net profit jumped 1,268.45% to 33.012 billion yuan (about 7.2 trillion won), while net profit attributable to the parent company rose 1,688.3% to 24.762 billion yuan (about 5.4 trillion won). Having achieved its first full-year profit only last year, the company earned 13 times its annual profit from last year in the first quarter alone.
CXMT signaled that this growth trend would continue. It projected first-half revenue of 110 billion to 120 billion yuan, a 612.53% to 677.31% increase from a year earlier. It also forecast net profit of 50 billion to 57 billion yuan, with a growth rate reaching 2,244% to 2,544%.
Founded in 2016 with support from the Chinese government, CXMT is regarded as a key company leading China's self-sufficiency strategy in the global DRAM market long dominated by Samsung Electronics and SK hynix. While Samsung Electronics and SK hynix are leading the way with HBM4, the sixth-generation high-bandwidth memory (HBM), CXMT lags behind, setting its mass-production target for the earlier HBM3 generation for this year, leaving the technology gap still wide. However, the company recently began shipping DDR5 products, expanding its reach into the commodity DRAM market that top global players had paid less attention to. This is based on prices 15% to 20% cheaper than Korean products and a domestic supply chain.
In particular, the explanation is that CXMT benefited as demand for high-performance memory surged amid expanded AI investment by global technology firms, while commodity DRAM prices also rose in tandem. Indeed, according to market research firm TrendForce, commodity DRAM prices roughly doubled in the first quarter, with the possibility of an additional increase of up to 60% in the second quarter. Bloomberg explained that "as AI data centers require large-scale advanced memory, the impact is spreading across the memory market as a whole, and commodity DRAM is also seeing a continued price surge."
CXMT's inventory strategy is also drawing renewed attention in light of these results. According to Taiwanese media outlet DigiTimes, CXMT held about 28 billion yuan worth of DRAM inventory produced during a price downturn before the market entered an upward cycle. The explanation is that when memory prices subsequently surged, the company sold that inventory at high prices, improving both profitability and cash flow at the same time. Combined with expanded shipments of high-value-added products such as DDR5, the pace of earnings improvement accelerated.
Korea's semiconductor industry is also closely watching CXMT's movements. Although CXMT still has limited presence in cutting-edge markets such as HBM, it is rapidly encroaching on the commodity DRAM market that is a key cash cow for Samsung Electronics and SK hynix. According to Omdia data, CXMT's market share by DRAM sales rose to 7.67% in the fourth quarter of last year, ranking fourth in the world. That is up from around 5% previously.
The fact that global firms are taking note of cheap Chinese chips also poses a threat. Hewlett-Packard (HP) and Dell are reportedly currently conducting quality tests on CXMT's DRAM. In this situation, concerns are being raised that if Chinese firms launch full-scale low-price offensives going forward, Korean companies could face pricing pressure and deteriorating profitability.
There are also variables. Nvidia CEO Jensen Huang said in an interview with Bloomberg TV that day, regarding the AI chip H200, "The Chinese government has to decide to what extent it will protect its own market," adding, "My judgment is that over time the market will open up." This revealed an optimistic outlook that the situation could improve in the future, even though Chinese firms are currently having difficulty purchasing H200 chips due to the Chinese government's own restrictions.
