China's largest DRAM maker, Changxin Memory Technologies (CXMT), posted an operating margin of 82% in the second quarter this year, topping major memory players such as Samsung Electronics, SK hynix and Micron. Analysts said CXMT benefited as the expansion of high bandwidth memory (HBM) production for artificial intelligence (AI) reduced supply of commodity DRAMs, sending DDR5 prices soaring.
According to the Nikkei on the 11th, CXMT's operating margin for the second quarter this year (April–June) was 82%, the highest among six major memory makers. SK hynix was at 76%, the semiconductor business of Samsung Electronics was at 70%, while Micron was at 80% for March–May; SanDisk and Kioxia were at 78% and 74%, respectively. The Nikkei compared earnings before interest and taxes (EBIT) based on company materials and other data.
CXMT booked a loss in the second quarter last year but swung to a large profit in just one year. Second-quarter sales this year were about 2.3 trillion yen (about 20 trillion won), roughly 10 times the level a year earlier, and EBIT reached about 1.9 trillion yen (about 16.6 trillion won), the Nikkei said. In its first semiannual report released last month, CXMT also said first-half sales this year were 150.31 billion yuan, up 873.64% from a year earlier, and net profit attributable to controlling shareholders was 77.605 billion yuan, turning to a profit.
A shortage of commodity DRAM supply is cited as the reason CXMT's profitability surged. As Samsung Electronics, SK hynix and Micron prioritized their advanced DRAM capacity for producing HBM used in AI servers, supply of commodity DRAM for servers and PCs tightened. CXMT, with a high share of DDR5 whose prices climbed rapidly, enjoyed a relatively large benefit.
In fact, profitability between commodity DRAM and HBM flipped this year. According to market researcher TrendForce, HBM prices are negotiated annually with major customers, so they could not immediately reflect the sharp rise in commodity DRAM prices since the second half of last year. As a result, in the first quarter this year, revenue per wafer for DDR5 64GB RDIMMs surpassed HBM, and profitability also rose above HBM.
By revenue, the global DRAM market is still led by Samsung Electronics, SK hynix and Micron. According to market researcher Counterpoint Research, CXMT's DRAM revenue share in the second quarter this year was 10%, up sharply from 4% a year earlier, but below Samsung Electronics at 39%, SK hynix at 26% and Micron at 25%. TrendForce's tally also had CXMT's share at 9.5%, ranking fourth.
CXMT listed on the STAR Market of the Shanghai Stock Exchange on July 27. The offering price was 8.66 yuan per share, and total proceeds including the overallotment option were about 66.6 billion yuan. The company plans to use the funds to upgrade memory wafer production lines and develop DRAM technologies.