China's CXMT posts first-half profit after revenue surge

Chinese chipmaker ChangXin Memory Technologies (CXMT) announced a staggering 870% increase in first-half revenue for the six months ending June, according to its recent filing with the Shanghai Stock Exchange. The Hefei-based firm, which is now China's most valuable publicly traded company following a prominent listing, reported revenue of 150.31 billion yuan (approximately US$22.4 billion) for the period, marking a dramatic surge from the previous year's loss of 2.33 billion yuan.

Net profit attributable to shareholders also reached an impressive 77.61 billion yuan, surpassing the company's pre-IPO expectations of 110 billion to 120 billion yuan in revenue and 50 billion to 57 billion yuan in profit.

The surge in revenue was driven by a surge in demand for memory products from the artificial intelligence industry, with global DRAM supplies remaining tight and prices continuing to rise. CXMT has capitalized on expanding production capabilities and an improving product mix, notably with the introduction of DDR5, which is increasingly utilized in personal computers, workstations, and servers.

The company's LPDDR6 chip, capable of speeds up to 12,800Mbps, was recently sent to key customers for validation as CXMT accelerates its preparations for mass production, marking the first time a Chinese DRAM maker has entered the commercialization race for a new LPDDR generation alongside global industry leaders.

Domestic Chinese DRAM producers are gaining global market share as they expand capacity more rapidly than overseas rivals. UBS estimates Chinese suppliers' share of global DRAM shipments will rise from around 7% in 2025 to 8.4% this year and 9.4% in 2027. Analysts remain optimistic about the impact of China's aggressive expansion on the global market, with UBS predicting that the DRAM upcycle will continue until the second quarter of 2028.

Morgan Stanley, which initiated coverage of CXMT with an "overweight" rating, estimates the company will reach monthly production capacity of 300,000 wafers this year and expects this capacity to increase to 500,000 wafers per month by 2028. The bank forecasts CXMT's full-year revenue to reach 388.9 billion yuan in 2026, suggesting a significant acceleration in earnings growth in the second half of the forecast period.

Despite a persistent technology gap with overseas rivals, UBS expects Chinese firms' capacity additions to be absorbed by rising demand rather than causing a global supply glut. CXMT's shares fell 0.88% on Friday to 58.6 yuan, valuing the company at approximately 3.98 trillion yuan, up more than 576% from its IPO price of 8.66 yuan.