Montage (688008): Goldman Sachs maintains Buy on Montage as AI server memory demand and DDR6 content expansion support growth

Overview

Goldman Sachs reiterates Buy on Montage, arguing that AI-agent-driven CPU-server demand, rising memory-channel content, DDR6 adoption and RCD product upgrades should support its memory-interconnect IC growth. The report also identifies CXL MXC as an emerging opportunity tied to DDR4 reuse in a high-cost, tight-memory-supply environment.

Core views

Management remained positive on Montage's outlook, with the central demand driver being AI agents' support for CPU-server demand. Goldman Sachs notes that newer CPU platforms require more memory channels: from roughly 8–12 channels currently to 16 in 2027E, with potential for 24 channels over the longer term. More channels raise the memory-interconnect content opportunity. Although DDR5 penetration exceeded 95% by the end of 2025 after industry adoption in 2024–25, the report argues that increasing server-memory configuration can continue to support demand beyond the DDR5 migration itself. The next technology transition could raise content further. DDR6 RDIMMs are expected to require two RCDs per module, compared with one RCD in the current generation. Montage is currently deriving its main contribution from RCD03, while RCD04 shipments are ramping and RCD05 is entering mass production. Goldman Sachs believes this generation migration should support higher average selling prices and gross-margin expansion. It also highlights Montage's leading position in memory interconnect ICs, its expanding AI interconnect portfolio, and management's order visibility into 2027 alongside sequential supply enhancement as supports for capturing demand. CXL MXC is presented as a separate potential growth avenue. Management cited high memory costs and tight supply as reasons DDR4 demand is increasing. Because the latest CPU platforms cannot use DDR4 directly, CXL MXC can be used to expand memory capacity while enabling DDR4 reuse. Management reported interest from cloud service providers in China and overseas; the product is currently in customer testing and qualification and could potentially begin ramping in 2027. For valuation, Goldman Sachs sets a 12-month A-share target price of Rmb380.00 using a 48.1x discounted 2030E P/E, with the target multiple derived from the relationship between peers' P/E multiples and net-income growth. The H-share target is HK$572.00, based on a 66.4x 2030E P/E, representing a 38% valuation premium to the A share and using a 1.09 CNY/HKD exchange rate. At prices of Rmb214.50 for the A share and HK$300.60 for the H share as of 24 September 2026, the stated upsides are 77.2% and 90.3%, respectively.

Analysis framework

The report combines management discussion with a technology-content analysis of server memory channels, DDR generations and RCD usage. It then links product migration to ASP and gross-margin potential, assesses CXL MXC through DDR4 reuse and customer qualification, and values the shares using discounted P/E multiples informed by peer P/E and net-income-growth relationships.

Methodology notes

• Industry AnalysisSupply-demand framework

  Server-memory demand and component-content analysis

  Goldman Sachs links AI-driven CPU-server demand, greater memory-channel counts and DDR6's higher RCD requirement to Montage's potential component demand.

• Valuation methodsP/E and PEG Valuation

  Discounted P/E valuation based on peer P/E and net-income-growth correlation

  The A-share target uses a 48.1x discounted 2030E P/E, while the H-share target uses a 66.4x 2030E P/E and a stated premium to the A share.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Montage (A) (688008.SS)

  Primary covered A-share security; expected to benefit from AI-server memory demand, DDR6 RCD content expansion and RCD product migration.

  Strengths

  Leading position in memory interconnect ICs, RCD04 shipment ramp, RCD05 mass production entry, and order visibility into 2027.

  Comparison

  A-share target is based on a 48.1x discounted 2030E P/E derived from peers' P/E and net-income-growth correlation.

  Risks

  Weaker-than-expected memory interface IC market growth, slower new-product introductions, or fiercer competition.

• Montage (H) (6809.HK)

  Primary covered H-share security representing the same company exposure.

  Strengths

  Exposure to the same memory-interconnect IC and CXL MXC growth drivers identified for Montage.

  Comparison

  H-share target uses a 66.4x 2030E P/E, a 38% valuation premium to the A share.

  Risks

  Weaker-than-expected memory interface IC market growth, slower new-product introductions, or fiercer competition.

Key data

• A-share 12-month target priceRmb380.00Based on 48.1x discounted 2030E P/E.
• H-share 12-month target priceHK$572.00Based on 66.4x 2030E P/E, a 38% premium to the A share, using 1.09 CNY/HKD.
• A-share price and upsideRmb214.50; 77.2%Price as of 24 September 2026 close.
• H-share price and upsideHK$300.60; 90.3%Price as of 24 September 2026 close.
• Memory channels8–12 currently; 16 in 2027E; potentially 24 long termNew CPU platforms are expected to require more memory channels.
• RCD content per RDIMMTwo under DDR6 versus one currentlyThe report identifies this as a future content-growth driver.
• 2025–2028E revenueRmb5,456.3mn; Rmb8,106.2mn; Rmb11,120.8mn; Rmb15,567.1mnGoldman Sachs forecasts for 2025, 2026E, 2027E and 2028E.
• 2025–2028E EPSRmb1.95; Rmb3.44; Rmb4.26; Rmb5.78Goldman Sachs forecasts for 2025, 2026E, 2027E and 2028E.

Impact & implications

Goldman Sachs believes higher server-memory content, the DDR6 transition and Montage's RCD generation upgrades can extend growth beyond DDR5 penetration and improve ASPs and gross margins. CXL MXC could add a new demand source if customer testing converts into production ramps from 2027.

Risks

• Memory interface IC market growth may be weaker than Goldman Sachs expects.
• New product introductions may be slower than expected.
• Market competition may become fiercer than expected.