Bernstein's Initial Coverage of Lanqi Technology: A Rising Star in AI Storage Networks, Target Price of 220 RMB for A-Shares
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Bernstein's Initial Coverage of Lanqi Technology: A Rising Star in AI Storage Networks, Target Price of 220 RMB for A-Shares
Bernstein covers Lanqi Technology for the first time, giving it an 'Outperform' rating and a target price of RMB 220/HKD 320, optimistic about its growth potential as a leader in AI storage interface chips and a rising star in PCIe networking chips.
- The world's largest memory interface chip supplier, benefiting from the surge in value driven by the MRDIMM upgrade from DDR5 to MRDIMM in AI servers.
- PCIe networking chips (Retimer/Switch) are rapidly ramping up production, filling the domestic gap in high-end interconnect chips.
- Projected revenue to reach 25.5 billion RMB by 2030, with net profit margin expected to rise to 54%, demonstrating strong scale effects.
- Compared to market consensus, the firm significantly raised its 2028 EPS forecast by 39%, highlighting its earnings elasticity.
- Ethernet and optical interconnect chips offer long-term options for 3-4 times TAM growth.
Report interpretation
Overview
Bernstein provides the first coverage of Lanqi Technology (Montage Technology), assigning it an 'Outperform' rating. The report argues that Lanqi Technology is transitioning from a single memory interface chip supplier to a core platform company driving China's AI infrastructure. As artificial intelligence evolves from training to inference, especially with Agent AI driving explosive demand for CPU and memory bandwidth, the company's two core businesses—memory interface chips and AI data center (AIDC) networking chips—are both experiencing structural growth opportunities. The report forecasts that the company's revenue will double to 25.5 billion RMB by 2030, with net profit margin expanding to 54%. Based on this, the target price is set at 220 RMB for A-shares and 320 HKD for H-shares.
Core views
Memory interface chips are the company's cash cow business, with the global market expected to grow at a CAGR of 32% to reach 7.5 billion USD by 2030. The core drivers come from three aspects: First, Agent AI boosts server CPU shipments; second, AI servers require higher memory capacity and bandwidth, increasing DIMM slot fill rates per CPU; third, technological iterations dramatically increase the value of each chip, especially the transition from RDIMM to MRDIMM, where the number of chips required per module rises from one RCD to one MRCD plus ten MDBs, significantly boosting value. Lanqi Technology holds a 36.8% global market share and is a leader in MRDIMM standard-setting, with its share expected to expand further. AIDC networking chips are the future growth stars, particularly PCIe Switches and Retimers. In China, constrained by advanced interconnect technologies like NVLink, PCIe has become a critical alternative for CPU-centric connections and Scale-Up connectivity. The Chinese PCIe Switch and Retimer market is projected to grow from 600 million USD in 2025 to 2.7 billion USD by 2030. Lanqi Technology is the only domestic manufacturer with both mass-production capabilities for PCIe Retimers and R&D expertise for Switches, positioning it to dominate the wave of domestic substitution. Additionally, although the company’s deployments in Ethernet and optical interconnect fields are not included in the base model, they provide substantial potential for incremental growth.
Analysis framework
The firm adopted a 'dual-drive + technological iteration' analytical framework. First, by dissecting server architectures, it identified the Memory Wall and interconnect bottlenecks as major constraints on current AI servers, thus pinpointing memory interface and networking chips as two high-growth tracks. Second, it deeply analyzed technology evolution paths (such as DDR5 to MRDIMM, PCIe 5.0 to 6.0), quantifying the ASP increases and bandwidth gains per unit area brought by each technological upgrade. Finally, considering geopolitical factors, it emphasized the need for autonomous and controllable domestic supply chains in China, assessing Lanqi Technology's monopoly potential and room for penetration in the domestic market. By comparing product roadmaps with overseas competitors (such as Rambus and Astera Labs), it established the company's first-mover advantage.
Methodology notes
By breaking down specific components in the server BOM (memory interfaces, PCIe chips), calculating the TAM (Total Available Market) for segmented markets.
The report did not just look at the overall semiconductor or server market but delved into specific signal integrity components. By analyzing factors such as CPU channel counts, slot fill rates, and protocol version upgrades, it precisely calculated that the growth rate of memory interface and PCIe chip markets far exceeds the overall server sales growth rate, thus identifying structural industry opportunities.
Identifying the key inflection points where MRDIMM and PCIe Switches are transitioning from the introduction phase to the growth phase.
The report focused on the replacement process from RDIMM to MRDIMM, pointing out that this is not just a product replacement but also a leap in silicon content and value. By judging that this product is on the eve of large-scale deployment, the firm predicted non-linear revenue growth over the next few years.
Analyzing companies’ positioning advantages in specific technology routes (such as MRDIMM standards, full-stack PCIe solutions).
The report noted that Lanqi Technology defined industry standards in the MRDIMM field and is the only domestic manufacturer capable of providing a complete Switch+Retimer solution. These technological and ecosystem-based barriers to entry form the basis for its ability to capture excess market share.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Lanqi Technology (688008.SS / 048583.HK)Direct beneficiary. As the global leader in memory interface chips and China's only full-stack PCIe networking chip supplier, it directly benefits from the surge in demand for high-bandwidth memory and high-speed interconnects in AI servers.
- Strengths
- 1. World's No. 1 market share (36.8%), MRDIMM technology standard setter; 2. Only domestic manufacturer with mass-production capability for PCIe Switches; 3. Strong SerDes IP reuse capability brings high margins and R&D leverage.
- Weaknesses
- 1. Declining traditional Jintide CPU platform business; 2. Delays in PCIe Switch R&D could affect the second growth curve; 3. Limited liquidity of H-shares.
- Comparison
- Compared to Rambus and Renesas, Lanqi has a stronger first-mover advantage in the MRDIMM field; compared to Astera Labs, Lanqi enjoys stronger customer stickiness and geopolitical dividends in the Chinese market.
- Risks
- 1. Slower-than-expected MRDIMM penetration; 2. CSP cuts AI capital expenditure; 3. PCIe replaced by other interconnect protocols.
Key data
- 2030 Global Memory Interface Chip TAM7.5 billion USDCAGR from 2025 to 2030 around 32%
- 2030 China PCIe Switch & Retimer TAM2.7 billion USDCAGR from 2025 to 2030 around 37%
- 2028 Expected Revenue14.941 billion RMB22.8% above Bloomberg consensus estimate
- 2030 Expected Net Profit Margin54.5%Significantly up from 38.8% in 2024, driven by scale effects and increased proportion of high-margin products
- 2028 Expected EPS6.25 RMB39% above consensus estimate
- Valuation Multiple44x P/E (2BF)Based on earnings from late 2027 to Q1 2028
Impact & implications
For investors, Lanqi Technology's logic has shifted from traditional cyclical memory upgrades to becoming a core beneficiary of AI infrastructure construction. The certainty of the memory interface business comes from the rising penetration of MRDIMM, while the explosion of networking chips depends on how quickly PCIe takes hold in the Scale-Up phase of AI clusters. Since the firm’s expectations significantly exceed market consensus, if subsequent quarterly reports confirm accelerated MRDIMM shipments or smooth progress in PCIe Switches, the stock price could experience a 'Davis Double.' H-shares, due to lock-up restrictions limiting liquidity, have performed stronger than A-shares recently; in the long term, the premium may narrow but still remains attractive.
Risks
- Decline in demand for AI servers and general-purpose server memory
- Slower-than-expected adoption of MRDIMM technology
- Delays in R&D or certification of new products like PCIe Switches
- Increased market competition leading to lower gross margins
- CSP shifts to non-PCIe interconnect protocols (e.g., abandoning PCIe for Scale-Up)
What to watch
- Changes in MRDIMM penetration rate in the global server DDR5 market
- Actual deployment progress and order status of PCIe Switches in AI servers
- Continued upward trend in global server CPU shipments
- R&D progress of Ethernet Retimers and optical interconnect chips
- Expansion of CXMT (Changxin Storage) in the global DRAM market and its procurement ratio from Lanqi