Nomura initiates coverage on ChangXin Memory Technologies: positive on China's largest DRAM maker gaining share in an AI memory tight-supply cycle

Overview

This is Nomura's initiation report on ChangXin Memory Technologies. The report positions ChangXin Memory Technologies as China's largest and the world's fourth-largest DRAM manufacturer, and believes that as AI training expands into inference, RAG, and agentic AI applications, DRAM, HBM, and SSDs are entering a memory supercycle. As global supply expansion faces physical constraints from cleanrooms, equipment, materials, and talent, the report expects ChangXin Memory Technologies to benefit from capacity expansion, process migration, and ASP increases in a tight supply-demand environment.

Core views

The core views include: first, global memory demand may sustain a bit CAGR of over 60% in 2026-2030F, while industry supply bit CAGR is about 30-40%, so the tight supply-demand dynamic may persist; second, ChangXin Memory Technologies' bit growth in 2026-2030F is expected to be about 40-45%, above the industry average but still below demand growth, and therefore it is likely to continue gaining share; third, the company's current mainstream process is around the 1x-1y node, with DDR5 yield at about 80% and DDR4 yield above 90%, and it may have mass-production capability for HBM3 starting from 2027F; fourth, the MATCH Act or potential US sanctions are downside risks that require close monitoring, particularly for their impact on overseas equipment, materials, and the pace of Shanghai capacity expansion.

Analysis framework

The report uses a top-down industry supply-demand framework combined with bottom-up company earnings forecasts: it first assesses memory demand from agentic AI task flows, KV cache, memory hierarchy, and efficiency technologies, then compares DRAM industry capacity, wafer output, and bit/wafer growth, and finally maps these to ChangXin Memory Technologies' capacity plan, process migration, ASP, revenue, profit, and valuation.

Methodology notes

• Valuation methodsTarget P/E method

  20x 2028F EPS

  The target price of CNY116 is based on 20x 2028F EPS of CNY5.8. The report believes ChangXin Memory Technologies deserves a higher multiple than Micron's roughly 10x P/E over the past five years due to market share gains and a China market valuation premium.

• Industry supply-demandDRAM supply-demand gap analysis

  Comparison of demand CAGR and supply CAGR

  The report assumes memory demand CAGR of about 60% in 2026-2030F, while industry supply bit CAGR is about 30-40%, so the supply-demand gap will be difficult to eliminate quickly.

• Technology trendAgentic AI memory hierarchy analysis

  Layering of KV cache, HBM, DDR, SSD, and HBF

  The report breaks agentic AI tasks into eight stages: request, weight loading, prefill, inference planning, tool execution, context integration, multi-step iteration, and response generation, and points out that concurrent memory pressure is highest during the multi-step iteration stage.

Asset mapping & comparison

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

• ChangXin Memory Technologies 688825.SS

  Core covered name

  Strengths

  China's largest DRAM manufacturer, with a thesis centered on capacity expansion, process migration, and domestic substitution, and expected share gains.

  Weaknesses

  Its mainstream technology still lags leading overseas manufacturers, and some key equipment and materials depend on overseas supply.

  Comparison

  The report compares its valuation with Micron and believes ChangXin Memory Technologies can obtain a higher P/E multiple due to China market valuation and share gains.

  Risks

  MATCH Act, potential Entity List inclusion, deterioration in end demand, domestic competition, and insufficient supply of key components.

• Micron

  Overseas valuation benchmark

  Strengths

  A major global DRAM competitor whose historical valuation provides a reference point.

  Weaknesses

  The report does not rate Micron and uses it only as a valuation benchmark.

  Comparison

  Micron traded at about 10x P/E over the past five years, while ChangXin Memory Technologies' target multiple is 20x.

  Risks

  Global DRAM cycle volatility will affect the comparable valuation.

• YMTC

  Potential domestic competitor

  Strengths

  A domestic semiconductor memory-related company.

  Weaknesses

  The report does not provide detailed financial analysis.

  Comparison

  Mentioned as a risk of intensifying domestic competition.

  Risks

  If domestic peer competition intensifies, it may compress ChangXin Memory Technologies' pricing and share gain potential.

• GigaDevice

  Partner related to DRAM-on-logic WoW cooperation

  Strengths

  Working with ChangXin Memory Technologies to advance DRAM-on-logic production and design to serve edge AI demand.

  Weaknesses

  The report does not provide a specific estimate of earnings contribution.

  Comparison

  More reflective of supply-chain collaboration than a direct valuation benchmark.

  Risks

  There is uncertainty around the pace of WoW mass production, customer ramp-up, and application commercialization.

Key data

• RatingBuyNomura initiation rating.
• Target priceCNY116.00Based on 20x 2028F EPS of CNY5.8.
• Reference current priceCNY8.66Listed in the table as the IPO price.
• Implied upside+1,239.5%Calculated from the target price relative to the IPO price.
• 2026-2028F sales CAGR63%Report forecast.
• 2026-2028F attributable net profit CAGR74%Report forecast.
• 2028F EPSCNY5.8Used for target price valuation.
• Global DRAM share targetabout 10% currently to about 18% by end-2028The report's estimate of ChangXin Memory Technologies' share gains.
• End-2028 capacity550kwpmThe report expects total capacity growth driven by Hefei, Beijing, and newly added capacity.
• 2026-2030F ChangXin Memory Technologies bit growth40-45% CAGRAbove the industry average but below demand growth.
• 2026-2030F memory demand growthOver 60% bit CAGR, more than 7x growthMainly driven by growth in concurrent agentic AI tasks.
• Localization rate of domestic equipmentabout 40%Estimated by the report; under sanctions risk, it may affect yield and capacity expansion.

Impact & implications

In terms of investment implications, the report views ChangXin Memory Technologies as a key beneficiary of China's DRAM localization and expanding AI memory demand. If the memory demand driven by AI inference and agentic AI continues to exceed expectations while overseas supply expansion remains constrained, the company may simultaneously benefit from share gains, rising ASPs, and earnings leverage. However, its valuation and earnings path are highly sensitive to the policy environment, availability of equipment and materials, process advancement, and the industry cycle.

Risks

• Deterioration in end demand, causing DRAM prices, shipments, and profitability to fall short of expectations.
• Intensified domestic competition, especially potential competition from local peers such as YMTC.
• Insufficient supply of key components such as ICs and CPUs, affecting end-product sales and realization of memory demand.
• Escalation of China-US geopolitical tensions, with restrictions such as the MATCH Act or Entity List potentially affecting equipment, materials, and capacity expansion.
• High-end photoresist and other materials are mainly supplied by Japanese companies; if imports are restricted, sub-15nm process advancement may be affected.
• If adoption of agentic AI is lower than expected, or if memory efficiency technologies deliver greater-than-expected savings, memory demand growth may fall short of forecasts.
• The DRAM industry is cyclical; if capacity expansion gets out of control or demand slows, price corrections may occur.

What to watch

• Whether MATCH Act legislation and US semiconductor export restrictions on China expand to key equipment maintenance and material supply.
• Whether ChangXin Memory Technologies' Shanghai expansion project progresses as planned, especially given that it may account for 30-40% of total 2028F capacity.
• Progress in DDR5, HBM3, HBM3e, and 12-16nm node advancement and customer validation.
• Whether the gap between global DRAM supply bit growth and AI-related demand growth in 2026-2030F persists.
• Whether the number of agentic AI tasks, user adoption rate, task duration, and token consumption validate the report's high-growth assumptions.
• Long-term memory supply agreements, DRAM price stability, and industry expansion discipline after 2028F.
• Changes in China's DRAM self-sufficiency rate and ChangXin Memory Technologies' penetration among domestic customers.