Chinese memory manufacturers are developing rapidly. Changxin Memory has ranked fourth in the global DRAM market, with a monetary share of 9.5%. In addition, according to Quick FactSet and quarterly reports of major global market players, Changxin Storage’s profit margin in the second quarter of this year has exceeded them.
Image source: Changxin Storage
as explained Nikkei Asian ReviewWe’re talking about earnings before tax and loan interest payments (EBIT) – by this measure, Changxin Storage’s operating profit margin in the second quarter reached 82%. In comparable numbers, both SK Hynix (76%) and Samsung Electronics (70%) lag behind, although the latter remains the largest memory maker by revenue. The absolute value of Changxin Storage’s profits is also significantly inferior to the performance of the above-mentioned Korean memory manufacturers and US Micron Technology. However, in terms of profit margins, Changxin Storage’s business efficiency is higher than that of its competitors, as its cost margins are the best in the industry. Sandisk and Kioxia are also inferior to CXMT in this sense, although they are technically focused on producing NAND memory rather than DRAM.
Changxin Storage’s profits mainly come from DDR5 memory. There is currently a huge demand for DDR5 memory in the data center field. The structure of the DDR5 market makes the price of such memory more volatile than that of HBM, which has long been supplied under long-term contracts and does not imply price increases. This is true even for DDR5 supply contracts, where suppliers have the opportunity to raise prices once the exchange rate moves favorably. In the first quarter, DDR5 sales margins were higher than HBM.
After its recent IPO, Changxin Storage has become the largest issuer in the Chinese stock market, with its market capitalization approximately three times greater than that of Japan’s Kioxia. Under this circumstance, investors were betting on the positive development of Changxin’s storage business, and it lived up to expectations. It was made no secret that the funds raised from the IPO would be mainly used to expand production capacity.
If you find an error, select it with your mouse and press CTRL+ENTER.
