Abstract:
According to Nikkei Asia, data shows that Changxin Memory's pre-interest and tax profit margin reached 82% in the second quarter of this year, surpassing major memory chip manufacturers such as SK Hynix, Micron, and Samsung Electronics' semiconductor business, becoming the memory chip company with the highest profit margin in the world in this quarter.
Relevant data comes from QUICK FactSet and corporate disclosures. During the same period, SK Hynix’s pre-interest and tax profit margin was 76%, and Samsung Electronics’ semiconductor business was 70%. Changxin Memory's revenue increased approximately 10 times compared with the same period last year, with the highest growth rate among the six companies: Changxin Memory, Samsung, SK Hynix, Micron, Kioxia and SanDisk.
However, in terms of absolute profit scale, Changxin Memory is still lower than SK Hynix, Micron and other companies. This lead is mainly reflected in the profit margin before interest and tax in a single quarter, and does not mean that its overall scale has surpassed the world's leading memory chip manufacturers.
Changxin Memory mainly produces DRAM chips, including DDR5, which are used in data centers, personal computers and game consoles. Its customers include Chinese technology companies such as Alibaba, ByteDance and Tencent.
"Nikkei Asia" believes that the increase in Changxin Memory's profit margin is closely related to the current round of changes in the supply and demand of memory chips. As Samsung, SK Hynix and Micron devote more resources to high-bandwidth memory for AI servers, the supply of ordinary DRAM tightens and the price of DDR5 rises sharply, benefiting Changxin Memory.
There are also differences in the contract models of HBM and DDR5. HBM usually signs annual supply agreements between memory chip manufacturers and large cloud service providers, and short-term prices are less affected by market fluctuations. DDR5 prices are more closely linked to spot market supply and demand, so profitability increases faster in the current price increase cycle.
According to market research firm TrendForce, HBM’s profitability has been lower than DDR5 since the first quarter of this year. Jun Okamoto, partner at KPMG FAS, said that in the current market environment, companies with a higher proportion of ordinary DRAM sales are more likely to benefit.
Changxin Storage is expanding its production capacity. The company will use the funds raised from its initial public offering in July this year to continue to increase the production capacity of the Hefei factory and plans to build a new factory in Shanghai.
QUICK FactSet data shows that Changxin Storage has now become China’s most valuable listed company, with a market value close to three times that of Japan’s Kioxia. Its forward price-to-earnings ratio is close to 20 times, while Samsung, SK Hynix and Kioxia are in the single digits, reflecting investors' higher expectations for Changxin Memory's future growth.
At the same time, Yangtze Memory’s parent company has applied to be listed in Shanghai. Both Changxin Memory and Yangtze Memory have benefited from the tight supply of global memory chips and are accelerating the expansion of production capacity.
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