CMSC released a research report stating that the shortage in the memory industry is expected to persist until 2027. Domestic memory manufacturers are anticipated to accelerate capacity expansion overall, which will drive demand and market space for equipment. Orders and localization rates for supply chain segments such as equipment, materials, and components continue to rise. Concurrently, memory technology iteration and upgrades are fostering the emergence of customized new products, with the CBA and advanced packaging supply chains poised to benefit. Considering the resumption of ChangXin Technology's IPO review and its sustained positive trends in profit and cash flow, it is advisable to focus on opportunities within the memory and upstream supply chain segments. The main views of CMSC are as follows:
ChangXin Technology's IPO review has resumed, with guidance indicating continued high sequential quarterly profit growth. ChangXin Technology updated its financial reports and resumed its IPO review. For the full year 2025, ChangXin achieved revenue of RMB 61.80 billion, a year-on-year increase of 155.6%, attributed to ramped-up capacity release and an upward DRAM price cycle. The ASP for the company's main DRAM products increased by 33.7% year-on-year. Gross margin was 41.0%, up 35.4 percentage points year-on-year, primarily benefiting from the company's scale effects and the rapid rise in DRAM prices in the second half of 2025. Net profit attributable to shareholders was RMB 1.87 billion, an increase of RMB 9.02 billion year-on-year, while adjusted net profit was RMB 5.32 billion, up RMB 13.19 billion year-on-year. For Q1 2026, revenue was RMB 50.8 billion, up 719% year-on-year; net profit attributable to shareholders was RMB 24.8 billion, an increase of RMB 26.3 billion year-on-year, and adjusted net profit was RMB 26.3 billion, up RMB 27.7 billion year-on-year. This high-speed growth is mainly due to the continued increase in DRAM product prices coupled with the company's ongoing expansion in production and sales scale. The company guides for H1 2026 revenue of RMB 110-120 billion, a year-on-year increase of 612.5-677.3%, and net profit attributable to shareholders of RMB 50-57 billion. Calculated estimates suggest Q2 2026 revenue of RMB 59.2-69.2 billion, representing a year-on-year increase of 552-662% and a sequential increase of 16.5-36.2%, with net profit attributable to shareholders of RMB 25.2-32.2 billion, up 1.92%-30.19% sequentially.
ChangXin's global market share has increased, with fundraising intended for capacity expansion and technical upgrades. ChangXin Technology currently operates three 12-inch production lines: Hefei Phase I, Hefei Phase II, and Beijing. It is continuously engaged in capacity construction and product iteration, leading to significant improvements in both capacity and output. In 2025, its capacity utilization and production-to-sales ratios were high. In Q4 2025, its global DRAM market share was approximately 7.67%, ranking fourth globally and first in China. ChangXin plans to raise RMB 29.5 billion, with RMB 7.5 billion, RMB 13 billion, and RMB 9 billion allocated respectively for technology upgrades and transformation of mass production lines, DRAM technology upgrades, and R&D for dynamic random-access memory. It is expected that all three existing plants will reach full capacity by 2026. Considering domestic DRAM market demand of about 25% and the company's positive cash flow trends, its production capacity scale is expected to continue rising. Additionally, ChangXin indicated that due to physical and commercial challenges such as leakage current and cost, the evolution of planar DRAM architecture is approaching its limits. Architectures like 4F2 vertical channel transistors and stacked channel transistors are expected to break through scalability limits.
Manufacturer expansion drives volume for equipment/materials/components; technology upgrades fuel new growth points in foundry and packaging & testing. 1) Semiconductor Equipment/Materials/Components: The expansion trend of domestic memory manufacturers is clear, and localization rates are expected to rise. As process technology upgrades, the consumption of equipment and materials continues to increase, simultaneously driving demand for related components. Focus on companies with strong market positions. ① Equipment: ChangXin stated that investment for a single DRAM production line exceeds ten billion USD. As process nodes advance, equipment investment climbs further, which is expected to drive sustained growth in equipment expenditure. It is anticipated that the pace of memory production line expansion will accelerate. Domestic equipment technology continues to achieve breakthroughs, and the localization rate will keep increasing. The growth trend for orders in front-end and back-end advanced packaging equipment is clear. ② Components: Equipment manufacturers' component inventories may be at low levels. As memory equipment orders improve, procurement from component suppliers is expected to increase, leading to rapid growth in component orders and revenue. ③ Materials: The procurement proportion of ChangXin's main materials continues to rise. In 2025, the shares for chemicals/photoresists/silicon wafers/gases/targets were 37.29%/12.16%/8.55%/5.10%/2.21% respectively. The process capabilities of domestic material products are continuously strengthening. As capacity bottlenecks are overcome, revenue and profit are expected to sustain growth. 2) Memory: Continued optimism for the current major memory cycle driven by AI inference. The memory shortage is persistently intensifying, and supply is unlikely to increase significantly in the short term. The supply-demand gap is projected to last until 2027 or even longer. The upward trend in memory contract prices is also expected to continue, with strong potential for sustained high performance growth for companies in the supply chain. 3) Foundry and Packaging & Testing: Memory technology upgrades are expected to drive volume for CBA architecture. Simultaneously, as a core component of computing power, memory expansion is likely to concurrently boost capacity for more advanced logic processes. Memory products are gradually shifting towards customization, with AI inference driving the development of new products like HBM to fill the performance gap between DRAM and SSDs. This also imposes higher requirements for advanced packaging. As the penetration rate of customized memory products increases and orders spill over from ChangXin's expansion, segments like packaging and testing will continue to benefit.
Investment Recommendations: 1) Semiconductor Equipment/Materials/Components: ① Equipment: Naura Technology Group, Advanced Micro-Fabrication Equipment Inc. China, Piotech Inc., Hwatsing Technology Co., Ltd., Kingsemi Co., Ltd., Leadmicro Nano., Wuhan Jingce Electronic Group Co., Ltd., Skyverse Technology Co., Ltd., Suzhou Silergy Semiconductor Co., Ltd., Changchuan Technology, Jingshizhun Technology, Jinhongtong. ② Components: Fusheng Precision, Jiangfeng Electron, Shen Gong, Zhengfan Technology, Yingjie Electric, Kema Technology. ③ Materials: Jiangfeng Electron, Aisen, Shen Gong, Dinglong, Xingfu Electronics, Shanghai Xinyang, Debang Technology, Guanggang Gases, Anji Technology, Luwei Optoelectronics, Qingyi Optoelectronics, Longtu Photomask. 2) Foundry and Packaging & Testing: Semiconductor Manufacturing International Corporation, Hua Hong Semiconductor, Yandong Microelectronics, Jinghe Integrated Technology, JCET Group, Tongfu Microelectronics, Huatian Technology, Huicheng Co., Ltd., Shenzhen Kaifa Technology. 3) Memory: ① Overseas Manufacturers: SanDisk, Micron, SK Hynix, Samsung, Western Digital, Seagate, Kioxia. ② Domestic Manufacturers: ChangXin Technology, Yangtze Memory Technologies Co., Ltd. ③ Modules: Jiangbolong, Biwin Storage, Demingli, Dapu Micro, Netac Technology. ④ Niche Memory: GigaDevice, Puram, Ingenic Semiconductor, Dongxin, Henshuo, Giantec Semiconductor.
Risk Warning: Terminal demand falling short of expectations; slower-than-expected inventory digestion; slower-than-expected progress in semiconductor localization; intensifying industry competition.
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