CXMT, the chip maker that could be China's answer to SK Hynix, set high expectations for revenue growth.
On Friday, it delivered, reporting a more than eightfold jump in sales for the first nine months of the year as it captured the massive supply gap in memory chips caused by the artificial-intelligence boom, cementing its status as one of China's most promising chip makers.
ChangXin Memory Technologies, as it is officially known, has been using the AI windfall to expand capacity and advance its technology, in line with China's ambition to have homegrown semiconductor powerhouses that can hold their own with foreign counterparts.
CXMT has a long way to go to close the gap with global leaders, but consistently strong earnings suggest it is making progress.
The company said revenue surged to 269.02 billion yuan, equivalent to $40.39 billion, for the January-September period, in line with its guidance. Net profit reached 132.04 billion yuan, compared with net loss of 5.3 billion yuan in the year-ago period.
Strong memory-chip pricing amid the tight supply, the company's capacity expansion as well as improving product mix all boosted its results, the company said.
Morgan Stanley analysts said recently that industry supply constraints and technology migration are continuing to support pricing and profitability across the sector, while identifying CXMT as a key beneficiary of favorable supply-demand dynamics and continuing technology improvements.
Investors have cheered CXMT's market-share gains and rapid profit turnaround. CXMT's stock has risen nearly fivefold since its July debut, though it has come under pressure in recent weeks as investors grow more cautious about AI spending and the cyclical nature of the memory market.
Despite the current insatiable demand, analysts warn that memory makers' super profits will eventually bring on new supply and a brutal downturn to the industry.
CXMT is moving beyond its roots as a domestic commodity-memory supplier to escape the eventual end of the AI-driven supercycle. The company recently highlighted progress in manufacturing technologies that allow memory chips to store more data without increasing production footprint, an area investors increasingly view as critical to narrowing the gap with global leaders such as Samsung Electronics and SK Hynix, which also reported blockbuster results this week.
Interest in CXMT's long-term growth prospects has also been heightened by developments in the AI ecosystem.
Asked whether Nvidia could work with Chinese memory suppliers such as CXMT, Chief Executive Jensen Huang recently told CNBC that the company remains open to working with Chinese firms where regulations permit. While no commercial relationship between Nvidia and CXMT has been announced, investors have increasingly focused on which domestic chip makers could ultimately benefit from the expansion of AI infrastructure.
CXMT provided little new detail on high-bandwidth memory, or HBM, but executives said last month that it would continue advancing products and process technologies in line with its road map and commercial plans. Investors have closely monitored the company's progress in next-generation memory technologies, which are widely expected to become an increasingly important driver of industry growth over the coming years.
Still, despite CXMT's aggressive capacity ramp-up plan, it will likely satisfy only about half of China's DRAM needs and 40% of HBM demand by 2028, Goldman Sachs analysts said, leaving ample room for peers in the Chinese market.
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