**Thirteen Times Bullish on ChangXin Memory Technologies?**

Original author: Su Yang

Original editor: Xu Qingyang

Original source: Tencent Technology

ChangXin's IPO has become the hottest topic in China's tech sector.

On July 27, ChangXin Technology, China's leading DRAM manufacturer, debuted on the STAR Market (Shanghai Stock Exchange's sci-tech board) with an opening price of RMB 49.50 per share, surging over 470% from its IPO price of RMB 8.66. Simultaneously, with a market cap exceeding RMB 3.6 trillion, it surpassed Industrial and Commercial Bank of China (ICBC) to top the A-share market cap rankings, doubling the market value of Kweichow Moutai and claiming the title of "A-share leader."

As the only IDM enterprise in China capable of mass-producing DRAM at scale, ChangXin's net profit exceeded RMB 50 billion in the first half of the year. Its global market share has climbed from 3% to nearly 8%, carving out a foothold in a market dominated for decades by Samsung, SK Hynix, and Micron.

Alongside ChangXin's surge, a report from Nomura also caught fire.

On July 27, before the market opened, international investment bank Nomura released a report initiating coverage on ChangXin with a "Buy" rating and a target price of RMB 116. With an estimated upside of over 12 times the opening price, ChangXin was instantly thrust into the market spotlight. In its report, Nomura even likened the industrial value of ChangXin's DRAM chips to "the crown jewel of China."

Nomura's research report on ChangXin

"A target price above 100 (implying over RMB 7 trillion market cap) is somewhat aggressive," said an investor who has long tracked China's semiconductor industry. "It's possible, but it would require euphoric market sentiment and would likely consume at least the next three years of growth."

So, what is the underlying logic behind Nomura's 13x bullish call on ChangXin, and how does it assess the risks?

Revenue Expected to Reach RMB 560 Billion in 2027

According to data disclosed by ChangXin in its IPO press release, the company expects revenue of RMB 110 billion to RMB 120 billion for the first half of 2026, representing a year-over-year increase of 612.53% to 677.31%. Net profit attributable to shareholders is projected to be between RMB 50 billion and RMB 57 billion, up 2244.03% to 2544.19% year-over-year.

Regarding the performance growth, ChangXin stated, "In recent years, driven by factors such as the recovery of the storage industry, optimization of product mix, and the release of economies of scale, the company's operating performance has achieved rapid growth."

Compared to ChangXin's own estimates, Nomura's report appears more optimistic. According to its model projections, ChangXin's revenue will surge from RMB 61.8 billion in 2025 to RMB 290.7 billion in 2026, RMB 560.8 billion in 2027, and RMB 773.3 billion in 2028.

Nomura also expects ChangXin's net profit attributable to shareholders to climb from less than RMB 1.9 billion to RMB 130.3 billion, RMB 277.2 billion, and RMB 393.1 billion over the three years 2026, 2027, and 2028, respectively. The compound annual growth rates for these two metrics are projected at 63% for revenue and 74% for net profit.

The underlying logic for ChangXin's performance forecast centers on three dimensions: capacity expansion, technological upgrades, and price increases. The first two dimensions are strongly correlated with the use of proceeds outlined in ChangXin's prospectus.

Previously, ChangXin disclosed in its prospectus that the funds raised would primarily be used for projects including the technological upgrade of mass-production lines for memory wafer fabrication, DRAM memory technology upgrades, and research and development of advanced DRAM technologies, to further enhance its advanced manufacturing capabilities and innovation level.

It's worth noting that the price increases primarily stem from two aspects: first, an increase in the average selling price per wafer driven by technological upgrades; second, a general rise in memory chip prices amid the current super-cycle.

"Since the second half of 2025, the sustained increase in product prices has driven a rapid improvement in gross profit margins and profitability, leading to a turnaround to profitability in 2025," ChangXin wrote earlier in the overview section of its prospectus.

The product shipment mix at ChangXin is also undergoing an upgrade.

In a previous response to a regulatory inquiry, ChangXin Technology disclosed that mobile terminal products are currently its main revenue driver. Smartphone manufacturers like Xiaomi, Transsion, Honor, vivo, and OPPO correspond to its LPDDR series products, while cloud providers like Alibaba and ByteDance primarily correspond to its DDR series products.

The revenue contribution from these two customer groups was roughly 9:1.

By May 17, 2026, revenue from AI server-related products, represented by the DDR series, jumped to over 30%, but the mainstay remained the LPDDR series product line, accounting for over 66%.

During this phase of performance ramp-up, the potential move by a heavyweight customer, Apple, is particularly noteworthy.

According to a Financial Times report, Apple has begun testing ChangXin's DRAM chips, aiming to use them in devices like entry-level iPhones sold in the Chinese market. Concurrently, starting around May or June this year, Apple has been lobbying the U.S. government to secure the necessary approvals.

If the cooperation ultimately materializes, ChangXin could take on a portion of Apple's global DRAM procurement. The significance of this order extends far beyond the sales figures themselves; it marks a shift for a supplier previously labeled as a "domestic alternative" towards becoming a supplier recognized by mainstream global customers.

However, some institutions believe Apple is only purchasing ChangXin's products in small volumes and may be using the introduction of a new supply variable as leverage in negotiations with Samsung and SK Hynix.

Capacity Frenzy, Valuation Rivals Twice Micron's

Based on Nomura's target price of RMB 116, corresponding to an EPS of RMB 5.8 in 2028, ChangXin's forward P/E ratio is approximately 20 times.

"Over RMB 100 billion in profit supporting a RMB 2 trillion market cap is reasonable," Chen Qi, an investor focused on the semiconductor industry, previously told Tencent Technology. "A RMB 2 trillion market cap corresponds precisely to a 20x P/E."

In comparison, Wall Street's expected P/E for Micron in calendar year 2026 is around 10x, while SK Hynix's is only about 5x. Chen Qi remarked, "When the semiconductor cycle turns, anything is possible."

In Chen Qi's view, a 10x P/E is reasonable, but a 20x P/E is also within the realm of possibility. "ChangXin's real opportunity lies in it standing opposite Samsung, Hynix, and Micron, representing China's true entry into the storage game."

Nomura's 20x P/E for ChangXin is also based on another rationale: Micron can be seen as a valuation anchor in the global DRAM sector, with a historical median forward P/E of around 10x. Meanwhile, the A-share semiconductor sector has long traded at a valuation premium of 1 to 3 times compared to its US counterparts. Taking the median of approximately 2x yields a P/E of about 20x for ChangXin.

The core driver of ChangXin's valuation is that global storage demand is being pulled into exponential expansion by AI, while the supply side, constrained by physical bottlenecks, simply cannot keep pace. Nomura estimates that even discounting the efficiency gains of storage technologies by 60%, global memory demand will still need to grow more than sevenfold between 2026 and 2030, representing a compound annual growth rate exceeding 60%.

Nomura even posits a more extreme scenario: if AI robots operate autonomously without the constraints of human operational rhythm, the upper limit of demand is only defined by authorization boundaries, infrastructure capacity, and CapEx budgets.

But the expansion rate on the supply side is far slower.

Nomura projects the industry's capacity expansion CAGR at only 30% to 40%. ChangXin's bit expansion CAGR between 2026 and 2030 is estimated at around 40% to 45%, which, while higher than the industry average, remains significantly below the growth rate of demand.

Furthermore, around the same time Nomura released its report, Korean and American chip giants initiated a new round of consolidation.

On July 24, local time in the US, Samsung Electronics signed a memorandum of understanding with Broadcom valued at over USD 200 billion, covering high-end memory supply like HBM4, 2nm foundry services, and advanced packaging. Around the same period, SK Group and SK Hynix reached a long-term cooperation intent with NVIDIA, valued at over USD 500 billion, involving joint development and stable supply for next-generation HBM.

For ChangXin, the more focused leading players become on HBM, the more pronounced the supply gap left in the traditional DRAM market. Nomura predicts ChangXin's share of the global DRAM market will rise from its current ~10% to 18% by the end of 2028.

Additionally, from the perspective of the domestic Chinese market, there is ample room for increasing the self-sufficiency rate, providing a growth window for ChangXin's performance.

According to WSTS data, China accounted for approximately 25% of the global DRAM consumption market in 2025. However, based on production revenue, the global share of domestic manufacturers was only about 10%, implying a self-sufficiency rate of around 30%. The potential for substitution within the Chinese market alone is quite considerable.

A Dual Examination Under the Spotlight

While the prospects are tempting, Nomura's report also dedicates considerable space to discussing risks.

The foremost risk is the embargo on critical equipment and materials, driven by the U.S. MATCH Act and other regulations. This includes items like lithography and etching equipment, as well as high-end photoresists. In the worst-case scenario, besides constrained capacity expansion, ChangXin's revenue and net profit in 2027 and 2028 could shrink by approximately 13%-14% and 30%-33%, respectively.

These external risks heavily overlap with the multiple shortcomings mentioned in the prospectus.

ChangXin's prospectus cites "geopolitical risks" related to the 1260H list, as well as competitive risks from a highly monopolistic global market. Most critically, it highlights the industry's cyclical risk—the strong cyclical nature of the DRAM industry and the risk of significant performance volatility.

Currently, the industry remains in an upward super-cycle, but cracks in the consensus on storage are already appearing.

Take Micron, for example. After hitting an all-time high of $1,255 on June 25, its stock fell to a low of $804 within just three weeks, experiencing a maximum drawdown of 36%. SK Hynix's decline was even more dramatic. Its Korean-listed shares fell from a high of KRW 2,987,000 on June 25 to KRW 1,678,000, a drawdown of 43.8%. Its ADR surged 27% in a single day on July 14 only to fall back 9% the next day.

The aforementioned long-time China semiconductor investor told Tencent Technology that cyclicality ultimately reverts to fundamental supply and demand theory. "As long as the market is frenzied, capacity expansion is unlimited. And demand can halt abruptly at a certain inflection point. No market is an exception; storage is just a more extreme case."

This investor cited the example of Hua Hong's investment in storage during the peak of the internet bubble in the 1990s, which led to extreme volatility and an eventual pivot to logic chip foundry, to emphasize the impact of storage cyclicality. "Few other markets see 5-10x price increases in 1-2 years during a boom, followed by a 90% price collapse in 1-2 years during a bust. Since 1990, this has happened at least five times, roughly on a 6-year cycle—a very regular pattern."

Therefore, how to maintain financial discipline and avoid aggressive capacity expansion during the favorable upward cycle will also test ChangXin's long-term wisdom.