Analysis Report on CXMT’s DDR5 Product Gross Margin of 35%
I. Core Drivers of Gross Margin Improvement
CXMT’s DDR5 product gross margin has significantly increased from -1.93% in 2023 to 35% in Q3 2025 [1], which stems from the combined effect of multiple favorable factors.
Product Structure Iteration and Upgrade
is the primary driver. CXMT completed the full transition from DDR4 to DDR5 by the end of 2024, shifting all production capacity to next-generation DRAM products such as DDR5 and LPDDR5/5X [1]. The company recently launched its first domestic DDR5 product with a speed of up to 8000Mbps and a maximum single-chip capacity of 24Gb; the LPDDR5X product has a maximum speed of 10667Mbps, an increase of 66% compared to the previous generation [2]. The product generation leap has directly reshaped the gross margin curve.
The storage industry entering a price increase cycle
forms the second support. Since 2025, the continuous pull of AI computing power demand has led international storage original manufacturers such as Samsung and SK Hynix to shift their production capacity focus to HBM (High Bandwidth Memory), resulting in a shortage of conventional DRAM capacity and continuous price increases [1]. According to TrendForce data, server DRAM quotes have soared by nearly 70% in Q4 2025 [3].
Continuous improvement in capacity utilization
provides economies of scale support. According to the prospectus, CXMT’s capacity utilization rate increased from 85.45% in 2022 to 94.63% in the first three quarters of 2025 [2]. High capacity utilization effectively spreads fixed costs and improves the profitability of unit products.
II. Supporting Factors for Sustained Gross Margin Improvement
Market share expansion enhances bargaining power
. According to Omdia data, based on 2024 production capacity and shipment volume, CXMT has become the largest DRAM manufacturer in China and the fourth largest globally [2]. Its global market share increased to 3.97% in Q2 2025 and further to 8% in Q3 [4][5]. Counterpoint predicts that CXMT’s share in the DRAM market is expected to rise to 8% by the end of 2025 [6]. The expansion of market share strengthens the company’s market bargaining power and economies of scale.
Leading R&D investment intensity provides guarantee for technological iteration
. In the first half of 2025, CXMT’s R&D expense ratio reached 23.71%, more than twice the industry average (10.37%) [1]. Among international storage giants, Samsung Electronics is 11.74%, SK Hynix is 7.39%, and Micron Technology is 10.66% [1]. High-intensity R&D investment supports the implementation of the “generational leap R&D” strategy, ensuring sustained leadership in product technology generations.
Structural capacity gap in the industry continues
. The three major original manufacturers have significantly tilted their capacity allocation towards servers, increasing the proportion from 55%-60% to 70%, while the total volume of other categories has decreased by 10%-15% [3]. Acer Chairman Jason Chen publicly stated: “It depends on when China’s DDR5 capacity can be mass-produced; as long as this wave of capacity catches up, the (storage) shortage problem can be solved immediately” [1]. As a major domestic DDR5 supplier, CXMT is expected to continue to undertake spillover demand.
III. Risk Factors Facing Gross Margin Improvement
Cyclical fluctuations in the storage industry
are the primary risk to watch. This round of price increases is largely affected by the sustainability of AI demand and the rhythm of capacity release. TrendForce analysts point out that the concentrated release of new capacity after 2027 may narrow the supply-demand gap [7]. A downward industry cycle may lead to price corrections, thereby affecting gross margin levels.
Technological yield improvement still takes time
poses a practical challenge. Domestic enterprises face technical gaps in DDR5 chip yield and HBM mass production capabilities [7]. According to prospectus data, the production and sales rate dropped to 89.30% from January to September 2025 [2], reflecting that there is still room for improvement in yield and product consistency. Each 1 percentage point increase in yield will directly increase gross margin.
External environment uncertainty
cannot be ignored. Tight supply of semiconductor equipment, export controls, and other external factors may affect the company’s capacity expansion and technological upgrade rhythm [7]. At the same time, the technological leading edge of international competitors is still significant—SK Hynix’s gross margin climbed to 57% in Q3 2025 [3], and after Samsung shifted its 1Y nanometer process 16Gb DDR4 capacity to DDR5, its gross margin increased by 12 percentage points compared to the DDR4 era [3].
IV. Conclusion and Outlook
Comprehensive analysis shows that CXMT’s DDR5 product gross margin of 35% has certain sustainability in the short term, but the medium to long-term improvement space and sustainability need to be carefully evaluated:
Short term (2025-2026)
: Against the background of the AI-driven storage super cycle, coupled with the structural supply gap caused by Samsung and SK Hynix shifting capacity to HBM, CXMT is expected to maintain a high gross margin level. The company has launched an IPO, planning to raise 29.5 billion yuan for technological upgrades and capacity expansion [1], which will further consolidate its competitive advantages.
Medium term (2027 and beyond)
: With the concentrated release of new industry capacity and adjustments in supply and demand patterns, gross margin may face correction pressure. The company’s response strategy will be to continuously improve DDR5 yield, expand market share, and promote next-generation product R&D.
Long term
: TechInsights predicts that CXMT is expected to occupy 5% to 10% of the global market share by 2030 [6], becoming an important force to ease the supply pressure of consumer-grade DDR5. If the company can continue to maintain high R&D investment intensity, steadily improve yield, and expand production capacity scale, there is still room for further improvement in gross margin.
References
[1] Economic Observer Online - Storage “Unicorn” CXMT’s IPO Accepted: Plans to Raise 29.5 Billion Yuan (http://www.eeo.com.cn/2025/1231/776340.shtml)
[2] 21st Century Business Herald - A-share Storage Chip First Stock Arrives: Plans to Raise 29.5 Billion Yuan (https://www.21jingji.com/article/20251231/herald/1158b65e5308fc615eef69cc215976d3.html)
[3] Wall Street News - Cars Are Also Snatching Memory Chips (https://wallstreetcn.com/articles/3760958)
[4] 36Kr - China Increases Presence in Storage Semiconductor Field (https://m.36kr.com/p/3582115858316168)
[5] IT Manager Network - Memory Price Increase Far From Peaking: Supply Shuffle Under AI Frenzy (https://www.ctocio.com/ccnews/41631.html)
[6] Counterpoint/TechInsights Market Forecast Data
[7] Caifuhao - Sorting Out 6 Potential Stocks in the Storage Industry Chain (https://caifuhao.eastmoney.com/news/20251226195158576284290)
