Chinese memory semiconductor leader Changxin Memory Technologies (CXMT) is expected to greatly increase its DRAM production capacity this year, exceeding initial forecasts. If this trend continues, CXMT's DRAM production is likely to closely pursue U.S. Micron, reaching about half the level of SK hynix, according to analysis. There are also predictions that within 1 to 2 years, the DRAM market will be reshaped from a three-player structure to a four-player structure, alongside a full-blown oversupply.
According to the latest statistics from market research firm Omdia on the 18th, Chinese CXMT is projected to increase its DRAM production capacity from 1.62 million units last year to 2.73 million units this year, representing a 68% increase. Previously, the market had anticipated that CXMT's DRAM production capacity would increase by about 20% this year, but it is expected to expand more than three times faster than that. CXMT is also expected to increase its share of both legacy DRAM DDR4 and DDR5.
Until the first quarter of last year, CXMT's average monthly DRAM production was only about 100,000 units, which was one-fourth of SK hynix’s production. Moreover, most of the products were DDR4 DRAM. However, in the first quarter of this year, it produced an average of 200,000 units per month, doubling from last year, with expectations for production to expand to approximately 300,000 units next year.
CXMT significantly increased its DDR4 production last year, pushing for price reductions, becoming a player that can no longer be ignored in the DRAM market. The three-player structure, solidified for nearly 15 years by Samsung Electronics, SK hynix, and Micron, has begun to show cracks. Both Samsung Electronics and SK hynix have publicly noted that the aggressive pricing of Chinese DRAM is impacting their financial performance during last year's earnings conference calls.
Founded in 2016, CXMT is showing aggressive progress by successfully mass-producing not only legacy DRAM but also DDR5 DRAM, which are flagship products of Samsung Electronics and SK hynix. Some market research firms, including TechInsights, have reported that despite evaluations stating that China lags behind Korea by about 3 to 4 years technologically, the performance of CXMT’s DDR5 is not significantly different from that of Korea.
According to prior data from Chinese consulting firm ChenZhan, CXMT's market share in the DRAM market, which remained at around 0% in 2020, increased to 5% last year. Another market research firm, TrendForce, forecasts that CXMT's DRAM market share could rise to 12% by the end of this year. Dan Hutchison, vice president of the research firm TechInsights, evaluated in an interview with the Financial Times (FT) that 'although CXMT's market share is still low, it is creating a 'snowball effect' with its rapid growth,' noting that this is similar to how Korea displaced Japan in the memory sector.
Meanwhile, CXMT is making large-scale investments in research and development of high bandwidth memory (HBM). Hyundai Motor Securities recently projected in a report that 'given that Chinese DRAM companies are developing HBM3 (fourth generation HBM) and HBM2E (third generation HBM), Chinese HBM is expected to be incorporated into Huawei's Ascend series within the next 2 to 3 years.'