Morgan Stanley Initiates Coverage on CXMT with Overweight; 2028 Marks the Watershed for Global DRAM Pricing Power
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Morgan Stanley initiated coverage of CXMT (长鑫科技) at overweight with an RMB 88 target, arguing its capacity will reach the critical mass to reshape global DRAM pricing around 2028 — a potential structural turning point for the memory market.
How big is CXMT right now?
Morgan Stanley estimates CXMT is already the world's fourth-largest DRAM maker, shipping roughly 11% of global DRAM bits in 2026.
The capacity ramp is steep: from 180k wafers per month in 2025 to 500k per month by 2028. Revenue CAGR over 2025–2028 is projected at 140%, with operating margins holding at 70%–72%.
The company turned its first annual profit in 2025 — net income of RMB 1.875 billion. This means → CXMT has passed the cash-burning scale-building stage and is now self-funding.
Before 2028 — should Samsung, SK hynix, and Micron worry?
Morgan Stanley is explicit: before 2028, CXMT's incremental supply will not materially affect global DRAM pricing. The scale isn't there yet — 2026 capacity is about 13% of global DRAM wafer output, rising to roughly 15% by 2028.
AI-driven demand is growing far faster than supply. Morgan Stanley's model shows the global DRAM supply gap widening from about 3%–4% in 2023–2024 to roughly 18% by 2026. In plain terms = the market is short of memory chips and getting shorter — CXMT's extra output gets absorbed before it can pressure prices.
Morgan Stanley maintains overweight ratings on Samsung, SK hynix, and Micron, expecting the tight supply environment to persist through 2027.
How deep has customer penetration gone?
Per Morgan Stanley's channel checks, Alibaba, ByteDance, and Tencent have begun purchasing CXMT server DRAM. Xiaomi and Transsion have added CXMT's LPDDR5/5X to their supply chains. Dell and HP are using CXMT memory in select China and Southeast Asia PC models.
This means → CXMT is no longer just a "domestic substitution story" — it has real sockets across cloud, mobile, and PC.
On pricing, the signal is even sharper: per earlier CNW reporting, Apple tried to negotiate lower DRAM prices with CXMT and was turned down. CXMT insists on pricing at or above Samsung and SK hynix levels. This reflects a confidence in product positioning — no price war.
What happens after 2028?
Morgan Stanley states plainly that even if industry profitability slows, CXMT's expansion will not stop, because DRAM carries strategic importance for China. In plain terms = this is not a pure commercial decision — state-level imperatives drive the build-out regardless of margin cycles.
If DRAM enters a more cyclical phase, Chinese supply will become a major variable in global pricing dynamics.
Historically, leadership in memory shifts when a new entrant achieves scale and simultaneously changes the competitive basis. Morgan Stanley sees China on a similar path — building scale behind a massive domestic market while incumbents concentrate capital on HBM (high-bandwidth memory — premium chips purpose-built for AI accelerators) and advanced server DRAM.
Where does the RMB 88 target come from?
The RMB 88 target implies a 2027 forward P/E of 18.5×, far above the global peer average of 4.4×. The premium rests on a steeper growth curve: 140% revenue CAGR, gross margins above 75%, and EPS CAGR of 480%.
Bull case: RMB 132 (27.7× P/E). Assumes U.S. cloud providers begin sourcing CXMT amid severe global memory shortages, and HBM ramp exceeds expectations with gross margins breaking 90%.
Bear case: RMB 70 (14.8× P/E). Key risks are an AI compute digestion period in 2028 accelerating DRAM price declines, and customer bargaining power compressing gross margins below 40%.
Who benefits most across the supply chain?
Japanese equipment makers: Kokusai Electric has the highest CXMT revenue exposure — CXMT sales accounted for 20% of total revenue in F3/25. Disco leads in TSV (through-silicon via — vertical interconnects drilled through chips) grinding equipment critical for HBM. Advantest dominates the HBM tester market.
Chinese domestic equipment makers: Morgan Stanley reiterates overweight on NAURA, AMEC, and ACM Research, seeing all three as direct beneficiaries of CXMT's capacity expansion and process migration.
Chip design companies: GigaDevice's 2026 related-party transaction budget with CXMT has jumped to RMB 5.711 billion, up from RMB 1.161 billion in 2025. Montage Technology, the global leader in memory interface chips, stands to expand its China supply-chain share as CXMT deepens server DRAM penetration.
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