Economic Observer reporter Zheng Chenye

It took Changxin Technology (688825. SH) a year to go from a loss to a net profit of 77.6 billion yuan in six months.

On the evening of August 28th, Changxin Technology released its 2026 semi annual report: in the first half of the year, the company achieved a revenue of 150.31 billion yuan, a year-on-year increase of 873.64%; The net profit attributable to the parent company was 77.605 billion yuan, compared to a loss of 2.332 billion yuan in the same period last year; Realize a net profit of 78.793 billion yuan after deducting non attributable expenses, compared to a loss of 2.387 billion yuan in the same period last year.

According to previously publicly disclosed data, Changxin Technology achieved a net profit of approximately 52.8 billion yuan in the second quarter, an increase of approximately 113% compared to the 24.762 billion yuan in the first quarter, and is still accelerating.

Changxin Technology is the largest DRAM (dynamic random access memory, a kind of memory chip) manufacturer in Chinese Mainland, whose products are mainly used in mobile phones, computers and servers. Changxin Technology mentioned in its semi annual report that the company has ranked fourth globally in terms of shipments and sales.

According to Omdia, a well-known market research firm, the global DRAM market has long been dominated by three manufacturers: Samsung Electronics (005930. KS), SK Hynix (000660. KS), and Micron Technology (MU. NASDAQ). By 2025, these three companies will collectively hold over 90% of the global market share.

In its semi annual report, Changxin Technology attributed its performance growth to factors such as the rapid increase in global computing power demand and the allocation of production capacity by major global manufacturers, resulting in a global shortage of DRAM products and a significant upward trend in prices.

As of the close on August 28th, Changxin Technology's total market value reached 3.98 trillion yuan.

Price Increase

This round of DRAM price increases started in the second half of 2025 and is still ongoing.

According to statistics from Jibang Consulting, DRAM contract prices increased by 93% to 98% month on month in the first quarter of 2026. The growth rate narrowed in the second quarter, and the latest forecast for the third quarter is a 13% to 18% month on month increase. The growth rate has further slowed down, but prices are still hitting new highs. Public market data shows that the contract price for DDR5 (fifth generation double rate memory) 16Gb chips has risen from less than $5 in mid-2025 to over $34.

Changxin Technology also mentioned in its semi annual report that "in the first half of 2026, the global DRAM product supply shortage pattern will continue, and prices will continue to rise. ”

Changxin Technology's current products are mainly DDR5 and LPDDR series, and do not involve HBM (high bandwidth memory). Among them, DDR (Double Rate Memory) is mainly installed in computers and servers, and different product generations are labeled with different numbers. For example, the world is currently in the process of switching from DDR4 to DDR5, and DDR5 has a significant generational improvement in speed and power consumption compared to DDR4; LPDDR (Low Power Double Rate Memory) is mainly used in mobile devices such as smartphones and tablets.

In this round of rising storage prices, overseas manufacturers have shifted their production capacity to HBM, objectively shrinking the supply of traditional DRAM and driving up prices. As one of the main suppliers of traditional DRAM, Changxin Technology has benefited from this round of price increases. In addition, Changxin Technology also stated in its semi annual report that AI (artificial intelligence) is one of the important driving factors of this round of market trend, but the company's revenue share in the AI field is relatively low.

The amplification effect of price increases on profits is also related to the cost structure of Changxin Technology.

Changxin Technology operates in IDM mode (completing all aspects of chip design, wafer manufacturing, and packaging testing independently). As of June 30, 2026, the book value of the company's fixed assets was 181.563 billion yuan, with depreciation alone reaching 14.51 billion yuan in the first half of the year.

The main cost of a wafer fab is the depreciation of these fixed assets and equipment maintenance. Once the production capacity is built, the marginal cost of producing an additional chip is relatively fixed. This also means that when the product price increases significantly, most of the incremental revenue will be directly converted into profits.

According to the financial report information, in the first half of this year, Changxin Technology's operating revenue surged by 873.64% year-on-year, but its operating costs only increased by 70.76%, and the gross profit margin of its main business reached 84.84%; The net cash flow from operating activities was 131.156 billion yuan, a year-on-year increase of 2985.64%; As of June 30th, the company's monetary funds amounted to 143.426 billion yuan, an increase of 175.87% compared to the end of the previous year.

In addition to the surge in performance, the uncertainty of the cycle is also worth paying attention to.

Changxin Technology stated in its semi annual report that "currently, DRAM product prices are at a high level, and the demand and supply factors that support product price increases are still dynamically changing. The sustained and significant price increases are not sustainable. ”In addition, international manufacturers are synchronously increasing their capital expenditure scale and planning to add considerable new production capacity. If the growth on the demand side does not meet the speed of supply side production capacity, the potential risk of a reversal in the industry's supply and demand pattern may continue to increase.

In the medium to long term, Omdia data shows that the global DRAM market is expected to grow from $150.5 billion in 2025 to $763.8 billion in 2030, with an average annual compound growth rate of 38.39%. The demand for computing power and storage in AI is still rapidly expanding, but the supply side is also accelerating. Samsung, SK Hynix, and Micron have all publicly stated that they will expand their production capacity.

However, industry insiders told Economic Observer reporters that it usually takes two to three years for storage chip factories to go from construction to mass production, and the expected time for the concentrated release of new production capacity is between the second half of 2027 and 2028.

The race between expanding demand and increasing supply will determine the duration of the current price increase cycle.

An electronics industry analyst from a large securities firm in southern China told reporters that the valuation logic of storage industry companies is different from that of most manufacturing companies, and investors are more concerned about the pace of capacity expansion and the speed of product iteration. In his opinion, the market's pricing of Changxin Technology already implies an expectation of continued high growth in performance in the second half of the year and even next year. Once the DRAM price increase slows down or there is a turning point signal in the supply and demand pattern, Changxin Technology's stock price will face greater pressure.

The analyst believes that the stock price of DRAM companies often peaks at their best performance because the market prices future expectations rather than current profits, and "the performance and stock price of the storage industry are never linearly related.

Breakthrough

On August 24th, Xiaomi officially released the Xuanjie O3 chip, which is the world's first flagship mobile processor (SoC) that supports LPDDR6. LPDDR6 is the latest generation of low-power mobile memory, with significant improvements in speed and power consumption compared to the previous generation LPDDR5X.

The Economic Observer reporter learned from people close to Changxin Storage that Changxin Storage is the core partner of Xuanjie O3's LPDDR6 memory. Prior to this, almost every flagship launch of the new LPDDR standard was completed by Samsung, SK Hynix, and Micron. Changxin LPDDR6 has landed with Xuanjie O3, breaking the long-term dominant pattern of overseas manufacturers in the iteration of cutting-edge low-power storage technology.

The design speed of Changxin's first LPDDR6 product is 12800 Mbps (megabits per second), with a basic operating speed of 10667 Mbps when combined with the processor, and a chip capacity of 16GB. In this regard, Changxin Technology also stated in its semi annual report that the company's product line has completed full coverage of DDR5, LPDDR4X, LPDDR5/5X, and LPDDR6 series. LPDDR6 products have been sent to key customers for sample verification and are accelerating mass production, with a peak speed of 12800 Mbps.

In the semi annual report, Changxin Technology also listed its main partners, including Alibaba Cloud, ByteDance, Tencent, Lenovo, Xiaomi, Median, Glory, OPPO, vivo, etc.

Changxin Technology's product line is expanding, but the gap between it and the three overseas giants is still significant.

HBM is currently the most profitable product in the global storage industry, and there is currently no public information indicating that Changxin Technology has entered this field. In the high-end server market, Samsung and SK Hynix have started supplying products such as MRIMM (Multi column Registered Memory Modules for high-performance computing scenarios such as AI servers) and providing customized solutions for next-generation platforms from manufacturers such as Nvidia and AMD.

Changxin Technology disclosed in its semi annual report that its DDR5 modules have covered multiple types, including MRIMM. Changxin Technology also mentioned in its semi annual report that the company is negotiating long-term supply agreements (LTAs) with multiple top customers to lock in medium to long-term deterministic demand.

The role of a long-term agreement is to lock in the supply volume and price range for the next few years in the contract. As a result, the seller has gained certainty in revenue, while the buyer has gained certainty in supply, and both parties are making arrangements in advance for possible shifts in the cycle.

Looking ahead to the second half of the year, Changxin Technology stated in its semi annual report that the global shortage of DRAM product supply will continue. However, in the content related to risk warning, Changxin Technology also stated that "the sustained and significant increase in prices is not sustainable".

(Author)