Greater China Semiconductors_ China Memory Update_ CXMT to Add 50k DDR5 Capacity in 2025, Supply Localization to Persist

Summary of Greater China Semiconductors Conference Call Industry Overview - The focus is on the Greater China Semiconductors industry, specifically the memory sector in China, with a highlight on CXMT (ChangXin Memory Technologies) as a key player in DRAM production [2][9]. Key Points and Arguments CXMT Capacity Expansion - CXMT plans to add 50,000 wpm (wafers per month) capacity in 2025, primarily for DDR5, bringing total capacity to 200,000 wpm by year-end, split evenly between DDR4 and DDR5 [2][3]. - Current production capacity is 100,000 wpm for DDR4 and 50,000 wpm for DDR5 [3]. Production Yield Improvement - CXMT's production yield is currently estimated at 90% for DDR4 and 80% for DDR5, with expectations to reach 90% for DDR5 by the end of 2025 [4]. - The DDR5 yield started at 50%, leveraging experience from DDR4 production [4]. Technology and Process Limitations - CXMT utilizes 19nm for DDR4 and 17nm for DDR5 production, which are not advanced enough to be affected by US technology restrictions [5]. - There are concerns that CXMT's products may underperform compared to those from Samsung and SK Hynix, which use more advanced 12nm processes [5]. Market Demand and Localization - The semiconductor supply localization is prioritized, with CXMT targeting domestic smartphone and computing OEMs for mass-market DRAM products [9]. - Despite higher power consumption, Chinese OEMs are incentivized to adopt domestic memory products due to supply security and lower costs [2][9]. Future Production Plans - CXMT is expected to begin low-volume production of HBM 2 (High Bandwidth Memory) by mid-2025, pending customer verification [6]. Company Valuation and Recommendations - ASMPT (0522.HK) is preferred within the coverage due to increasing demand for advanced packaging solutions, with a target price of HK$105, based on a 25x P/E ratio for 2025E [11]. - Risks to ASMPT's target price include a worsening semiconductor industry outlook, failure to penetrate key foundry customers, and intensified competition [12]. Additional Insights - The report emphasizes the importance of advanced packaging and AI-driven revenue contributions for valuation re-rating in the semiconductor sector [11]. - The ongoing US export restrictions pose challenges for CXMT's future technological advancements and production capabilities [5]. This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of the Greater China Semiconductors industry, particularly focusing on CXMT's strategic initiatives and market positioning.