China’s memory chip manufacturer CXMT is garnering attention for its growth potential both domestically and internationally. Analysts from CLSA initiated coverage of CXMT, providing an outperform rating and projecting a rise in the company’s global market share from 9% last year to 14% in 2024. The analysts noted that despite trailing the leading suppliers in memory chips, CXMT’s rapid growth highlights its increasing relevance in the industry.
The analysis utilized TSMC as a benchmark for valuation, reflecting the premium afforded to industry leaders benefiting from technological advancements and sustained market demand. CLSA has set a price target of 84.70 yuan ($12.64) for the stock, which represents a significant rise of over 60% from its previous closing. Following a brief public holiday in mainland China, CXMT’s stock saw a nearly 1% increase.
Bernstein analysts also issued an outperform rating for CXMT, predicting a price target of 70 yuan. Although they cautioned about risks arising from U.S. restrictions on access to certain production tools, they acknowledged CXMT’s considerable progress. Anticipating a demand shift, Bernstein reported that CXMT could capture an additional 10% of global market share from overseas markets, indicating strong prospects for the company’s DRAM chips.
Analysts highlighted that many products made in China, equipped with CXMT’s memory, will likely find their way to international markets. They observed that, contrary to common assumptions about geopolitical barriers, foreign companies are increasingly open to using Chinese memory in their diverse range of products, except in the U.S. and sensitive sectors.
CXMT is scheduled to announce its earnings on October 31, with expectations of a 22% increase in revenue from the previous quarter.
Why this story matters
- Growth in China’s semiconductor sector has implications for global technology supply chains.
Key takeaway
- CXMT is positioned for significant market expansion, driven by both domestic and international demand.
Opposing viewpoint
- Some analysts caution that U.S. restrictions could hinder CXMT’s access to essential production technologies.
