China's ChangXin Memory Technologies, which has mounted a challenge to the DRAM memory market led by Samsung Electronics (005930.KS) and SK hynix (000660.KS), is growing rapidly. The company expressed confidence that it has achieved economies of scale through capacity expansion.
CXMT, which is competing in the DRAM memory market dominated by Samsung Electronics and SK hynix, has signaled a sharp jump in third-quarter revenue and net profit amid the artificial intelligence boom.
According to Science and Technology Innovation Board Daily and Yicai, CXMT said in a preliminary earnings release on the 16th that third-quarter revenue is estimated at 114.7 billion to 119.7 billion yuan (about 22.9 trillion to 23.9 trillion won), up 589% to 619% from a year earlier. That marks a 15% to 20% increase from the second quarter.
Revenue for the first three quarters is expected to reach 265 billion to 270 billion yuan (about 53 trillion to 54 trillion won), up roughly 725% to 741% from 32.1 billion yuan (about 6.4 trillion won) a year earlier.
CXMT posted a net loss of 5.3 billion yuan (about 1 trillion won) for the first three quarters of last year, but expects net profit of 131 billion to 132.5 billion yuan (about 26.2 trillion to 26.5 trillion won) for the same period this year.
"Demand for artificial intelligence computing power has risen rapidly since the second half of last year," CXMT said. "As the global DRAM industry cycle improved, product supply failed to keep pace with demand and prices rose sharply." The company added: "CXMT has steadily pursued capacity expansion, product research and development, and process technology upgrades, further raising output per wafer. The effects of economies of scale continue to emerge."
Meanwhile, CXMT Chairman Zhu Yiming proposed to the company on the 16th that it buy back 1 billion to 2 billion yuan (about 200 billion to 400 billion won) worth of its own shares using equity capital or internally raised funds.
Given that previous share buybacks by companies on the STAR Market, China's answer to the Nasdaq and a board dedicated to technology stocks, have ranged from 200 million to 800 million yuan, analysts read CXMT's announcement as a signal that management views the company's value favorably.
CXMT raised up to 66.61 billion yuan (about 13.2 trillion won) through an initial public offering in July. Its shares surged on the first day of trading, making it the most valuable company by market capitalization on China's mainland market.