Bank of America: BofA initiates coverage of ChangXin Technology: DRAM price increases lift profits, while capacity expansion and HBM determine future growth

Why did profits surge so quickly?

ChangXin Technology reported revenue of 99.51 billion yuan and an operating margin of 83% in the second quarter of 2026; full-year 2025 revenue was 61.8 billion yuan, with an operating margin of approximately 14%. BofA attributes the profit improvement to higher DRAM prices, increased capacity utilization and better yields.
BofA estimates that ChangXin’s DRAM revenue accounted for approximately 8%–10% of the global market in the first half of 2026, compared with approximately 3%–4% in 2024; the company’s profitability in the second quarter of 2026 was already close to that of the world’s three largest suppliers.

BofA believes cloud providers locking in supply through long-term agreements, together with increased HBM use in AI servers, could absorb the industry’s additional capacity and extend the global DRAM upcycle through 2028–2030.
But ChangXin is more reliant on the price-sensitive consumer market: mobile applications accounted for 60% of its DRAM sales in 2025, and servers for 27%; its five largest customers contributed 74% of company revenue. BofA therefore expects ChangXin’s average DRAM selling price to rise 9% year over year in 2027, below the industry’s 34%, and to fall 17%, 12% and 11%, respectively, in 2028–2030.
Even so, BofA expects ChangXin’s average DRAM selling price in 2030 to remain at approximately 10 dollars per GB, above the historical level of approximately 3–4 dollars per GB before 2026.

BofA expects ChangXin’s monthly wafer capacity to rise from approximately 300 thousand wafers at the end of 2026 to 470 thousand at the end of 2028 and 670 thousand at the end of 2030. Combined with process upgrades, the bank expects shipments measured by memory capacity to grow 34%–39% annually in 2027–2028.
The company has announced mass production using its fifth-generation DRAM process, which can produce at least 50% more dies per wafer than the previous generation. But BofA assumes yields of 70%–85% for the process in 2027–2028, below the more than 90% achieved by older processes; capacity expansion also depends on critical equipment, services or existing equipment inventories.
Depreciation is a major component of costs. BofA forecasts depreciation of 34 billion, 57 billion and 75 billion yuan, respectively, in 2026–2028. Its profit model relies on shipment growth to absorb rising costs: it expects the operating margin to fall from approximately 80% in 2026 to 73% in 2028.

HBM is high-bandwidth memory used for AI. Media reports say ChangXin has delivered small quantities of HBM3 and HBM3E samples to potential domestic customers, but mass production at commercial scale has yet to be demonstrated. BofA expects HBM to account for 3% and 11% of company revenue in 2027 and 2028, respectively.
BofA forecasts operating cash flow of 321.6 billion, 441.9 billion and 509 billion yuan, respectively, in 2026–2028, and capital expenditure of approximately 61.6 billion, 100 billion and 120 billion yuan over the same period. At the end of the first half of 2026, the company had approximately 143 billion yuan in cash and equivalents, approximately 140 billion yuan in debt and approximately 3 billion yuan in net cash.
Not all profits are attributable to shareholders of the listed company: ChangXin directly owns approximately 31% and 32%, respectively, of the Hefei A2 and Beijing wafer fabs, which it controls and consolidates. BofA assumes non-controlling interests will account for 35% of consolidated net profit from the second half of 2026 through 2028, above 28% in the first half of 2026.

BofA initiated coverage with a Buy rating and a 65 yuan price target, calculated by multiplying average earnings per share of 4.07 yuan for 2027–2028 by a price-to-earnings multiple of 16. The share price used in the report was 43 yuan, corresponding to approximately 11 times expected 2027 earnings.
The bank believes ChangXin remains in a phase of rapid capacity expansion. Its target multiple is above the 9–11 times assigned to global DRAM peers, while below the approximately 30–40 times expected earnings for Chinese semiconductor manufacturing peers, to reflect the cyclical fluctuations of the DRAM business.