This report is an update to the "Made in China" report (January 16). In the memory market outlook, China has now become one of the most critical factors. With China's entry, existing suppliers are adjusting their production mix and pricing strategies. While 2025 product plans remain on track, challenges with HKMG technology are prompting us to revise our 2025 production forecast for CXMT downward.

CXMT growth Slowing Down. As of 1Q25, CXMT’s bit market share remained at 6%, unchanged from 2024, according to our Memory Tracker. The 4Q25 forecast projects a 7.5% share—slower growth compared to some expectations surpassing 10%. The outlook for CXMT’s growth in 2025 and 2026 hinges on overcoming HKMG-related challenges. Current assessments lean conservative, with our latest production forecast revised down to 22 billion Gb, lower than the 31 billion Gb estimated in January and 24 billion Gb in the meantime. Though still a high-growth trajectory compared to 15 billion Gb in 2024, this marks the first downward production revision for CXMT.

Production Scenario and the Impact. To achieve satisfactory yields using domestically produced equipment, CXMT may focus on manufacturing easier products in greater quantities. Increasing LPDDR5 8.5GHz output—even with some downgraded products—could help stabilize yield rates, with those downgraded units redirected to the channel at cheaper price. This strategy would pave the way for launching HBM3 production within the year. While lower-yield products may introduce some market friction, the overall impact is expected to remain limited, especially with the local smartphone vendors who are willing to take the market share from overseas vendors.

China’s Domestic Equipment Progress. Although the semiconductor equipment localization process remains challenging, overall progress appears intact. Huawei’s massive semiconductor investment plans— widely reported in recent months—underscore growing confidence.
Meanwhile, YMTC continues mass production of 276-layer NAND using local etching tools, further indicating that China’s push toward self- sufficiency is advancing steadily.

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