Halve DRAM prices and CXMT would still earn a 79% margin; Charles Kau says ten fabs could flood DRAM by 2028

Charles Kau, the former Nanya Technology president the industry calls the DRAM "godfather", told TechNews on November 10↗ that CXMT▲+4.00% — CXMT, up 4.00 percent today is building ten fabs in Beijing, Shanghai and elsewhere, fully ramped within two years ¹. In his telling, that volume alone tips the market into oversupply on mature process technology, even without the EUV lithography machines that US export controls keep out of the company's hands ¹. ChangXin Memory Technologies already ranks fourth worldwide, at 9.5% of global DRAM revenue in April-June ¹. Kau dismissed the belief that Chinese demand will absorb the new wafers as a perception created by the current boom ¹.

An 89% margin is a war chest

CXMT's July-September report shows what a price war would meet. Gross margin reached 89.53%, up 1.94 points from the prior quarter, leaving cost of sales at 10.47% of revenue ¹. Modeled on that base, a uniform halving of prices still leaves a 79.06% gross margin; gross profit hits zero only if prices fall about 89.5% ¹. The same arithmetic takes Micron's▲+9.36% — Micron, up 9.36 percent today 87% to about 74% and Samsung's▲+3.57% — Samsung, up 3.57 percent today blended 69.3% to about 39% ¹. CXMT says its prices already match overseas rivals, and Apple▲+2.22% — Apple, up 2.22 percent today is testing its memory for iPhone and MacBook: the company is banking the margin, not spending it ¹.

The other camp is still raising prices

The shortage camp has receipts of its own. Commercial Times reporting cited by the Taipei market-research firm TrendForce counts CXMT at about 320,000 wafers a month now and 420,000 in 2027, the additions mostly bound for customers inside China; some institutional investors see no clear effect on global supply and demand before 2027 ¹. In September, Samsung and SK hynix▲+7.43% — SK hynix, up 7.43 percent today held fewer than ten days of finished memory inventory↗, and second-quarter industry DRAM revenue ran to $154.7 billion, up 59.5% in a quarter ².

On November 11, GigaDevice Semiconductor, a Hong Kong-listed chipmaker whose earnings growth runs on memory, rose 3.96% to HK$315 ³. Channel sources said Samsung and other leaders had verbally notified distributors of higher enterprise DRAM and SSD contract prices, with formal letters not yet issued ³. Huaxing Securities, a Chinese broker, expects the tight DRAM supply to persist, citing limited domestic capacity additions into 2027 ³.

Micron's September quarter↗ brought $54.2 billion of revenue at an 86.8% gross margin, and Samsung posted a record 107.44 trillion won of operating profit↗, 99.1% of it from chips, with its HBM output for 2027 already sold out ⁴⁵. Kau is calling quarters like these a peak.

What decides it

The ten-fab count rests on Kau's word alone. Reuters has reported two planned CXMT fabs at 100,000 wafers a month each, a slower build ¹⁶. Both camps already have money on the table. CXMT's July listing on Shanghai's STAR Market soared 466% on its first day, raising about $8.6 billion↗ ⁷⁸, and its October 13 news on the 4F² design, its next-generation DRAM cell architecture, knocked Micron down 3.6%, SK hynix 10% and Samsung 7.4% ⁷. The shortage camp's money moved too: September's inventory report↗ sent SK hynix up 8.3% and Samsung 5.7% in a single day ².

Two readings decide it: whether the verbal price rises become formal letters, and whether CXMT's gross margin holds near 89% as capacity climbs toward 420,000 wafers a month ¹³. If the margin holds, Kau's flood is still only a forecast; a fall well below the level the price model implies would mean the cuts have begun.