--- title: "Halve DRAM prices and CXMT would still earn a 79% margin; Charles Kau says ten fabs could flood DRAM by 2028" description: "Charles Kau's two-year flood warning lands on CXMT's own July-September report: an 89.53% gross margin that, on the quarter's cost base, would still leave 79% after a halving of prices. Micron, Samsung and SK hynix holders own the other side of that arithmetic." publisher: "The Inference" section: "Chips" published: 2026-11-11T14:13:28.394Z modified: 2026-11-11T14:13:28.394Z canonical: https://theinference.org/article/halve-dram-prices-and-cxmt-would-still-earn-a-79-margin-charles-kau-says-ten-fabs-could-flood-dram-by-2028 language: en keywords: "DRAM, CXMT, Micron, Samsung, Memory Prices, Charles Kau" --- # Halve DRAM prices and CXMT would still earn a 79% margin; Charles Kau says ten fabs could flood DRAM by 2028 > Charles Kau's two-year flood warning lands on CXMT's own July-September report: an 89.53% gross margin that, on the quarter's cost base, would still leave 79% after a halving of prices. Micron, Samsung and SK hynix holders own the other side of that arithmetic. Charles Kau, the former Nanya Technology president the industry calls the DRAM "godfather", [told TechNews on November 10](https://xenospectrum.com/en/cxmt-dram-glut-gross-margin/) that [CXMT](https://theinference.org/markets/companies/cxmt) 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](https://theinference.org/markets/companies/micron)'s 87% to about 74% and [Samsung](https://theinference.org/markets/companies/samsung)'s blended 69.3% to about 39% [1]. CXMT says its prices already match overseas rivals, and [Apple](https://theinference.org/markets/companies/apple) is testing its memory for iPhone and MacBook: the company is banking the margin, not spending it [1]. *Chart: **Halve DRAM prices and CXMT still prints a 79% gross margin** Bar chart comparing modeled gross margin after a 50% price cut for CXMT, Micron and Samsung* *Modeled gross margin after a uniform 50% price cut, holding volume, product mix and cost of sales at July-September 2026 levels; inputs are CXMT's reported 89.53%, Micron's about 87% and Samsung's 69.3% company-wide blend. Source: XenoSpectrum model on reported inputs [1]. [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](https://theinference.org/markets/companies/sk-hynix) [held fewer than ten days of finished memory inventory](https://www.techtimes.com/articles/326837/20260907/memory-runs-dry-samsung-sk-hynix-drop-below-10-day-supply-hbm4-devours-capacity.htm), 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](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000723125) brought $54.2 billion of revenue at an 86.8% gross margin, and [Samsung posted a record 107.44 trillion won of operating profit](https://en.yna.co.kr/view/AEN20261029002653320), 99.1% of it from chips, with its HBM output for 2027 already sold out [4][5]. Kau is calling quarters like these a peak. *Chart: **Micron's gross margin has climbed from 35% to 87% in nine quarters** Line chart of Micron's quarterly gross margin over nine quarters, rising from 35.3% to 86.8%* *Gross margin, percent of revenue, calendar quarters; Micron's fiscal year ends late August, so the quarter ended September 3, 2026, is its fiscal fourth. Source: Micron SEC filings [4]. [4]* ## 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 [1][6]. 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](https://www.cnbc.com/2026/10/13/cxmt-memory-chip-stock-rout.html) [7][8], and its October 13 news on the [4F² design](https://theinference.org/article/cxmt-targets-4f2-dram-years-ahead-of-samsung-and-naura-collects-the-tool-bill), 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](https://finance.yahoo.com/markets/stocks/articles/micron-samsung-sk-hynix-suffer-075901384.html) 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 [1][3]. 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. ## Takeaway CXMT's 89.53% gross margin gives it a deeper price-cut cushion than Micron or Samsung; until that margin falls, Charles Kau's DRAM flood stays a forecast rather than a fact. ## Sources 1. [XenoSpectrum, "Ex-Nanya Chief Warns China's CXMT Expansion Could Flood DRAM Market Within Two Years," 11 November 2026](https://xenospectrum.com/en/cxmt-dram-glut-gross-margin/) 2. [TechTimes, "Memory Runs Dry: Samsung and SK Hynix Drop Below 10-Day Supply as HBM4 Devours Capacity," 7 September 2026](https://www.techtimes.com/articles/326837/20260907/memory-runs-dry-samsung-sk-hynix-drop-below-10-day-supply-hbm4-devours-capacity.htm) 3. [GMT Eight, "HK Stock Market Move | GigaDevice Semiconductor Inc. (03986) rose nearly 4%; memory prices are brewing a new round of increases," 11 November 2026](https://gmteight.com/content/detail/450693) 4. [Micron Technology, quarterly figures from its SEC filings, retrieved 11 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000723125) 5. [Yonhap News Agency, "Samsung Electronics posts record profit in Q3, with memory biz on roll amid AI supercycle," 29 October 2026](https://en.yna.co.kr/view/AEN20261029002653320) 6. [Wikipedia, "ChangXin Memory Technologies," accessed 11 November 2026, citing Reuters reporting on CXMT fab plans](https://en.wikipedia.org/wiki/ChangXin_Memory_Technologies) 7. [CNBC, "Why this little known Chinese chipmaker has caused a global stock rout," 13 October 2026](https://www.cnbc.com/2026/10/13/cxmt-memory-chip-stock-rout.html) 8. [Yahoo Finance / StockTwits, "Micron, Samsung, SK Hynix Suffer Drop In DRAM Market Share As China's CXMT Pulls Ahead," 3 September 2026](https://finance.yahoo.com/markets/stocks/articles/micron-samsung-sk-hynix-suffer-075901384.html) --- Halve DRAM prices and CXMT would still earn a 79% margin; Charles Kau says ten fabs could flood DRAM by 2028 — The Inference. Canonical: https://theinference.org/article/halve-dram-prices-and-cxmt-would-still-earn-a-79-margin-charles-kau-says-ten-fabs-could-flood-dram-by-2028