In 2025, the global semiconductor memory market will enter a new growth cycle driven by the AI wave. As a key player, China is accelerating the expansion of production in the NAND and DRAM sectors to meet strong end demand.
This article analyzes the trends and opportunities in the Chinese semiconductor memory market from three dimensions: end demand, wafer capacity expansion, and equipment demand, based on the latest research from institutions such as J.P. Morgan, Nomura, Jefferies, and Morgan Stanley.
【End Demand: AI Servers Lead Growth, Consumer Electronics Under Pressure】
1. Strong Demand for AI Servers, Cloud Service Providers Increase Capex
- Cloud Service Providers (CSP) Capex Continues to Grow: In 2024, the Capex of the top 8 global CSPs is expected to grow by 56% year-on-year, with a further increase of 65% anticipated in 2025 (Figure 1). Among them, Chinese companies like Alibaba and Tencent are seeing Capex growth rates of 20-30%, directly driving demand for DRAM and HBM.
- Server Shipment Growth: Global server shipments are expected to grow by 2% in 2025, accelerating to 11% in 2026 (Figure 2). The increasing share of AI servers is driving demand for high-bandwidth memory (HBM) and high-speed NAND.
2. PC Demand: Windows Replacement Cycle Nearing End, Cost Pressures Emerge
- PC Shipments Expected to Grow by 5.8% in 2025, primarily due to replacement demand from the end of support for Windows 10. However, a decline of 2.8% is expected in 2026 (Figure 3) due to rising memory costs (DRAM accounts for 15-25% of BOM costs), which will push up retail prices and suppress consumption.
- Brand Differentiation: Lenovo benefits from growth in the Chinese and Japanese markets, while Dell’s focus on AI servers has led to a decline in market share.
3. Smartphones: Mid- to Low-End Models More Severely Impacted by Rising Memory Prices
- Smartphone Shipments Expected to Increase Slightly by 1.4% in 2025, with a projected decline of 1.7% in 2026. The main reasons are the reduction of subsidy policies in China and rising memory costs (memory accounts for over 15% of BOM costs in low-end models).
- Apple iPhone Demand Remains Strong: The iPhone 17 series is selling well, but the iPhone 18 Air may be delayed due to design changes.
【Wafer Demand: Chinese Manufacturers Aggressively Expand Production, DRAM/NAND Capacity Soars】
To meet the high-performance storage demand driven by AI, Chinese semiconductor companies are accelerating wafer capacity expansion.
1. DRAM Capacity: CXMT Leads, Technology Gap Narrows
- Yangtze Memory Technologies Corp (YMTC) and Changxin Memory Technologies (CXMT) are Core Players. CXMT’s DRAM capacity is expected to increase from 85k wpm in 2023 to 254k wpm in 2025, and is projected to reach 338k wpm by 2027 (Figure 4). Although its LPDDR5 products lag behind global leading technologies by 1.5-2 generations, they are rapidly catching up.
- Global Market Share Increases: The DRAM capacity share of Chinese manufacturers is expected to rise from 6% in 2023 to 15% in 2027.
2. NAND Capacity: YMTC Technological Leadership, Accelerated Expansion
- YMTC is Approaching International Giants with X-Stacking Technology Advantages, with its capacity expected to increase from 66k wpm in 2023 to 136k wpm in 2025 (Figure 5).
- Competitive Landscape: YMTC is more competitive in the NAND sector than CXMT is in the DRAM sector, and is expected to enter the high-end product supply chain within a year.
3. Significant Increase in Capital Expenditure (Capex)
- In 2025-2026, Chinese memory manufacturers’ Capex is expected to reach $15-16 billion, primarily for new wafer fabs (such as YMTC’s second phase project). An investment of $1.1 billion is required for every additional 10k wpm of DRAM capacity, while NAND requires $720 million (Table 1).
【Equipment Demand: Expansion Drives WFE Market Growth, Advanced Packaging Becomes New Focus】】
The expansion of wafer capacity directly drives the demand for wafer fab equipment (WFE), highlighting opportunities for Chinese equipment manufacturers in the advanced packaging sector.
1. WFE Market Continues to Grow
- Global WFE Market Growth Rates Adjusted to 2%/11%/8% for 2025-2027 (originally expected 0%/10%/1%), primarily due to expansion in China and increased demand for etching and deposition equipment driven by HBM/3D NAND layer increases.
- Key Equipment Manufacturers Benefit: Tokyo Electron (etching) and Advantest (testing) are experiencing growth due to increased testing times.
2. Explosive Demand for Advanced Packaging Equipment
- Driven by CoWoS and CoPoS Technologies: TSMC’s CoWoS capacity is tight, and the next-generation CoPoS technology is expected to be mass-produced by 2028, potentially increasing equipment ASP by 50-100% (Figure 6).
- Opportunities for Chinese Equipment Manufacturers: Companies like Guangdong GPTC are benefiting from CoWoS equipment orders, and demand for HBM-TCB (Thermal Compression Bonding) equipment is expected to restart in 2026.
3. Acceleration of Domestic Equipment Substitution
- Under U.S. export controls, China is accelerating the self-research of semiconductor equipment. AMEC is increasing its share in etching equipment, while Northern Huachuang is gaining share in PVD equipment.
Risk Warning: Rapid increases in memory prices may suppress end demand; intensified U.S. technology controls may delay the progress of Chinese production capacity.
Data Sources: J.P. Morgan “Asia Pacific Equity Research”, Nomura “Asia PC & Smartphone”, Jefferies “China Memory Expert Call”, Morgan Stanley “Greater China Technology Hardware”.