Montage: CXL deep dive - a new growth engine from DDR4 reuse

This is a Bernstein deep-dive on Montage. The rollout of agentic AI is creating significant incremental demand for CPUs and thereby server DRAM, and DRAM supply shortages have become a key bottleneck facing hyperscalers, making new solutions to increase supply increasingly urgent. Meta recently published a paper using CXL Memory eXpander Controller (MXC) to reuse retiring DDR4, and our discussion with Montage confirmed that local CSPs are developing similar solutions. We believe DDR4 reuse could become the first large-scale commercial application of CXL MXC. We estimate global CXL MXC TAM for DDR4 reuse could reach US$8bn by 2030E. Assuming Montage captures 50% market share in China and 10% in non-China, we estimate incremental revenue potential equivalent to ~10% of our 2028E sales projection. We forecast global server DDR demand to grow at a 47% CAGR in 2025-28E versus roughly 23.8% growth in overall DRAM bit capacity, with the global server DDR shortfall reaching ~5.5bn GB in 2027E