Montage (688008.SS): AI agent drives CPU servers demand and Memory interconnect ICs; CXL MXC riding on DDR4 reuse; Buy

We talked to Montage management recently where the company reiterated it remains positive on its business outlook, driven by: (1) AI agent continuing to drive CPU servers demand, with new platforms requiring more memory channels, driving DDR5 demand, along with generation migration, (2) DDR6 drives RCD demand, as per DDR6 RDIMM requires two RCD (vs. one RCD for current generation), (3) RCD generation migration, from RCD03 (current main contribution) to RCD04 (shipment ramping up) and toward RCD05 (entering mass production), supporting ASP and GM expansion, and (4) strong orders visibility (having orders for 2027) and sequentially enhancing supply, supporting the company to capture the strong market demand. We remain positive on Montage's leading position in memory interconnect ICs and its expanding AI interconnect product portfolio. Maintain Buy. Key takeaways: (1) Memory interconnect ICs outlook - the industry has been riding on DDR5 penetration rate in 2024-25, with penetration above