Chinese semiconductor companies are rapidly expanding in the DRAM and NAND flash markets, backed by substantial financial resources and a large domestic market. Changxin Memory Technologies (CXMT), China's largest DRAM manufacturer, has secured the fourth position globally, while Yangtze Memory Technologies Co. (YMTC) has entered the top three in the NAND market for the first time. Samsung Electronics and SK Hynix are countering this surge by focusing on high-value artificial intelligence (AI) memory products, such as high-bandwidth memory (HBM).
According to market research firm Omdia, YMTC's NAND wafer production is expected to rise from 2.01 million units this year to 2.496 million units next year, marking an increase of approximately 24%. YMTC has climbed to third place in the global NAND market based on second-quarter shipments and aims to double its production capacity by the end of the year with the launch of its Wuhan Phase 3 factory, targeting the top position in the global NAND market by the end of next year.
In contrast, domestic companies are projected to see little growth in NAND production. Samsung Electronics is expected to increase its output from 4.77 million units this year to 4.845 million units next year, while SK Hynix is anticipated to rise from 2.79 million units to 2.865 million units during the same period. As Samsung and SK Hynix concentrate their investments on more profitable DRAM and HBM products, Chinese firms are aggressively expanding their NAND production to fill market gaps.
In the DRAM sector, CXMT is quickly closing the gap. Omdia reports that CXMT's global DRAM market share surged from 4.7% in the fourth quarter of last year to 7.6% in the first quarter of this year, a jump of 2.9 percentage points in just one quarter, placing it fourth globally behind Samsung, SK Hynix, and U.S.-based Micron.
CXMT has also secured significant funding for further expansion. The company plans to invest up to 14 trillion won raised through its recent initial public offering (IPO) into enhancing production lines and researching next-generation DRAM. Its current production capacity of 200,000 to 300,000 units per month is expected to expand to over 600,000 units in the long term. If these expansion plans proceed as intended, increased supply in the general DRAM market could lead to price pressures.
However, there remains a significant technological gap between domestic firms and Chinese companies in high-value AI memory products like HBM. Samsung and SK Hynix have begun mass production of HBM4 and are advancing the development and supply of next-generation HBM4E. In contrast, CXMT is still in the process of stabilizing production of HBM3. HBM production requires not only yield and stacking and thermal management technologies but also quality certification from global tech giants and experience in mass production, making it challenging for Chinese firms to close the gap quickly.
Samsung and SK Hynix are shifting their focus from price competition with Chinese firms in general products to increasing their share of high-value products such as HBM, server DRAM, and enterprise solid-state drives (SSDs). With the surge in demand for high-performance and high-capacity memory driven by investments in AI data centers, they aim to secure profitability by leveraging their technological expertise in AI memory and their customer base among global tech giants.
The concern is that China's dominance in general memory could serve as a stepping stone for it to catch up in advanced memory technologies. With a vast domestic market, Chinese firms can secure production scale and cost competitiveness, then reinvest accumulated funds and mass production experience into high-value products like HBM and server DRAM. For instance, CXMT, which recently raised substantial funds through its IPO, is projected to meet 50% of China's DRAM demand and 40% of HBM demand by 2028. YMTC is also pursuing an IPO worth 6.8 trillion won, with the funds earmarked for enhancing production facilities and R&D.
According to market research firm Omdia, YMTC's NAND wafer production is expected to rise from 2.01 million units this year to 2.496 million units next year, marking an increase of approximately 24%. YMTC has climbed to third place in the global NAND market based on second-quarter shipments and aims to double its production capacity by the end of the year with the launch of its Wuhan Phase 3 factory, targeting the top position in the global NAND market by the end of next year.
In contrast, domestic companies are projected to see little growth in NAND production. Samsung Electronics is expected to increase its output from 4.77 million units this year to 4.845 million units next year, while SK Hynix is anticipated to rise from 2.79 million units to 2.865 million units during the same period. As Samsung and SK Hynix concentrate their investments on more profitable DRAM and HBM products, Chinese firms are aggressively expanding their NAND production to fill market gaps.
In the DRAM sector, CXMT is quickly closing the gap. Omdia reports that CXMT's global DRAM market share surged from 4.7% in the fourth quarter of last year to 7.6% in the first quarter of this year, a jump of 2.9 percentage points in just one quarter, placing it fourth globally behind Samsung, SK Hynix, and U.S.-based Micron.
CXMT has also secured significant funding for further expansion. The company plans to invest up to 14 trillion won raised through its recent initial public offering (IPO) into enhancing production lines and researching next-generation DRAM. Its current production capacity of 200,000 to 300,000 units per month is expected to expand to over 600,000 units in the long term. If these expansion plans proceed as intended, increased supply in the general DRAM market could lead to price pressures.
However, there remains a significant technological gap between domestic firms and Chinese companies in high-value AI memory products like HBM. Samsung and SK Hynix have begun mass production of HBM4 and are advancing the development and supply of next-generation HBM4E. In contrast, CXMT is still in the process of stabilizing production of HBM3. HBM production requires not only yield and stacking and thermal management technologies but also quality certification from global tech giants and experience in mass production, making it challenging for Chinese firms to close the gap quickly.
Samsung and SK Hynix are shifting their focus from price competition with Chinese firms in general products to increasing their share of high-value products such as HBM, server DRAM, and enterprise solid-state drives (SSDs). With the surge in demand for high-performance and high-capacity memory driven by investments in AI data centers, they aim to secure profitability by leveraging their technological expertise in AI memory and their customer base among global tech giants.
The concern is that China's dominance in general memory could serve as a stepping stone for it to catch up in advanced memory technologies. With a vast domestic market, Chinese firms can secure production scale and cost competitiveness, then reinvest accumulated funds and mass production experience into high-value products like HBM and server DRAM. For instance, CXMT, which recently raised substantial funds through its IPO, is projected to meet 50% of China's DRAM demand and 40% of HBM demand by 2028. YMTC is also pursuing an IPO worth 6.8 trillion won, with the funds earmarked for enhancing production facilities and R&D.
* This article has been translated by AI.
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