Chinese memory manufacturer ChangXin Memory Technologies (CXMT) is closing the gap with Samsung Electronics and SK Hynix in the high-value DRAM sector. Although there is still a significant difference in production yield and advanced products, CXMT's expansion from consumer DRAM to server DDR5 and high-bandwidth memory (HBM) is raising concerns.
On October 13, shares of Samsung Electronics and SK Hynix fell by more than 7% and 8%, respectively, during trading on the domestic stock market. Earlier, the Philadelphia Semiconductor Index in the U.S. dropped by 2.67%, and Micron's shares fell by 3.88%. SK Hynix's American Depositary Receipts (ADRs) also declined by 4.02%.
The market's reaction was heightened by CXMT's announcement of its entry into the server market. On October 10, CXMT President Chao Kan-yu revealed in Shanghai that the company plans to release its self-developed 4F² cell structure server 'DDR5 RDIMM' by the end of the year. The 4F² structure reduces cell area compared to the mainstream 6F², allowing for more memory on the same wafer. While mass production and customer validation are still pending, the shift from consumer DRAM to high-value server products marks a significant development for the Chinese company.
Growth has been rapid. According to Counterpoint Research, CXMT's DRAM sales surged by 716% year-on-year in the second quarter of this year. The company's global market share stands at 7%, ranking fourth behind Samsung's 39%, SK Hynix's 26%, and Micron's 25%.
Samsung and SK Hynix must pay close attention to the markets CXMT is targeting. The domestic firms have been increasing their focus on server DDR5 and HBM, which are more profitable than general-purpose DRAM.
The challenge lies ahead. CXMT's foray into server DRAM and HBM, which are key revenue streams for Samsung and SK Hynix, poses a threat. While it is widely believed that CXMT is not yet at a competitive level with domestic firms in HBM3E or HBM4, the speed at which it is moving from general-purpose to high-value products is alarming.
Additionally, the ongoing debate over massive investments in the U.S. AI market adds pressure. Estimates suggest that the four major tech companies—Google, Amazon, Microsoft, and Meta—will increase their capital expenditures by 77% this year compared to last year. While they are not reducing AI investments, rising costs for memory and power have shifted market focus toward profitability and return on investment.
Wall Street analysts are adopting a negative outlook on the global memory market. Citigroup recently classified CXMT as a 'medium-term price threat,' noting that Samsung and SK Hynix are more exposed to general-purpose DRAM than Micron. In August, Micron's target price was lowered from $1,400 to $1,150, with predictions of a peak in the second quarter of next year, citing the expansion of Chinese firms in DRAM and NAND as a significant risk factor.
Kim Yang-pyung, a senior researcher at the Korea Institute for Industrial Economics and Trade, stated, "It is difficult to determine the technology gap with China in terms of years. If the U.S. allows the export of advanced semiconductor manufacturing equipment to China, the gap could close rapidly." He emphasized that domestic companies must continue to pursue a strategy of maintaining a significant lead by developing new products and markets that are difficult for Chinese firms to replicate.
* This article has been translated by AI.
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