Korean semiconductor stocks fell more than 7% on the 13th after China's largest DRAM maker, ChangXin Memory Technologies (CXMT), claimed it had leapfrogged rivals in technology. Shares of Samsung Electronics (005930.KS) and SK hynix (000660.KS) each dropped more than 7% that day. Micron Technology of the U.S. closed down 4% the previous night. The KOSPI also declined.
Bei Fu, managing director at Union Bancaire Privée, told Bloomberg that investors are nervous and looking for an excuse to take profits in AI-related stocks that have outperformed the market this year, particularly memory names.
Earlier, CXMT Chief Executive Officer Cao Kanyu said at the 4th Integrated Circuit and Chiplet Conference, held in Shanghai on the 9th and 10th, that the company had laid the groundwork for implementing a 4F² architecture by developing vertical surround gate (VSG) transistors capable of resolving long-standing problems such as current leakage. He said CXMT would release server DDR5 memory modules (RDIMM) using the technology by the end of the year.
The 4F² design reduces the area of the cell, the smallest unit that stores data in DRAM. It can cut cell area by about 33% compared with the 6F² structure that currently dominates the industry, allowing more data to be stored on a chip of the same size. SK hynix unveiled its 4F² roadmap last year, and Samsung Electronics is pursuing plans to apply the structure to sub-10-nanometer DRAM for mass production, targeting 2028. Based on announced timelines alone, CXMT would be roughly two years ahead of Samsung Electronics.
CXMT's decision to apply the technology first to server DRAM, rather than the low-power DRAM (LPDDR) it has focused on until now, also signals a head-on challenge to Korean chipmakers. "DDR5 RDIMM has to support servers running 24 hours a day and must avoid errors during high-speed data transfers, so the technical requirements are higher," a CXMT official said. "Choosing it as the first target for 4F² technology means we intend to take on the very high technical and engineering barriers in server memory directly."
The industry reads the move as an alternative that emerged because U.S. sanctions have prevented CXMT from obtaining extreme ultraviolet (EUV) lithography equipment from ASML of the Netherlands. The approach uses existing deep ultraviolet (DUV) lithography tools while changing the structure to raise density.
Morningstar analyst Jing Zhewei said CXMT's competitive position would improve significantly if it successfully and quickly implements the 4F² architecture in DRAM production. "That said, both the leading memory makers and the equipment suppliers have described the difficulty of this technology transition in similar terms," the analyst added. "We expect there will still be a meaningful time gap between CXMT's unveiling of a 4F² product and its commercialization at profitable yields."
The industry's existing standard, 6F², refers to an area equal to six times the square of the feature size, the basic line width between transistors. Samsung Electronics and SK hynix are exploring ways to reduce this to 4F². In theory, the same cell can be fit into a smaller area, improving efficiency. Cao said CXMT is changing its layout structure by stacking transistors. The vertical surround gate (VSG) approach can reduce current leakage and side effects, he explained. That has long been cited as a problem in attempts by major manufacturers to shrink dimensions below 6F².
CXMT is accelerating its expansion of advanced memory output to meet surging AI demand, as it remains a latecomer in high-bandwidth memory (HBM) used in Nvidia's AI accelerators. According to Counterpoint Research, CXMT's DRAM market share expanded to 10% in the second quarter of this year from 4% a year earlier. If it can make more advanced products, it will be better positioned when the global supply shortage begins to ease.
If the approach works, it would be the latest example of an innovative workaround devised by Chinese companies to get around U.S. technology restrictions, following Huawei and DeepSeek. In May, Huawei unveiled a "tau scaling law" to replace Moore's Law. It raises transmission speeds and increases transistor density on a chip through logic folding, and chips using the technology are already in smartphones released this year.
Within the semiconductor industry, there is caution about the claim of a technology leapfrog, given that CXMT has not disclosed specific specifications. The company has not revealed its implementation method, process or yields. Critics argue in particular that applying a new technology and securing stable mass production is a separate matter from moving quickly.