One Chinese chip design, billions gone from Micron, SK Hynix and Samsung (Picture: Reuters)
A Chinese memory chipmaker that few investors outside China had heard of until this summer has spent the past week knocking billions of dollars off the world's biggest chip stocks.
ChangXin Memory Technologies, or CXMT, says it has made "key progress" on a denser memory chip design, and the news has sent Micron, SK Hynix, Samsung and a string of storage companies sharply lower.The worry is specific. CXMT plans to bring a server memory module built on the new design to market by the end of 2026, aiming straight at the part of the memory business where AI demand has pushed prices and profits to record highs.
SK Hynix fell more than 10% in Seoul on Tuesday, Samsung dropped 7.4% and South Korea's Kospi lost 5.5%. In the US, the Philadelphia semiconductor index slid for a fifth straight session, with Micron, Seagate and Western Digital among the hardest hit.
CXMT's 4F² chip design squeezes more memory into less space
CXMT president Cao Kanyu outlined the plan at an industry event in Shanghai on October 10. The technology is called 4F², also written as 4F square, where F is the smallest feature a chipmaker can print on silicon.
Mainstream DRAM cells today take up about 6F². Cutting that to 4F² shrinks each cell by roughly a third, which in theory fits 50% more cells into the same area.The first product will be a DDR5 RDIMM, the memory module that sits inside data centre servers. CXMT credits a vertical transistor design that keeps electrical leakage in check as cells get smaller.Samsung and SK Hynix are chasing the same architecture, and SK Hynix published a roadmap for it last year.
A Chinese rival widely seen as a step behind claiming progress first is what rattled the market.
Why Micron and SK Hynix have so much to lose right now
Memory has been the most profitable corner of the AI boom this year. Micron's revenue for the quarter ended September jumped to $54.23 billion from $11.32 billion a year earlier, and its gross margin climbed to 86.8%. Those numbers rest on a shortage, so even the prospect of a new supplier puts that pricing power in question.CXMT is no small player either. HSBC estimates its share of the global DRAM market has grown to about 10%, from roughly 4% a year ago. The Hefei-based company raised $8.6 billion in Asia's biggest IPO of the year in July. On Friday, it reported preliminary nine-month profit of up to 132.5 billion yuan (about $19.8 billion), against a loss of 5.3 billion yuan a year earlier.Robert Pavlik, senior portfolio manager at Dakota Wealth, called it profit-taking, noting that when competition looms, "all the sheep run to the door at the same time."
Broadcom CEO Hock Tan comparing AI spending to gambling a day earlier did little for the mood.
CXMT still has no answer to HBM, the memory inside AI chips
Several analysts think the selloff ran ahead of reality. CXMT has not shown it can make the new chips in volume, and server customers take months to approve a new supplier. The plan also leaves out high-bandwidth memory, or HBM, the stacked memory that sits next to Nvidia's AI processors, where SK Hynix and Samsung remain far ahead.
US export controls keep the most advanced chipmaking machines out of China too.Micron CEO Sanjay Mehrotra still expects demand to outrun supply through 2027 and 2028, with more than three-quarters of next year's output already spoken for.The chip index is up over 70% this year, which leaves plenty of room for nervous selling. Whether CXMT's design becomes a real threat will be clear once its first server modules reach customers around the end of the year.