Shares of leading Asian memory chip manufacturers experienced significant declines this week, reflecting growing investor uncertainty over the sustainability of the sector’s recent profit surge driven by artificial intelligence (AI) demand. Despite strong quarterly earnings supported by elevated chip prices, concerns about valuation levels and potential supply risks have triggered notable sell-offs in key players.
In Seoul, Samsung Electronics and SK Hynix saw their stock prices fall sharply, closing down 7.4 percent and 10.1 percent respectively on Thursday. Over the past five trading sessions, Samsung’s shares have dropped approximately 16 percent, while Hynix has fallen about 22 percent. These two companies collectively represent nearly half of the South Korean Kospi index’s weighting, which ended the day 5.5 percent lower following an intraday decline exceeding 7 percent.
Chinese memory maker ChangXin Memory Technologies (CXMT), a major dynamic random-access memory (DRAM) producer, also faced losses amid the downturn. CXMT shares decreased by 2.8 percent to 46.99 yuan in Shanghai, extending a broader decline of roughly 14 percent since before the recent National Day holiday. The stock had previously surged more than 600 percent above its July initial offering price, peaking at 61.80 yuan in mid-August before retreating about 20 percent since late September.
Industry analysts attribute investor caution in part to worries that the rapid rise in memory prices may slow down. According to forecasts by Visible Alpha, a unit of S&P Global Market Intelligence, CXMT’s average selling price for conventional DRAM chips is projected to grow 206 percent this year, considerably outpacing an anticipated shipment volume increase of 79 percent. However, research firm SemiAnalysis noted that CXMT’s cost per bit for DDR5 memory production remains over 30 percent higher than that of its largest global competitors, while high-bandwidth memory (HBM) contributes minimally to its revenue base. This disparity could constrain the company’s margin expansion if price growth decelerates, despite continued shipment gains.
CXMT’s rapid growth poses an emerging challenge to established players. Counterpoint Research estimated the company’s share of global DRAM revenue rose to 10 percent in the second quarter from 4 percent in the same period last year. Over the weekend, CXMT announced plans to launch a new DDR5 server-memory product by the end of the year, employing a 4F square cell architecture designed to reduce memory cell size and potentially increase chip capacity. Success in this endeavor could help CXMT strengthen its foothold in the lucrative server memory market, where Samsung, Hynix, and Micron have long dominated.
Tesla CEO Elon Musk commented on China’s memory sector progress in a social media post Monday, highlighting the rapid scaling capabilities of Chinese manufacturers once production expertise is acquired. Musk noted advancements in low-power memory standards such as LPDDR5 and LPDDR6 but suggested that mastering newer HBM designs could prove more difficult.
Despite these developments, some experts urge caution regarding CXMT’s short-term competitive impact. Analysts pointed out that CXMT’s planned server-memory product has yet to reach mass production, with uncertainties remaining around manufacturing yields, product performance, and customer qualification. On the supply side, market intelligence firm TrendForce projected conventional DRAM contract prices to rise another 10 to 15 percent this quarter, though at a slower pace than before, indicating ongoing tightness in chip availability.