Micron Technology (Micron Technology, MU) shares tumbled nearly 4% during trading on Monday, following the announcement by China's ChangXin Memory Technology Corporation (ChangXin Memory Technologies, CXMT) that it had made progress in the design of next-generation memory chips. This news sparked concerns in the market that Chinese manufacturers could ultimately challenge the pricing power of established suppliers that have benefited from the artificial intelligence boom.
This pressure has also spread to storage chip stocks. South Korean SK Hynix has fallen by about 3.5%, and Samsung Electronics has fallen by more than 4%. Micron's stock price tumbled by about 4% during trading, closing near $984, marking the third consecutive trading day of decline.
China's ChangXin Memory aims at the next generation of server memory
The sale occurred after an industry conference held over the weekend in Shanghai. At the conference, Cao Lanyu, President of ChangXin Memory, stated that the company has made progress in the research and development of a new generation of 4F2 DRAM architecture and plans to launch server memory products using this technology by the end of 2026.
This new architecture is designed to reduce the physical area occupied by a single storage unit from the commonly seen 6F² in the industry to 4F², which is a reduction of about 33% in unit area. As a result, it is possible for manufacturers to package more memory within the same silicon chip space.
The importance of this progress lies in the fact that ChangXin Memory is targeting the DDR5 registered memory modules used in servers, with its business focus expanding from consumer electronics to the more valuable server market. However, its commercialization yield, customer certification, and large-scale manufacturing capabilities have not yet been verified.
Despite the ongoing memory boom represented by AI, Micron still faces competitive pressures.
Prior to the Monday news, Micron's stock price had risen by approximately 261% this year, mainly driven by the strong demand for storage chips required by AI infrastructure. Even before the news release on Monday, the market had already begun to question whether the demand for AI and the high prices of storage chips could continue.
Samsung recently estimated its quarterly operating profit to be around $80 billion, nearly nine times that of the same period last year. However, despite such a strong boom in the memory chip industry, its stock price has still weakened.
The progress of ChangXin Memory has brought another potential risk: if Chinese suppliers successfully enter the higher-value server market, intensified competition may ultimately weaken the pricing advantages currently enjoyed by the leading DRAM manufacturers.
Why are the storage shares of AI under pressure?
As investors re-evaluate the valuation of semiconductors, this competitive threat has emerged once again. Last week, the sell-offs by NVIDIA and AMD indicated that concerns regarding AI's stock in terms of infrastructure spending and future revenue prospects have become very sensitive.
