US listed memory chip stocks plummet, as China's DRAM giant shakes up the global landscape?

Original Author: Li Dan

Original Source: Wall Street News

The explosive debut of Chinese memory chip giant CXMT on the A-share market is emerging as a new variable for the global memory chip sector.

During US trading hours on Monday, memory chip stocks suffered a heavy sell-off, becoming the biggest drag on the broader market. Sandisk (SNDK) fell over 10% intraday, plunging as much as 14.6% at its session low, and is down 47% from its all-time high on June 22, erasing approximately $170 billion in market value over the past month. SK Hynix ADR (SKHY) dropped about 10% during the session, while Western Digital (WDC) and Seagate Technology (STX) fell over 9% and 8% respectively at their lows, and Micron Technology (MU) slid over 7% at one point.

By market close, Sandisk, SK Hynix ADR, Western Digital, Seagate Technology, and Micron were down approximately 11%, 7.5%, 4.2%, 4.1%, and 2.3%, respectively. SK Hynix closed below its IPO price for the first time since its US listing on July 10, ending the session 4% below the offer price.

At its intraday low, the Philadelphia Semiconductor Index, a key benchmark for chip stocks, fell about 5%, significantly underperforming the three major US stock indices, before closing down 2.2%. The S&P 500 and Nasdaq Composite fell roughly 0.4% and 0.8% respectively at their session lows, while the Dow Jones Industrial Average remained in positive territory throughout the day.

Market participants widely pointed the finger at CXMT, which debuted on the Shanghai Stock Exchange's STAR Market (科创板) on the same day. China's largest DRAM manufacturer saw its stock price surge over 460% on its first trading day, pushing its market capitalization beyond 3 trillion yuan and making it the most valuable company on the A-share market. This development has prompted global investors to reassess the competitive landscape of the DRAM industry in the coming years.

China's DRAM Leader Goes Public, Triggering a Global Storage Sector Revaluation

Regarding the sharp decline in US-listed memory chip stocks on Monday, several international media outlets suggested that market concerns are less about CXMT's short-term earnings and more about potential future changes in the global DRAM supply landscape.

Analysts believe that after completing Asia's largest IPO this year, CXMT has secured a more ample capital base, which is expected to strengthen its capabilities in future capacity expansion, technological R&D, and its push into advanced AI memory segments like HBM. For the previously surging global memory chip leaders, this signals rising long-term competitive pressure.

Some commentators noted that the market fears CXMT's successful fundraising could accelerate the release of new DRAM supply in the future, potentially undermining the current optimistic outlook for sustained memory price increases. Meanwhile, stocks like Micron, SK Hynix, and Sandisk had already experienced significant gains. Against a backdrop of high valuations, any perceived change in the competitive landscape can easily trigger profit-taking.

Other commentators view this correction more as a market repricing event. While AI-driven demand for HBM remains robust, investors are beginning to reconsider: if Chinese manufacturers continue to ramp up production capacity and technological prowess, could the traditional DRAM business enter a phase of intensified competition sooner than expected, thereby impacting industry profit margins?

However, many analysts argue that the market reaction may involve some degree of overinterpretation.

Currently, CXMT's products are still primarily focused on traditional DRAM segments like DDR4 and DDR5. In contrast, the fastest-growing profit engines for Micron, SK Hynix, and Samsung are AI memory products like HBM. Subject to US export restrictions, CXMT faces significant technological hurdles in entering the high-end HBM market in the short term. Therefore, the global AI memory market landscape is unlikely to undergo a fundamental shift in the near future.

CXMT's Surge on Debut: Capital Markets Bet on 'Chinese Memory'

CXMT's IPO itself had already attracted global attention.

The company raised approximately 57.9 billion yuan (about $8.6 billion) in this offering, setting a new record for the largest IPO in Asia this year. On its first trading day (Monday), the stock closed 465.82% above its issue price, giving it a total market capitalization of 3.28 trillion yuan. This surpassed Industrial and Commercial Bank of China (ICBC) to make it the most valuable company on the A-share market, with a market cap equivalent to two Kweichow Moutais.

CXMT's trading volume exceeded 140 billion yuan on Monday, making it the first individual stock in A-share history to surpass 100 billion yuan in single-day turnover.

Public records show that CXMT, founded in 2016, is China's largest DRAM chip manufacturer and a key representative of China's achievements in independent DRAM R&D and mass production. The company's products currently cover consumer electronics, PCs, servers, automotive electronics, and other fields, and it continues to advance the development of new products like DDR5.

Domestic media generally believe that CXMT's listing not only marks a new milestone for China's semiconductor industry but also signals that the capital market is assigning a higher valuation premium to domestic high-end manufacturing and "hard technology." There is market expectation that the raised funds will further support advanced process R&D, capacity expansion, and the improvement of the domestic memory supply chain.

In the AI Era, HBM Remains the True Deciding Factor

However, from a global competitive landscape perspective, most institutions still believe that the leading positions of Micron, SK Hynix, and Samsung in the AI memory segment are unlikely to be challenged in the short term.

The current explosion in demand for AI servers has made HBM one of the most scarce semiconductor products globally. Micron and SK Hynix virtually monopolize the HBM supply for AI chip giants like Nvidia, and this related business is also the core driver of their rapid profit growth.

Therefore, many analysts believe Monday's sell-off in memory stocks was more of an emotion-driven valuation adjustment rather than a turning point in industry fundamentals. As AI infrastructure construction continues to advance, demand for high-end memory is expected to maintain rapid growth.

Bernstein analyst Mark Li even argued that the sector's pullback on that day actually provided a new entry opportunity. He predicts that by 2027 or 2028, global memory chip market revenue could still surpass $1.3 trillion, with data center construction in the AI era continuing to support DRAM and HBM demand growth.