Memory chip stocks fell sharply this week amid broader equity market turmoil. Investors are weighing Chinese competition from CXMT and speculation about an oversupply of memory in 2029, though analysts question both worries.
Over the last five days, SK Hynix has plunged 26%, Samsung has tanked 22% and Micron has dropped around 11%. Memory chip stocks have taken a particularly bad beating this week, CNBC reported, as two concerns add to the pressure: Chinese competition and the timing of a possible oversupply.
China's CXMT raises competition fears
The initial jitters came at the start of the week, when ChangXin Memory Technologies, or CXMT, announced plans to roll out a server memory product based on new architecture. The design would allow higher storage density, raising concerns that CXMT could take global market share from Samsung, SK Hynix and Micron.
However, a number of analysts questioned whether CXMT could scale production of such an advanced technology. Ben Barringer of Quilter Cheviot said the issue with any architectural change is yield, warning that a 50% yield would mean putting half the chips in the bin. Kevin Cassidy of Rosenblatt Securities also said CXMT's developments are unlikely to add more supply. According to Cassidy: "We don't think this is going to swing the supply-demand equation at all."
A 2029 oversupply forecast adds pressure
Traders are also discussing an opinion column in Maeil Business Newspaper, a South Korean publication. The writer said that Professor Hwang of Seoul National University and Ahn Ki-hyun of the Korea Semiconductor Industry Association expect a large wave of new supply in 2029, according to a CNBC translation. Elon Musk responded on X that China will be making a LOT of RAM in 2028.
An oversupply in 2029 would bring lower prices and squeezed profit margins, but other analysts have not echoed a forecast that far out. Many analysts instead forecast that the shortage won't ease until 2028, which might not lead to huge price declines.
Counterpoint sees a milder down cycle
Counterpoint Research sees DRAM prices falling around 23% in 2028 compared with 2027, which would still leave them up around 230% compared to 2025. Analyst Jeongku Choi said suppliers and buyers have entered 3- to 5-year long-term agreements with upper and lower price limits, so a down cycle is not expected to show the same sharp decline seen in the past.
Source: CNBC
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