China is making noticeable strides in the memory chip market

US Stock Discussions
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China is making noticeable strides in the memory chip market, yet the immediate risk to leading companies like Samsung, SK Hynix, and Micron remains limited. Despite a jump in China’s DRAM capacity from 4% to 11% in just one year, and projections to reach 16% next year, the real-world impact is still moderate. T

his is because ChangXin Memory Technologies (CXMT), a key player in China, hasn’t yet matched the production quality of its competitors—its chips store less data per unit and have a higher rate of production failures. Right now, China’s growth mostly impacts older-generation chips, causing their prices to drop. This poses a bigger problem for smaller companies that focus on these older products than for the big three, who dominate the high-end market.

Even though China is pushing hard and investing big, it still lags about six to eight years behind in technology, partly due to export controls from the West. Yet, with China accounting for a significant chunk of global DRAM demand, there’s a real chance Chinese companies could start fulfilling more of this domestic need. If this happens, it could lead to overcapacity issues for the Korean and U.S. giants, forcing them to cut back production. For now, though, the top players are relatively safe but will need to keep a close watch as China continues to advance.

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It’s pretty remarkable how quickly China is increasing its DRAM capacity—from 4% to 11% in just a year and expected to hit 16% next year. Even if they’re six to eight years behind technologically, that kind of growth can’t be ignored. With China being a massive consumer of DRAM, their domestic companies like CXMT could start fulfilling more of their own demand. If that happens, big players like Samsung, SK Hynix, and Micron might face overcapacity issues and might have to cut back production. It seems like the global chip market could see a significant shift if China keeps up this pace.

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The fact that China’s DRAM capacity is projected to reach 16% next year is a game-changer. Even though their technology is behind, the sheer increase in production could flood the market with cheaper chips, driving prices down. Smaller companies focusing on older-generation chips are already feeling the squeeze. If Chinese companies start fulfilling more domestic demand, it could force the big players to reduce their output due to overcapacity. This might not hurt them immediately, but it’s something they need to keep an eye on.