[News] China’s DRAM Expansion Raises Concerns, Potentially Impacting Samsung and SK hynix Profits

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According to a report from Korean media ZDNet Korea, Chinese memory manufacturers like CXMT (Changxin Memory Technologies) are aggressively expanding production, which could negatively affect profitability in the traditional DRAM market. Both Samsung and SK hynix are said to be closely monitoring these developments.

Established in 2016, CXMT has become China’s largest DRAM producer with government backing, focusing on traditional DRAM and preparing to enter the HBM market.

Reportedly, CXMT has rapidly increased its DRAM production capacity, from 70,000 wafers per month in 2022 to 120,000 in 2023, and is projected to reach 200,000 wafers this year.

CXMT’s main products include 17nm and 18nm DDR4 and LPDDR4, with its latest offerings being 12nm DDR5 and LPDDR5X, which the company is also developing. Its aggressive DRAM expansion could negatively impact sales and profits for Korean memory manufacturers.

According to TrendForce’s data, the spot price of 16Gb DDR4 increased from $3 in the second half of 2023 to $3.50 in the first half of this year, before falling back to $3.30 in the second half of 2024.

For DDR5, prices have increased from $4.20 in October 2023 to over $4.50 in the first half of this year, approaching $5 in the second half.

By the end of August, the price premium of DDR5 over DDR4 had surged to 53.9%, up significantly from 36.9% six months earlier.

Per a recent report from Nomura Securities cited by ZDNet Korea, the rapid expansion of Chinese companies is expected to negatively impact the memory industry’s profitability, necessitating preparations for potential disruptions. CXMT’s production now accounts for about 5% of the market, potentially influencing prices.

Read more

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(Photo credit: CXMT)