Key Points
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Chinese DRAM company CXMT says it has pre-sold $1 billion worth of DRAM.
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CXMT and Micron both want more market share in high-bandwidth memory (HBM).
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CXMT is struggling to break into this market, where Micron has an advantage.
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For investors, owning Micron (NASDAQ:MU) isn’t as much fun as it used to be.
Shares of Micron, a global leader in the production of both DRAM and NAND flash memory for the artificial intelligence data center market, are still up more than triple over the past 52 weeks. That’s great for folks who got in on the ground floor. More recent Micron investors, however, have suffered terribly as Micron shares shed nearly 30% of their value over just the last six trading days.
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And as of 10:35 a.m. ET Thursday, Sandisk stock is down another 13%.
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China looms large
Why does Micron stock keep going down? Intel‘s (NASDAQ:INTC) post-earnings rout last month started the ball rolling. Now, many are blaming Chinese memory chipmaker CXMT for keeping it on a downhill trajectory. CXMT recently announced that a new “4F square” memory chip is under development and plans to market it as high-bandwidth memory (HBM) for data centers.
Earlier today, CXMT announced it’s received $1 billion in customer prepayments for its DRAM chips, “a 15.7-fold increase from … the end of 2025,” according to DigiTimes.
What it means for Micron
Should this worry Micron investors? Not necessarily.
On the one hand, yes, both CXMT and Micron produce DRAM memory. Micron is in fact the world’s third-largest supplier of these chips — and CXMT is the fourth. In HBM in particular, however, things are more complicated.
Both companies are angling to win share in this market, where SK Hynix (NASDAQ:SKHY) dominates with at least a 50% market share. But CXMT is significantly behind Micron in the race to overtake SK Hynix. According to DigiTimes, CXMT is struggling to transition its DRAM to HBM, and yield rates for its “next-generation HBM3E products” are only 20% to 30%.
If that’s the best CXMT can do, Micron investors may have little to worry about.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Micron Technology. The Motley Fool has a disclosure policy.
