Samsung and SK Hynix Plunge 7-10% After China’s CXMT Unveils New Memory Chip Design
Samsung Electronics closed down 7.39% and SK hynix dropped 10.09% on Tuesday after China's ChangXin Memory Technologies said it plans to mass-produce a new type of DRAM chip this year, raising fears of stiffer competition for the memory market leaders.
SEOUL: Samsung Electronics and SK hynix suffered their worst single-day selloffs in months on Tuesday, after China’s largest memory chipmaker said it would begin mass-producing a new generation of DRAM chips this year.
Samsung closed down 7.39% at 232,000 won on the Kospi, the Korea JoongAng Daily reported, while SK hynix tumbled 10.09% to 1.443 million won. Both stocks had already fallen 4.4% and 4.5% on Monday, extending the slide into a second straight session as foreign investors kept selling.
The trigger was an announcement from ChangXin Memory Technologies, known as CXMT, China’s biggest maker of DRAM memory. The company said it plans to mass-produce next-generation DRAM chips with smaller memory cells this year, including DDR5 registered DIMM modules for data-center servers, according to the reports.
A cell design that packs in more memory
CXMT’s design, known as 4F², squeezes memory cells into a smaller area than the standard layout, letting each silicon wafer carry more storage. Analysts quoted by the Korean press said a working product from CXMT, ahead of the established players, would threaten the competitive standing of the Korean chipmakers in the memory market.
Some analysts urged caution. It remains to be seen whether the supply concerns will translate into an actual deterioration in earnings, the Seoul Economic Daily reported, since CXMT has not yet succeeded in mass production and its yields, performance and customer certification remain unverified. Earnings announcements from ASML and TSMC scheduled for this week could also ease uncertainty over the chip industry outlook.
Markets tumble across the region
The selloff spread well beyond the two leaders. The Kospi fell 3.10% at the open to 6,186.08, while SK Square, the largest shareholder of SK hynix, dropped 7.77% and Samsung Electro-Mechanics fell 5.99%. Foreign investors sold a net 948.8 billion won worth of shares on the main board in early trading, according to the Korea Exchange.
The rout started overnight in New York, where the Philadelphia Semiconductor Index fell 2.67% on Monday. Micron dropped 3.9% and SanDisk slid 6.0%, according to Bloomberg data cited in the Korean reports.
Another factor weighing on the Korean stocks was weakening buying from institutions: Samsung has completed its share repurchase program for employee stock-based compensation, while SK hynix’s buyback and cancellation program is nearing completion, the Korea JoongAng Daily reported.
Reporting based on coverage by the Korea JoongAng Daily and the Seoul Economic Daily.
