China's DRAM giant stirs up the global landscape, US stock memory chips plunge, SK Hynix breaks below par, and SanDisk nearly halves in a month

Author: Li Dan

The explosive performance of Changxin Technology, the leader in domestic storage chips, on its first day of trading on the A-shares is becoming a new variable in the global storage chip sector.

On Monday, U.S. stocks saw a sharp decline in storage chip stocks, becoming the biggest drag on the market. SanDisk (SNDK) fell over 10% during the day, hitting a low of about 14.6% in early trading, down 47% from the historical high set on June 22, with a market value evaporating by about $170 billion over the past month; SK Hynix ADR (SKHY) dropped about 10% at one point, while Western Digital (WDC) and Seagate Technology (STX) fell over 9% and 8%, respectively, and Micron Technology (MU) dropped over 7% at one point.

By the close, SanDisk, SK Hynix ADR, Western Digital, Seagate Technology, and Micron fell about 11%, 7.5%, 4.2%, 4.1%, and 2.3%, respectively. SK Hynix closed below its IPO issue price for the first time since its listing in the U.S. on July 10, closing 4% lower than the issue price.

When hitting a new low in early trading, the Philadelphia Semiconductor Index, which tracks the overall performance of chip stocks, fell about 5%, significantly underperforming the three major U.S. stock indices, ultimately closing down 2.2%. The S&P 500 Index and Nasdaq both hit new lows, falling about 0.4% and 0.8%, respectively, while the Dow Jones maintained its upward trend throughout the day.

The market generally pointed its finger at Changxin Technology (CXMT), which was listed on the Shanghai Stock Exchange's STAR Market that day. The largest DRAM manufacturer in China saw its stock price soar over 460% on its first day, with a market value exceeding 3 trillion yuan, becoming the new market leader in A-shares and prompting global investors to reassess the competitive landscape of the DRAM industry in the coming years.

China's DRAM leader listing triggers global storage sector reassessment

Regarding the sharp decline of U.S. storage chip stocks on Monday, several foreign media outlets believe that the market's concerns are not about Changxin Technology's short-term performance, but rather the potential changes in the global DRAM supply landscape in the future.

Analysts believe that after Changxin Technology completed the largest IPO in Asia this year, it means the company has gained more ample capital support, enhancing its future capabilities in expanding production, technological research and development, and advancing into high-end storage areas like HBM for AI. For global storage chip leaders that have already seen significant increases, this means long-term competitive pressure is rising.

Some commentators pointed out that the market is worried that with Changxin Technology's financing completed, the future release of new DRAM supply may accelerate, thereby weakening the current market's optimistic expectations for sustained increases in storage prices. Meanwhile, storage stocks like Micron, SK Hynix, and SanDisk have experienced significant increases, and any changes in the competitive landscape under high valuations are likely to trigger profit-taking.

Other commentators believe that this round of correction reflects more of a market repricing. Although demand for HBM driven by AI remains strong, investors are beginning to reconsider: if Chinese manufacturers continue to enhance their production capacity and technological strength, will the traditional DRAM business enter a phase of intensified competition earlier than expected, thereby affecting industry profit margins?

However, many analysts believe that the market reaction may be somewhat of an overinterpretation.

Currently, Changxin Technology's products are still mainly concentrated in traditional DRAM areas such as DDR4 and DDR5, while Micron, SK Hynix, and Samsung's fastest-growing businesses come from AI storage products like HBM. Due to U.S. export restrictions, Changxin Technology still faces high technical barriers to entering the high-end HBM market in the short term, making it difficult for the global AI storage market landscape to fundamentally change in the near future.

Changxin Technology's explosive rise on its first day, capital markets bet on "Chinese storage"

Changxin Technology's IPO itself has attracted global attention.

The company raised about 57.9 billion yuan (approximately $8.6 billion), setting a new high for IPO fundraising in Asia this year. On its first day of trading, the company's stock price closed 465.82% higher than the issue price, with a total market value reaching 3.28 trillion, surpassing Industrial and Commercial Bank of China to become the largest by total market value in A-shares, equivalent to two Kweichow Moutai.

On Monday, Changxin Technology's trading volume exceeded 140 billion yuan, making it the first stock in A-share history to surpass 100 billion yuan in single-day trading volume.

Public information shows that Changxin Technology was established in 2016 and is the largest DRAM chip manufacturer in China, as well as an important representative enterprise for achieving independent research and development and mass production of DRAM in China. Currently, the company's products cover multiple fields including consumer electronics, PCs, servers, and automotive electronics, and it continues to promote the research and development of new products like DDR5.

Domestic media generally believe that Changxin Technology's listing not only signifies a new milestone for China's semiconductor industry but also indicates that the capital market is giving higher valuation premiums to domestic high-end manufacturing and "hard technology." The market expects that the raised funds will further support advanced process research and development, expand production capacity, and improve the domestic storage industry chain.

In the AI era, the true determinants of victory are still HBM

However, from the perspective of the global competitive landscape, most institutions still believe that the leading advantages of Micron, SK Hynix, and Samsung in the AI storage field are difficult to shake in the short term.

The current explosion in demand for AI servers has made HBM one of the most scarce semiconductor products globally. Micron and SK Hynix have almost monopolized the HBM supply for AI chip manufacturers like NVIDIA, and this related business is also the core driver of rapid profit growth for both companies.

Therefore, many analysts believe that the sharp decline in storage stocks on Monday is more like an emotionally driven valuation adjustment rather than a turning point in the industry's fundamentals. As AI infrastructure construction continues to advance, high-end storage demand is still expected to maintain rapid growth.

Bernstein analyst Mark Li even believes that the sector's correction that day provided a new opportunity for positioning. He expects that by 2027 to 2028, global storage chip market revenue is still expected to exceed $1.3 trillion, with the construction of data centers in the AI era continuing to support the growth of DRAM and HBM demand.