Chinese DRAM Giant Enters Booming Flash Memory Market To Take On Samsung, SanDisk

Chinese chipmaking giant, CXMT, and the biggest IPO of the decade in the mainland market, is preparing to enter the booming flash memory ​chip market dominated by Samsung Electronics and other foreign rivals, Reuters reported citing sources, a move that would broaden ‌its customer base amid a global memory shortage.

The move would also pit the dynamic random access memory (DRAM) chip specialist against domestic rival YMTC, taking it into one of the semiconductor industry’s fastest-growing segments.

The relentless, debt-fueled demand from AI servers (where ROI remains deeply negative) has created a global memory shortage that industry executives believe will persist through at least 2027. SK Hynix CEO Kwak Noh-jung said in July that 2027 ​could be the industry’s worst year from a supply perspective, while TrendForce expects NAND supply tightness to ease only in the second half of next ​year, unless of course the bond market cracks first at which point all the hyperscalers will simply run out of money to buy massively overpriced DRAM and flash memory… which it will now that global yields are at decade highs. 

Manufacturers have also prioritized capital spending on DRAM and high-bandwidth memory, or HBM, limiting additions to NAND flash capacity, according to ⁠TrendForce, worsening shortages in this segment. DRAM provides the working memory used by processors, while NAND stores data in phones, computers and data centres. Both have seen costs explode in recent months, making memory the biggest cost driver of electronics purchases, with Goldman forecasting that memory prices will singlehandedly raise core PCE by 0.5%.

CXMT, also known as ChangXin ​Memory Technologies, plans to establish a research-and-development production line for NAND flash memory at its new plant in Beijing, according to the report; the company has ​also set up a research institute in the Chinese capital and projects there include NAND development, one source said.

CXMT has discussed its NAND plans with customers, including a newly established startup that intends to buy its NAND chips for storage products used in AI systems and supercomputers. 

Samsung was the world’s biggest NAND supplier ‌by revenue ⁠in the second quarter with a 28% share, according to research firm Counterpoint. SK Hynix ranked second, followed by Micron. China’s YMHT recently surpassed Sandisk, and is now tied with Japan’s Kioxia for 4th spot in NAND marketshare. It will likely overtake Micron next quarter. 

CXMT and YMTC, known in China as the “twin stars” of the country’s memory-chip industry, have largely operated in separate markets. CXMT dominates Chinese production of DRAM, while YMTC is the country’s leading NAND manufacturer.

However, thanks to the biggest memory bubble in history, those lines have begun to blur. In April, Reuters reported that YMTC had sent low-power DRAM samples to customers as it weighed entry into CXMT’s core market.

And now CXMT is entering the NAND market.

While ​the two firms lag behind larger international ​rivals and are more exposed to ⁠lower-priced products, they are growing at a blistering pace as tight supplies have strengthened their pricing power with some Chinese customers. In some cases, they have charged more than their foreign competitors, Reuters reported in July.

Both companies have emerged as key pillars of Beijing’s drive to build a self-sufficient chip industry ​and close the gap in strategic technologies like AI. They grew with backing from China’s national semiconductor fund and local ​governments. CXMT expanded with ⁠backing from Hefei, the provincial capital of Anhui province, in eastern China, while YMTC was built in Wuhan, the provincial capital of central Hubei province, reflecting competition among Chinese local governments to attract strategic industries through investment and incentives.

CXMT, which raised 57.92 billion yuan ($8.6 billion) in July in Asia’s biggest initial public offering this year, plans a second memory-chip plant ⁠in Beijing and ​was in funding talks with a tech manufacturing hub backed by the local government, Reuters reported last ​month. YMTC’s parent, CCSH, is also planning a Shanghai listing that aims to raise 33 billion yuan.

Washington’s export restrictions have added urgency to China’s drive to develop domestic memory suppliers. Washington placed YMTC on its Entity List ​in 2022 and later tightened China’s access to HBM chips that are used alongside AI processors.