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

Author: Li Dan

The explosive performance of Changxin Technology, the leader in national 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 largest drag on the market. SanDisk (SNDK) dropped over 10% during the day, hitting a low of about 14.6% in early trading, and has cumulatively fallen 47% from its historical high on June 22, with a market value evaporating by about $170 billion in the past month; SK Hynix ADR (SKHY) fell about 10% at one point, while Western Digital (WDC) and Seagate Technology (STX) dropped over 9% and 8%, respectively, with Micron Technology (MU) falling 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 U.S. listing on July 10, finishing 4% lower than the issue price.

When it hit 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, dropping 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 Sci-Tech Innovation Board that day. The largest DRAM manufacturer in China saw its stock price soar over 460% on its first day of trading, 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's listing triggers a global reevaluation of the storage sector

Regarding the significant drop in U.S. storage chip stocks on Monday, several foreign media outlets believe that the market's concern is not about Changxin Technology's short-term performance, but rather the potential changes in the global DRAM supply landscape.

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 fields like HBM for AI. For global storage chip leaders that have already seen significant price increases, this indicates that long-term competitive pressure is rising.

Some commentators pointed out that the market is worried that with Changxin Technology's financing completed, the 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 under high valuation conditions, any changes in the competitive landscape can easily trigger profit-taking.

Other comments suggest that this round of adjustments reflects 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, whether the traditional DRAM business will enter a phase of intensified competition earlier than expected, thus affecting industry profit margins.

However, many analysts believe that the market reaction may be somewhat overinterpreted.

Currently, Changxin Technology's products are still mainly focused on traditional DRAM fields like 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 debut, capital markets bet on "Chinese storage"

Changxin Technology's IPO has attracted significant global attention.

The company raised approximately 57.9 billion yuan (about $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 yuan, 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 a single day.

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 R&D 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 R&D 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 R&D, expand production capacity, and improve the domestic storage industry chain.

In the AI era, the true determinant of victory still lies in HBM

However, from the perspective of the global competitive landscape, most institutions still believe that Micron, SK Hynix, and Samsung's leading advantages in the AI storage field are unlikely to be shaken 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 significant drop in storage stocks on Monday is more like an emotionally driven valuation adjustment rather than a turning point in the industry's fundamentals. As the construction of AI infrastructure continues to advance, high-end storage demand is still expected to maintain rapid growth.

Bernstein analyst Mark Li even believes that the sector's pullback 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.