The Question in Brief
Memory-chip stocks fell for two days this week on news from China. On Saturday, October 10, the president of CXMT, China's largest maker of DRAM (the working memory inside every computer, phone and server), told a conference in Shanghai that the company had made progress on a denser chip design and plans to sell server memory built on it by the end of the year. Micron Technology fell 3.9% on Monday and another 3.6% on Tuesday. SanDisk fell 6.0% on Monday. In Seoul on Tuesday, Samsung Electronics fell 7.4% and SK hynix 10.1%.
Elon Musk gave the worry its shape. Replying on X to a post about the sell-off, he wrote: "When China figures out how to manufacture a product, their ability to scale is often greater than the rest of the world combined. We saw this with lithium batteries and solar, for example." That is the question this two-part Stock Focus takes up: if China scales up memory chips, what happens to the companies that make them, equip them and buy them? This first part covers the industry, where China stands, and what the earlier cases show. Part two will go through the companies one by one.