Global memory chip stocks experienced violent turbulence. Micron Technology (MU) shares plunged more than 4% after the market opened on July 16, officially pushing its market capitalization below the $1 trillion threshold. The selloff quickly spread across the entire memory chip sector, with SanDisk (SNDK), SK Hynix (SKHY), Seagate Technology (STX), and Western Digital (WDC) all suffering declines broadly exceeding 5%. The market pointed to China's rising memory powerhouse—CXMT—and its upcoming massive IPO as the trigger, with investors concerned that a new wave of capacity expansion will completely shatter the current tight supply-demand balance.
This rout was not an isolated event. A day earlier, on July 15 local time, U.S.-listed memory chip stocks had already sounded the alarm. According to market data, Micron closed down more than 8% at $904.28 per share; SK Hynix ADRs tumbled 9.00% to close at $176.46 per share; and SanDisk fell 8.12% to close at $1,615 per share. In just two trading sessions, memory chip giants saw hundreds of billions of dollars in market value evaporate.
The core variable triggering the market panic came from China. CXMT, the world's fourth-largest DRAM manufacturer, will begin accepting investor subscriptions this Thursday as it officially debuts on the Shanghai STAR Market. Under the plan, the company's IPO is expected to raise as much as $8.55 billion, nearly double the original target, implying a market capitalization of approximately $85.5 billion. The market broadly expects this massive fundraising to be deployed for significant capacity expansion, thereby boosting CXMT's global market share.
Data from Counterpoint Research shows that CXMT's rise in the DRAM space has been astonishingly rapid. In the first quarter of this year, its market share jumped to 8% from 3% in the same period last year, firmly establishing it as the world's fourth-largest player. While still trailing Micron's 22% share and the even higher shares held by SK Hynix and Samsung Electronics, the expansion momentum of this Chinese memory manufacturer is enough to put the market on high alert. Given that approximately 80% of Micron's revenue comes from DRAM, including high-bandwidth memory (HBM) supporting AI servers, any increase in DRAM supply and intensification of price competition would directly impact its core profit engine.
However, CXMT's expansion path is far from smooth. The company faces multiple structural risks. Beyond the inherent cyclical volatility of the memory industry, U.S. export controls restrict its ability to procure advanced chipmaking equipment from suppliers such as lithography giant ASML, making it extremely difficult to narrow the technology gap with global leaders. Additionally, geopolitical risks are escalating. The U.S. Department of Defense last month designated CXMT as a "Chinese military company." According to a previous Reuters report, an interagency committee has approved adding the company to the U.S. Department of Commerce Entity List, though the relevant measures have yet to formally take effect.
South Korea's two memory titans were not spared from the selloff either. On July 16, Samsung Electronics (005930.KS) shares plummeted 8.77%, while SK Hynix (000660.KS) cratered 11.53%. Behind this, beyond the oversupply concerns triggered by CXMT's IPO, was a subtle shift in market sentiment. After share prices had climbed persistently to historic highs, investors began to question whether memory chips and the broader AI infrastructure sector could continue delivering results that exceed expectations.
Legendary investor Warren Buffett's sharp criticism poured cold water on the overheated market at a particularly opportune moment. On July 15 local time, he publicly stated that the market is increasingly dominated by short-term speculative trading rather than long-term value investing, noting that "when everyone is keen on gambling, finding value targets with a margin of safety becomes exceedingly difficult." These remarks undoubtedly intensified the correction pressure on high-flying technology stocks.
Amid the market panic, memory manufacturers themselves continued to project strong confidence. Micron Technology executives made clear in late June that as supply gradually improves, demand will remain robust because AI is still in a very early stage, the token economy requires more memory capacity, and system performance will continue to be constrained by memory capacity and bandwidth. The company even expects tight supply conditions to persist beyond 2027. SK Hynix's forecast was even more aggressive, predicting that 2027 will see the most severe supply shortage in the memory industry's history.
To seize the future high ground, an unprecedented capacity arms race has already begun. In late June, the South Korean government joined forces with Samsung and SK Group to unveil a combined corporate domestic investment plan totaling 4,755 trillion won, focused on three core mega-projects: semiconductors, physical AI, and AI data centers. Among these, the southwestern region of South Korea plans to invest 800 trillion won (approximately $518 billion) to build four semiconductor manufacturing plants, with Samsung Electronics and SK Hynix each constructing two.
Meanwhile, Samsung Electronics is reassessing the possibility of tapping U.S. capital markets. According to Bloomberg, citing sources familiar with the matter, Samsung has held preliminary discussions with multiple investment banks regarding a potential American Depositary Receipt (ADR) issuance, though the talks remain at an early evaluation stage and no decision has been made on whether to proceed with the transaction. This move is largely driven by SK Hynix's previously completed $26.5 billion U.S. IPO, which set a record for the largest U.S. listing by a foreign company. However, Samsung faces a more complex situation, with its business spanning memory chips, logic chips, smartphones, and consumer electronics—far more intricate than SK Hynix's memory-focused operations—which will increase the difficulty of valuation and deal structuring.
Micron Technology is also ramping up investment. On July 9 local time, the company announced plans to invest more than $250 billion in the United States by 2035. This enormous sum will be used to build a second leading-edge memory chip manufacturing facility in Boise, Idaho, expand manufacturing facilities in Manassas, Virginia, and invest tens of billions of dollars in technology research and development.
Below is the stock performance of major memory chip companies on July 15-16:
Note: U.S. stock figures for July 15 represent closing price declines, while July 16 figures represent intraday declines; South Korean stock figures for July 16 represent closing price declines.
This selloff reflects a market-wide reassessment of the valuation logic for the AI memory sector. On one hand, the massive demand generated by AI infrastructure buildout has indeed propelled the memory chip industry into a new upcycle, with major players unveiling astronomical investment plans. On the other hand, rapid supply-side expansion and the catch-up efforts of Chinese manufacturers have led investors to begin pricing in potential future overcapacity and price wars. When CXMT's IPO provided the market with a clear supply increment expectation, it was hardly surprising that investors holding positions at elevated levels chose to lock in profits. The boom-and-bust cycle of the memory chip industry appears to be replaying at an accelerated pace within the grand narrative of AI.
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