China is Targeting SanDisk but Has Not Yet Challenged Micron's Position

According to Benzinga, HBM (High Bandwidth Memory) is the specialized chip powering NVIDIA’s latest AI accelerators and is expected to remain dominated over the next few years by existing leaders such as Micron Technology (MU-US), SK Hynix (SKHY-US), and Samsung Electronics. However, China is making rapid progress in the fields of commodity DRAM and NAND.

MS Hwang, an analyst at Counterpoint Research, stated: "Chinese manufacturers are quickly catching up in commodity DRAM and NAND, but it will be difficult for them to surpass in HBM."

He added: "I believe Chinese manufacturers could produce HBM3 by the first half of 2027."

HBM3 by early 2027 would not represent the current generation. By then, Micron, SK Hynix, and Samsung are expected to already be meeting demand for HBM4, with their technology roadmaps pointing even further ahead.

This moat is precisely one generation deep.

Where could real competition emerge?

Commodity memory is a different story. Unlike the HBM leaders, traditional NAND suppliers such as SanDisk (SNDK-US) and Western Digital (WDC-US) appear more vulnerable to intensifying competition from Chinese manufacturers.

These products are more standardized; customers primarily switch suppliers based on price, and the main barrier to entry is capital, not technical know-how—exactly the kind of barrier that state-backed new entrants are best equipped to overcome.

This is precisely the surface market that Chinese suppliers are targeting—and the segment currently experiencing the most extreme pricing pressures.

China’s ambition in the memory chip sector took a significant step forward as ChangXin Memory Technologies (CXMT), China’s largest domestic DRAM manufacturer, completed an $8.6 billion IPO in Shanghai.

The stock surged 466% on its first day, reflecting strong investor confidence in Beijing’s efforts to build a globally leading memory chip giant.

China wants a share of the fourfold rise in memory prices.

Hwang noted that memory prices have nearly quadrupled over the past year, with most of the increase concentrated in the last six months.

He also pointed out that supply constraints have shifted away from data centers. "The key bottleneck is now in consumer segments such as smartphones, PCs, gaming, and home appliances."

He added, "The situation for DRAM and NAND is similar, but DRAM supply appears slightly tighter."

Thus, the segments experiencing the most severe price increases are exactly where Chinese capacity is entering.

A market priced at four times last year’s level is a massive target.

Despite record-high profits, most memory companies currently have forward P/E ratios below 10x.

According to Hwang, investors remain skeptical because the industry’s economic model has not fundamentally changed. "These commoditized products inherently require massive capital investment in a competitive manner."

As long as manufacturers continue to compete primarily on production scale and pricing, rather than structural reforms in industry discipline, investors are unlikely to assign valuation multiples comparable to software companies.

This may explain why artificial intelligence (AI) has created two distinct investment narratives in the memory sector.

Companies involved in HBM continue to benefit from technological barriers that Chinese competitors cannot easily breach.

Meanwhile, firms more reliant on commodity-type DRAM and NAND businesses may face increasing competitive pressure as Chinese manufacturers expand their capacity.

For investors, the next question may no longer be whether memory is still attractive, but rather what kind of memory business they hold.