CXMT Expansion Looms! Micron Rises Instead of Falls — What Is the Market Betting On?

Barron's reported that China's memory powerhouse ChangXin Memory Technologies (CXMT) is moving forward with an expansion plan, signaling further heating up of competition in the global DRAM market. However, Micron (MU-US) was not significantly dragged down by the news on Monday (3rd). After falling more than 3% in early trading, the stock reversed course and closed higher. Short-term, the market views Micron's weakness as part of fund rotation, not a deterioration in industry fundamentals.

Micron's stock dropped as much as 3.4% at the market open, hitting $795.02 per share, but gradually recovered ground and ended the day up 0.79%, closing at $829.50—a gain of $6.47. The Philadelphia Semiconductor Index rose over 1% on the same day. Sandisk (SNDK-US) surged more than 6%.

While Micron's stock stabilized, its Chinese competitor is preparing to ramp up production.

According to Reuters, following its recent initial public offering (IPO), CXMT is evaluating the construction of a second memory chip fab in Beijing and may nearly double its monthly wafer output to over 600,000 wafers.

CXMT still lags behind major memory manufacturers, but its market share is rapidly growing. Data from Counterpoint Research shows the company held about 8% of the global DRAM market in the first quarter of this year, up from 3% a year earlier, making it the world's fourth-largest DRAM manufacturer.

In contrast, Micron held around 22% market share during the same period, while SK Hynix and Samsung Electronics maintain even more solid positions. Despite the gap, CXMT is expected to use IPO-raised funds to expand capacity and lay the foundation for capturing more global market share in the future.

CXMT's expansion also affects Apple's (AAPL-US) supply chain strategy in China.

The Wall Street Journal reported that Apple hopes to use CXMT chips in devices sold in China and has lobbied the Trump administration not to place the company on the U.S. trade blacklist. Neither Apple nor CXMT immediately responded to requests for comment.

Meanwhile, South Korean memory stocks weakened sharply on Monday. Both SK Hynix and Samsung Electronics closed down 8.8% in the South Korean market.

During U.S. trading hours, SK Hynix's ADR (SKHY-US) fell as much as 4.4% intraday but narrowed losses to under 1% by the close.

Jordan Klein, an analyst at Mizuho Securities' trading division, pointed out that Asian memory stocks had a weak start to the week, but this movement was more likely driven by position unwinding in the South Korean market and fund rotation, rather than a change in industry fundamentals. He believes the market is currently digesting deleveraging pressures and capital reallocation.