China's CXMT emerges as silent threat to Samsung, Micron

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China's CXMT emerges as silent threat to Samsung, Micron

Published: 14 Apr. 2025, 06:00 Updated: 14 Apr. 2025, 10:01

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

A Chinese flag is displayed next to a ″Made in China″ sign seen on a printed circuit board with semiconductor chips, in this illustration picture taken Feb. 17, 2023. [REUTERS/YONHAP]

[Behind the Numbers]

Samsung Electronics held undisputed leadership in the memory chip sector until very recently, when competitors at home and in China began turning the tide. One well-known disrupter is SK hynix, a Korean rival that snatched the top spot in market share of dynamic random access memory (DRAM) in the first quarter thanks to its high bandwidth memory supply to Nvidia.

A lesser-known market shaker is ChangXin Memory Technologies (CXMT), a Hefei-based producer that manufactures advanced DRAM such as Double Data Rate 5 (DDR5) without relying on cutting-edge lithography technologies.

Although its market share remains modest at 5 percent, CXMT has the potential to affect market shares previously held by Samsung, Micron and SK hynix with the strong backing of the Chinese government.

CXMT's growth could be particularly detrimental to Samsung, since it already trails behind SK hynix in the high-end HBM segment. CXMT poses a challenge in the commercial lines of memory chips because of its significantly cheaper pricing, with commodity DRAM products at around $1 — half the market price offered by major suppliers Samsung, SK hynix and Micron, according to industry reports.

Samsung Electronics held a 34 percent market share for the first quarter, trailing SK hynix's 36 percent, according to Counterpoint Research. Micron was at 25 percent, and CXMT was not mentioned in the report. However, the Chinese company is rapidly scaling up its wafer production capacity and flooding the market with cheaper DDR4 and LPDDR4 chips, driving down average selling prices.

With global DRAM demand softening as customers shift toward premium processors, Samsung faces mounting pressure to defend its market leadership and navigate an increasingly polarized landscape.

Rise of CXMT

Founded in 2016, CXMT — China’s leading DRAM maker — has rapidly grown since beginning mass production in 2020, capturing a 5 percent share of the global DRAM market by 2024, according to Shenzhen-based consultancy Qianzhan. Multiple reports such as TrendForce and Tom's Hardware predict that the Chinese memory maker could take big bites out of the market dominated by Samsung, SK hynix and Micron, potentially capturing as much as 15 percent by the end of this year.

CXMT has emerged as China’s national champion in memory chip localization, succeeding where others like Fujian Jinhua, Wuhan Hongxin Semiconductor and Tsinghua Unigroup fell short despite heavy state backing — demonstrating that its technological competitiveness is strong enough to drive meaningful gains in market share.

The Chinese company has been pushing to drive up chip production through funding, having secured a funding round of $1.48 billion from national investors in March 2024, which was followed by another $2.4 billion capital infusion from its parent company, Innotron, to build an advanced packaging plant in Shanghai. Samsung Electronics, on the other hand, said it spent 46.3 trillion won ($32 billion) in semiconductor operations in 2024.

As for quality, assessments of chip performance yield rates for CXMT remain controversial, especially for its DDR5 products that went into mass production at the end of last year. Reports from TechPowerUp and TrendForce reported that CXMT's DDR5 yield rates had reached 80 percent, on par with Samsung and SK hynix. However, they are still expensive to produce due to the company's less-advanced manufacturing processes and lower bit density, though they can still do so with active backing from the government and domestic demand.

A CXMT plant in Hefei, Anhui [CXMT]

Local media outlets such as Business Korea estimate that the figure is actually between 10 and 20 percent, as Chinese firms are unable to utilize extreme ultraviolet lithography tools due to U.S. regulations. They claim an 80 percent yield rate cannot be reached with deep ultraviolet lithography equipment alone, whereas local chipmakers such as Samsung and SK hynix utilize more advanced 12-nanometer nodes with extreme ultraviolet lithography.

From commodity DDR4 and LPDDR4 products, Chinese chipmakers such as CXMT are now preparing to expand into the high-end DRAM market, according to a Hyundai Motor Securities report.

“CXMT is preparing to mass-produce LPDDR5 at the 15-nanometer technology and is now working toward producing HBM3E, a high-performance memory used in AI and advanced computing, by 2027,” the report said.

Frenemy China

Samsung’s relationship with China remains fraught, even as CXMT eats away at its standing.

The Korean giant seeks to boost semiconductor revenue through China, even as China’s homegrown chipmakers — backed by aggressive state-led initiatives — accelerate efforts to localize the entire semiconductor value chain and drive out imports from mainstream players such as Samsung, SK hynix and Micron.

For now, though, China is the top chip importer from Korea, as the country hoards AI chips and related equipment amid tightening U.S. export restrictions.

Samsung's business report released in March said that its exports to China surged by 53.85 percent on year to 64.9 trillion won in 2024, exceeding those of the United States with 61.35 trillion won.

Korea’s total memory semiconductor exports in 2024 were $88.29 billion, with China and Hong Kong accounting for 55.4 percent, or $48.93 billion, according to a report from the Korea Institute for International Economic Policy.

DRAM and multi-chip packaging, which includes HBM to stack multiple DRAM dies into a single package, dominated exports for the year, together making up 91 percent of the total.

U.S. chipmaker Micron has seen its presence in China gradually shrink in recent years, with annual revenue from the country declining by 7.85 percent to $3.05 billion in the 2024 fiscal year compared to 2022. The drop was even steeper in the 2023 fiscal year, when revenue fell to $2.18 billion.

Flailing presence in HBM

With China ramping up efforts in DRAM and even premium HBM products, Samsung also faces rivalry with other key players who have already established positions in HBM, such as SK hynix and Micron.

Samsung executives apologized for the company’s recent declines in stock prices stemming from its late response to the booming AI chip market at March’s general shareholder meeting.

The company still awaits certification of 12-layer HBM3E chips to Nvidia, which has been pending for more than a year now, as opposed to SK hynix, which has already situated itself as a key supplier to Nvidia.

“We acknowledge that our initial response in the AI chip sector was somewhat lacking, which in turn delayed profitability improvements in our memory business,” said Samsung Electronics’ CEO Jun Young-hyun.

“Starting in the second half of 2025, we plan to swiftly supply our 12-layer HBM3 products to the market and accelerate our transition toward the AI DRAM market to actively meet customer demand. Additionally, in the HBM4 and custom HBM markets, we are taking every measure to avoid repeating last year’s missteps and are fully committed to achieving our goals without setbacks.”

As for the preliminary earnings in the January-March period, the company’s semiconductor division is estimated to have posted an operating profit of 800 billion won, according to analyst forecast. While the memory sector generated 3.3 trillion won in operating profit, the contract chip manufacturing and design divisions incurred a loss of 2.5 trillion won.

So what comes next?

Experts are cautiously optimistic about Samsung Electronics’ second-quarter performance, anticipating a rebound in DRAM prices despite lingering uncertainties over U.S. semiconductor tariffs. Analysts project that earnings in Samsung’s memory division could improve as average selling prices rise, driven by a recovery in AI-related demand and rapid inventory depletion in China. Additionally, major suppliers like Samsung, SK hynix and Micron have tightened supply — particularly of older-generation products like DDR4 — to support price stabilization.

However, risks remain. Aggressive price competition from Chinese firms could continue to drag down global DRAM prices.

“The rebound may be short-lived,” said Lee Jong-hwan, a professor of system semiconductor engineering at Sangmyung University, noting that the demand cycle has become shorter, with the potential for a swift downturn following recent gains — particularly in commodity DRAM.

“If that happens, prices could fall again, putting pressure on margins,” he added. “For Samsung, this is especially concerning, as SK hynix is already profiting from HBM, while Samsung’s HBM business has yet to turn a profit. That gap could become a serious challenge.”

BY LEE JAE-LIM [[email protected]]