China is flooding the market with extremely cheap DDR4 modules. It is a threat to South Korea

Memory chips are the engine of South Korea’s trade-dependent economy. In fact, for the South Korean Government, its semiconductor industry has a strategic role. And Samsung and SK Hynix are the companies that support it. The first of them has an approximate market share of 40%, while SK Hynix defends a very worthy 29%. Behind both is the American Micron Technology, with approximately 26%.

The memory integrated circuits market has enormous growth potential due to the high demand for these chips that has led to the proliferation of data centers for artificial intelligence (AI) applications. And, as expected, Chinese semiconductor manufacturers do not want to be left out of it. Changxin Memory Technologies (CXMT) is one of the Chinese companies specialized in the production of memory chips, and, like other companies in the country led by Xi Jinping, it has chosen to compete in this very attractive market by deploying a very aggressive

Chinese manufacturers are competing with 50% lower prices

CXMT in particular has increased its DRAM chip production capacity almost five times over the last four years, allowing it to increase its global market share to a very worthy 9%. This growth has placed this company just behind Micron if we stick to its market share, making it already the fourth largest memory chip manufacturer on the planet. To further complicate matters, the Chinese Government is financially supporting its manufacturers of this type of semiconductor in response to the sanctions implemented by the US and its allies, which is why the competitiveness of Chinese companies is on the rise.

Be that as it may, the pricing strategy of not only CXMT, but also other Chinese memory chip manufacturers, such as Fujian Jinhua, is extremely aggressive. In fact, these two companies in particular are expanding their production capacity and slashing prices. Currently both sell their DDR4 chips with a 50% discount compared to integrated circuits of the same type produced by South Korean companies. As we can guess, for Samsung and SK Hynix this strategy represents full-blown aggression that leaves them no choice but to reduce their prices, and, therefore, also their profit margin. Of course, we, the users, win.

CXMT’s manufacturing capacity has increased from 70,000 wafers per month in 2022 to as many as 200,000 wafers in 2024. But that’s not all. Its goal is to reach 300,000 wafers per month and capture 11% of the global DRAM memory chip market over the next few years. Fujian Jinhua is sanctioned by the US Government, but has still managed to increase its production significantly. At this juncture, South Korean manufacturers have chosen to reduce their production of DDR4 chips and increase that of DDR5 and HBM3 memories for a very compelling reason: their Chinese competitors still do not have the necessary technology to manufacture these last two types of chips on a large scale. memoirs.

Imagen | Moe Bodden

More information | DigiTimes

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