Memory stocks are getting hammered. China and a 2029 oversupply are the big worries

Key points

• Memory chip stocks fell sharply this week: SK Hynix down 26%, Samsung 22%, Micron 11%.
• CXMT's new server memory design raised fears of Chinese competition and market share loss.
• A Korean column warned of a 2029 memory oversupply, but other analysts have not echoed that forecast.

Memory chip stocks have fallen sharply this week amid broader equity market turmoil. Over the last five days, SK Hynix dropped 26%, Samsung fell 22% and Micron declined around 11%.

Two concerns are adding pressure: debate over whether Chinese competition threatens incumbents, and speculation about when the memory market could become oversupplied.

CXMT announcement sparks jitters

The initial jitters came at the start of the week after China's leading memory chipmaker, ChangXin Memory Technologies (CXMT), announced plans to roll out a server memory product based on a new architecture. CXMT's design would allow higher storage density, raising concerns that the breakthrough could let the Chinese company take global market share from Samsung, SK Hynix and Micron.

Several analysts questioned whether CXMT could scale production of such an advanced technology. Ben Barringer, global head of technology research at Quilter Cheviot, told CNBC's "Squawk Box Europe" on Wednesday that with any architectural change, yield is the issue. Kevin Cassidy, a senior research analyst at Rosenblatt Securities, told CNBC he does not think the development will swing the supply-demand equation at all.

The current memory market is considered to be in a 'New Normal' era, and the down cycle will differ from previous ones.

— Jeongku Choi, senior research analyst at Counterpoint Research

Oversupply worries for 2029

Traders also discussed an opinion column in Maeil Business Newspaper, a prominent South Korean publication, in which a reporter urged the government to prepare for a slowdown in the AI boom. The writer said Professor Hwang of Seoul National University and Ahn Ki-hyun, executive director of the Korea Semiconductor Industry Association, expect a "flood of new supply" that will turn the memory market "into a red ocean" in 2029. By 2030, the writer said, the supercycle could be over and the industry could enter a downturn.

SpaceX and Tesla CEO Elon Musk responded on X, saying China "will be making a LOT of RAM in 2028." An oversupply of RAM in 2029 would pose another headwind for memory stocks, with lower prices and squeezed profit margins, but a forecast that far out has not been echoed by other analysts.