Key Points
Worries over technology improvement's with CXMT memory chips are dogging Micron this week.
CXMT is "two or three generations" behind Micron in DRAM -- but may be catching up.
It's happening again. Worries about competition from China in the computer memory space are roiling stock markets, and once again, Micron (NASDAQ:MU) stock is front and center in the turmoil.
Shares of the U.S.-based computer memory maker closed down 3.9% on Monday, and as markets reopen Tuesday, Micron stock is down once again -- 4.5% as of 10 a.m. ET.
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Image source: Micron
CXMT in the news
Blame Chinese DRAM company ChangXin Memory Technologies, or CXMT. Several months ago, CXMT went public in a $487 billion IPO, threatening to disrupt the DRAM market by selling low-cost memory, undercutting Micron's prices, and stealing Micron's market share. CXMT was expanding production, and rumor even had it Apple would soon be buying its chips from CXMT!
Granted, that plan fell apart when Apple began negotiating with CXMT and discovered the Chinese company was charging DRAM prices no less than what SK Hynix and Samsung were charging. And seeing as CXMT's chips were "two or three generations" behind current DRAM technology, that was a non-starter.
But now, CXMT is making a move to catch up. The company's new "4F square" stacked DRAM architecture promises to increase the storage density of its chips and make the product more competitive with Micron's, SK's, and Samsung's wares.
Should Micron investors worry?
The last time CXMT loomed as a threat, it cost Micron stock a 36% decline in under a month. Should investors expect that to happen again?
Perhaps. The memory market remains in deficit, and supply is expected to get even tighter next year. Given this, more production from CXMT may not make a huge dent in Micron's business -- so long as CXMT's chips go primarily to supply the low end of the market for mobile phones and devices, rather than AI data centers.
If CXMT can break into HBM, though -- look out below!
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Micron Technology. The Motley Fool has a disclosure policy.