
Analysts believe China still faces technological hurdles in advanced memory areas such as HBM, with market selloff reflecting nervousness over AI deals
AI-generated summary
China's Changxin Memory recently announced that it has made progress in a new chip architecture, triggering market concerns about its challenge to the status of South Korea's memory giant.
China's vigorous promotion of the memory chip business has caused heavy losses to the stock markets of SK Hynix and Samsung. Is artificial intelligence stock trading losing momentum? Much concern. Analysts said that Chinese memory manufacturers still face technical obstacles in advanced memory such as HBM, and the current threat is still limited. The sell-off reflects the market's general nervousness about artificial intelligence transactions, rather than a major change in the competitive landscape.
China's Changxin Storage reportedly said it has made progress on a new chip architecture designed to pack more memory into a smaller space. The development has raised concerns that Chinese producers could eventually increase supply and challenge existing memory leaders including SK Hynix, Samsung and Micron Technology.
SK Hynix shares fell more than 5% on Tuesday as investors reacted to growing competition from China's Changxin Storage Technology and a broader sell-off in artificial intelligence-related semiconductor stocks.
South Korean memory chip giant Samsung Electronics plunged more than 10% in Seoul, and its U.S.-listed shares fell about 5% in pre-market trading. Rival Samsung Electronics also fell, with both stocks falling to their lowest levels since August.
Vey-Sern Ling, senior equity advisor at UBP, told CNBC that investors are "feeling jittery and are looking for excuses to profit from artificial intelligence-related stocks that have outperformed this year, especially memory stocks." He also added that although Chinese memory manufacturers still face technical obstacles in advanced memory such as HBM, they may affect the global supply and demand balance over time.
Phillip Wool, chief market strategist at Rayliant Global Advisors, said the progress of Changxin Storage marks an important milestone for Chinese chip manufacturers, but he believes that the current threat is still limited.
Wool said: What's more, we haven't even discussed HBM yet, and Korean chipmakers still undoubtedly dominate this field, and companies like Changxin Storage or anyone else will hardly pose any threat in the foreseeable future.
He said the sell-off reflected widespread nervousness about artificial intelligence deals rather than a major change in the competitive landscape. "I think this is more indicative of how fragile artificial intelligence emotions are right now," Wool said.
Global technology stocks were generally weak, with Micron Technology falling about 3% in U.S. pre-market trading, while SanDisk's stock price also fell. Seagate Technology Holdings Inc. and Western Digital Corp. also fell about 4-5%.

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