Consider Changxin’s 4F² technology a “paper tiger” Analyst: 2 reasons why China’s competitive threat is exaggerated

Changxin claims to have made key progress on the 4F² architecture. (Changxin official website)

[Compiled by Wei Guojin/Taipei Report] "Investor's Business Daily" reported on the 14th that a Wall Street analyst believes that Micron investors have overreacted to the "key progress of the 4F² architecture" made by Chinese DRAM giant Changxin Memory in the memory field. Because the mass production and yield rate of related technologies are unclear, Changxin is at best a "paper tiger" and will not pose a major challenge to major memory companies such as Micron. Micron's stock price has fallen for days.

Changxin President Cao Kanyu said at an industry conference in Shanghai last weekend that it plans to launch a new chip that can integrate more computing power into a single component. He pointed out that the chip built for data center servers is called a 4F² architecture design and is expected to be launched before the end of this year.

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If Changxin successfully reaches the 4F² technology threshold, it means that despite US sanctions that prevent Chinese companies from obtaining ASML's top machines, Changxin's technological progress is still ahead of Samsung and SK Hynix, because these two memory giants are not expected to launch 4F² architecture designs until 2028.

Although Cao Kanyu did not provide further details, the remarks triggered panic selling in global memory stocks after being widely reported. Micron fell nearly 2% in early trading on the 14th and has fallen 13.16% in the past five trading days. In the Korean stock market, SK Hynix fell 17.88% in 5 trading days, and Samsung Electronics fell 14%.

Rosenblatt Securities analyst Kevin Cassidy said the news that triggered a sell-off in memory stocks was "exaggerated."

He said in a client report released on the evening of the 13th that "this reaction exaggerates short-term competitiveness threats and ignores the structural changes that are reshaping DRAM."

He called Changxin a "paper tiger" that would not pose a major threat to Micron or SK Hynix. He reiterated that he still gave buy ratings to Micron and SK Hynix, and said that Changxin still has a long way to go before the mass production and yield of 4F² architecture chips.

Cassidy pointed out, "Changxin's presentation did not establish manufacturing yield or wafer mass production. The new architecture may face huge initial yield challenges. Without these information disclosures, the competitiveness and mass production economic benefits provided by product launch targets are very limited."

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