"KOSPI Plunges 8% as Samsung and SK hynix Reel from 'Unexpected' Chinese Memory Onslaught"

Concerns Over Breakdown of DRAM Oligopoly Amid CXMT's IPO
News of Chinese DUV Development Weighs on Chip Stocks
"Technology Gap Remains, Market Response Seen as Excessive"

On the 28th, the KOSPI index opened sharply lower, following the steep decline of U.S. semiconductor stocks the previous day. At the Hana Bank headquarters dealing room in Jung-gu, Seoul, exchange rates, KOSPI, and KOSDAQ indexes are displayed on the status board. July 28, 2026. Photo by Dongju Yoon

The KOSPI plunged on concerns that the successful listing of China's memory semiconductor company ChangXin Memory Technologies (CXMT) could undermine the global DRAM oligopoly of Samsung Electronics and SK hynix. News that China is quickly advancing its technological capabilities—now able to manufacture advanced semiconductor equipment such as deep ultraviolet (DUV) lithography machines domestically—also weighed on the stock market.

Concerns Over Collapse of Global DRAM Oligopoly After CXMT’s Successful Listing

On July 28, the KOSPI opened at 6,400.27, down 5.26% from the previous session, and further widened its losses to 6,212.26 as of 10:17 a.m., down 8.04%. As the drop exceeded 8%, the market volatility mitigation mechanism, known as a circuit breaker, was triggered at around 10:13 a.m. The KOSDAQ also started the session 2.97% lower at 742.13, then plunged further to trade at 714.76 as of 10:26 a.m., down 6.55%.

Chinese momentum in semiconductors has emerged as a drag on global equity markets after CXMT’s listing. Overnight in the US, the tech-heavy Nasdaq Composite closed at 24,932.08, down 0.18% from the prior session. The Philadelphia Semiconductor Index dropped 2.23%. Major semiconductor companies all fell sharply: Nvidia (-4.99%), Micron (-2.25%), SanDisk (-11.02%), Western Digital (-4.21%), and AMD (-5.17%). The SK hynix American Depositary Receipt (ADR) plunged 7.47%.

The negative catalyst from China hit chip stocks. The preceding day, CXMT was listed on the Shanghai Stock Exchange and instantly became the top-ranked domestically listed Chinese firm by market capitalization, recording a value of 3.28 trillion yuan (711 trillion won). The market worried that CXMT would use the funds raised from its listing to boost its technological prowess and break the DRAM oligopoly held by Samsung Electronics, SK hynix, and Micron.

Reports that China had begun mass production of DUV lithography equipment also soured market sentiment. According to Bloomberg, a state-owned company headquartered in Shanghai has started producing immersion DUV lithography machines and has recruited semiconductor equipment R&D talent from other Chinese firms such as startup WeLion Technology. As a result, shares of Dutch semiconductor equipment maker ASML traded on the US market fell 5.8%. The introduction of domestically produced DUV equipment by Chinese memory chipmakers—led by CXMT—is expected to ease supply bottlenecks for equipment procurement, potentially enabling expanded facility capacity, increased generic DRAM supply, and ultimately fueling greater competition in the global memory market.

This concern was reflected directly in the Korean stock market. As of 9:46 a.m., SK hynix was trading at 1,626,000 won, down 10.46% from the previous session. Samsung Electronics also dropped 8.66% to 232,000 won. Most other large-cap stocks were also falling sharply—SK Square (-10.68%), Samsung Electro-Mechanics (-12.30%), Hyundai Motor (-6.58%), and LG Energy Solution (-4.80%). Securities firms suffered heavy losses as well: Mirae Asset Securities (-8.10%), Kiwoom Securities (-6.83%), Samsung Securities (-5.92%), and NH Investment & Securities (-5.13%).

Some in the Korean securities industry argue that concerns about the rise of China’s memory chip sector may be somewhat overstated. According to Kiwoom Securities, not only is the precise manufacturer and detailed performance of the Chinese DUV equipment undisclosed, but initial production is limited to just five machines, with a 2027 goal of only about 20 units. This still lags far behind ASML’s targeted production of 130 units in 2026. Ultimately, the recent dramatic correction in semiconductor-related stocks since July has left investor sentiment fragile, potentially causing the market to overreact to news about China’s DUV equipment production.

Han Ji-young, an analyst at Kiwoom Securities, said, “Although the CXMT listing boom may have a psychological impact, it suggests that actual capital outflows are limited,” and added, “Since the domestic stock market has reached valuation bottom territory and is now in a phase beyond peak price and supply-demand volatility, a strategy of accumulating leading stocks on dips is more effective.”

Investors are also paying close attention to the second-quarter earnings announcements and capital expenditure plans of major Big Tech companies—Meta and Microsoft (on July 29), and Amazon and Apple (on July 30). These firms are raising funds through bond issuances and paid-in capital increases, but there's rising uncertainty about whether they will be able to recover these investments quickly. While concerns have been raised about excessive AI investment among Big Tech firms, Apple—which had been labeled an “AI latecomer”—regained its position as the world’s top market capitalization company after 15 months, which it had lost in April of the previous year. Apple is seen as financially sound due to its cautious stance toward AI investments thus far.

How Advanced Is CXMT’s Technology?

CXMT, together with Yangtze Memory Technologies (YMTC), represents the dual pillars of China's semiconductor ambitions. It received overwhelming government support, managing to pass the STAR Market (Shanghai Stock Exchange Science and Technology Innovation Board) review from application to listing committee approval in just 148 days, a process that typically takes more than a year. CXMT is also currently the only DRAM manufacturer in China targeting mass production of fourth-generation High Bandwidth Memory (HBM3) or higher.

The primary reason the market and industry are reacting so sensitively to CXMT’s listing is concerns about aggressive facility expansion (CAPA) and the resulting erosion of price competitiveness. There is speculation that if CXMT increases supply of general-purpose DRAM, it could undermine the pricing power and profit margins of existing memory companies around 2028.

In fact, CXMT plans to invest the nearly 14 trillion won in public offering proceeds, as well as cash flows generated by favorable market conditions, in facility expansion and DRAM/HBM research and development. CXMT’s current monthly DRAM production capacity is estimated at 300,000 wafers, with expectations to expand to 500,000 wafers per month by 2028.

From a technology perspective, the gap with the so-called memory “Big 3” (Samsung Electronics, SK hynix, Micron) is narrowing quickly. Industry estimates suggest that CXMT’s DDR5 yield exceeded 80% last year, with its mass-produced low-power DRAM—LPDDR5X—already being supplied to major Chinese electronics makers such as Xiaomi. As of the first quarter of 2026, CXMT’s global DRAM market share stood at 7.6%, ranking fourth after Samsung Electronics, SK hynix, and Micron, but it is projected to rise to 17% by 2028.

However, semiconductor experts agree that a significant technological gap still exists between CXMT and Korean memory companies. The DDR5, LPDDR5X (in mass production), and HBM3 (fourth-generation, now in sample supply phase) from CXMT are all based on legacy manufacturing processes, resulting in a substantial difference in net die competitiveness, speed, and power efficiency compared to Samsung Electronics and SK hynix. CXMT is currently working on its G4 node process to develop HBM3E (fifth generation), with sample supplies to major clients such as Huawei, Alibaba, and Cambricon underway. The technology gap with the memory Big 3 is estimated to be about three years.

This content was produced with the assistance of AI translation services.