Markets this week have been pummeled by seemingly alarming news for memory-chip manufacturers: A Chinese company called CXMT was making rapid headway toward a next-generation memory technology.
The announcement by CXMT last weekend immediately sent the biggest memory stocks tumbling. Micron Technology is down about 10% this week. South Korea's SK Hynix is off nearly 15%, and Samsung has fallen 17%.
If CXMT does produce and come to market with chips using the technology, called 4F-squared, it could quickly become the most advanced and in-demand memory manufacturer in the world. But that is a very big if.
CXMT, which listed in July in Shanghai, is a big player in memory chips. But chip history is littered with examples of promising-sounding advances that were delayed or scrapped in the extremely tricky process of moving to mass-production and commercialization.
What's more, there is good reason to doubt that CXMT has the manufacturing equipment and technical chops to do that any time soon.
The company is developing the 4F-squared chips using a manufacturing process four generations behind the leading memory producers, Citi analysts pointed out in a note. And the company has limited access to more advanced chip-making equipment because of export restrictions targeting China. Citi estimated that mass production was unlikely before 2028.
The selloff shows that AI plays are prone to jitters. But CXMT's announcement alone is nothing to panic about.
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