As the demand for memory semiconductors intensifies due to the rise of artificial intelligence (AI), major global tech companies are considering Chinese memory as an alternative. The increasing negotiating power of Samsung Electronics and SK Hynix has prompted key clients to diversify their supply chains to mitigate price hikes. However, significant constraints are expected due to technological gaps and U.S. regulations on China.
According to industry sources, Elon Musk, CEO of Tesla, stated on October 15 via X (formerly Twitter) that "China will produce a massive amount of memory semiconductors (RAM) by 2028." He criticized other companies for demanding excessively high prices, while acknowledging that Micron has shown a reasonable attitude regarding memory pricing.
Although Musk did not name specific companies, analysts suggest his comments were aimed at Samsung and SK Hynix. The surge in demand for memory, including high-bandwidth memory (HBM), driven by investments in AI data centers, has given suppliers leverage in price negotiations.
Apple is also keeping the door open for the adoption of Chinese memory. In an interview with Time magazine on October 15, Apple CEO John Ternus described the memory supply constraints as an "absolute crisis" and stated, "We must consider all options." Reports indicate that Apple is currently testing DRAM from China's Changxin Memory Technologies (CXMT).
This shift is seen as a response to the rising costs associated with soaring memory prices. According to KB Securities, general DRAM prices are expected to rise by 10-15% in the fourth quarter compared to the previous quarter, while NAND prices may increase by 15-20%. For major tech companies that purchase large volumes of memory, securing negotiating power through supply diversification is crucial.
An industry insider commented, "Musk's strategic move appears to leverage market anxiety over falling memory prices, continuously signaling to suppliers that their prices are too high to prevent further increases."
However, it is unlikely that Chinese memory will quickly replace domestic products. Samsung has established competitiveness in mass production experience, yield stabilization, and customer certification, leading many to believe concerns about Chinese companies catching up technologically are overstated. Additionally, U.S. semiconductor regulations pose a significant hurdle. Apple's consideration of applying Chinese memory only to products sold in China is interpreted as a response to political pressures.
In the long term, however, the expansion of China's production capacity could pose challenges to the profitability of domestic firms. Market research firm TrendForce reports that CXMT's global DRAM market share rose from 7.6% in the first quarter to 9.5% in the second quarter of this year. Projections suggest that the company's third-quarter revenue could surge to seven times that of the previous year.
CXMT's monthly DRAM wafer production capacity is expected to expand to between 500,000 and 600,000 units by the end of 2028. As China's production increases, competition for DRAM for smartphones and PCs will intensify, inevitably weakening the negotiating power of domestic companies.
* This article has been translated by AI.
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