Chip, storage stocks continued to fall on Tuesday. Philadelphia Chip Index tumbled 2.7%; Western Digital, Seagate Tech, SK Hynix, Micron down around 6%; AMD, Intel fell over 3%.
CXMT Corp. announced a breakthrough in chip technology that rivals like Samsung Electronics Co. have chased for years — an unverified claim that rattled stock markets and highlights China's aggressive advance into a critical technological domain.
The domestic memory leader intends to introduce a new type of chip that packs more computing power into a single component, CXMT President Cao Kanyu told an industry conference in Shanghai over the weekend. The forthcoming product for data center servers features a so-called 4F² design and should launch before the end of the year, Cao said in remarks confirmed by a company spokesperson.
If CXMT has indeed reached the 4F² threshold, that means it got there before Samsung and SK Hynix Inc., despite US sanctions that bar the Chinese firm's access to tools such as ASML Holding NV's top-end machines. Cao didn't provide further details, but the widely reported comments helped trigger a selloff in global chip stocks.
Samsung and SK Hynix shares fell more than 7% in South Korea on Tuesday, dragging down the broader Kospi index.
"A successful and earlier implementation of 4F² architecture in DRAM production would vastly improve CXMT's competitive position versus peers," said Jing Jie Yu, an analyst with Morningstar. "That said, memory leaders as well as equipment manufacturers have both similarly echoed the difficulty in this technological transition, and we still expect a meaningful time gap between the unveiling of CXMT's 4F2 product and commercialization at viable yields."
Cao's declaration — months after CXMT briefly became China's most valuable company following a blockbuster summer IPO — underscores its effort to close the gap with foreign rivals in chipmaking, an area essential to AI development.
The industry's existing 6F² standard refers to a surface area of 6-times the square of the "feature size" of a chip: the basic line-width between transistors. Samsung and SK Hynix are exploring ways to shrink that to 4F2, in theory packing the same cells into a smaller area for greater efficiency.
CXMT's Cao said it's changing the way transistors are laid out via stacking. The so-called Vertical Surrounding Gate approach should reduce leakage and other side effects — a problem long associated with efforts by bigger rivals to reduce sizes beyond the 6F² standard.
"Investors are jittery and looking for excuses to take profit on AI-related stocks that have outperformed this year, especially memory stocks," said Vey-Sern Ling, a managing director at Union Bancaire Privee.
Huawei in May unveiled its Tau Scaling Law, an alternative to the decades-old Moore's Law of shrinking transistors to boost chip performance. The Chinese chip champion instead seeks to speed up transmission and increase transistor density within a chip through LogicFolding. It's already rolled out chips using this technology that run on smartphones launched this year.
CXMT is racing to ramp up production of advanced memory to meet surging AI demand. The ability to manufacture sophisticated products would also position the company better as a global supply crunch begins to ease in coming years.
It remains a laggard in high-bandwidth memory, the type of semiconductors used in Nvidia Corp. AI accelerators. Still, it's making steady progress in the broader DRAM market. The company's share of that field had expanded to 10% by the second quarter of this year, compared to just 4% a year ago, data compiled by Counterpoint Research shows.