I replaced my phone and laptop this year and felt the price jump on each. More expensive memory is part of why. Samsung Electronics (SSNLF) saw its mobile business lose over $1 billion last quarter on those costs, analysts told Reuters. The same squeeze that hit my wallet is feeding its chip division.
Samsung estimated a record third-quarter operating profit of 107.4 trillion won ($80.2 billion), according to Reuters. Both Samsung and Micron Technology (MU) expect the shortage to run into 2028, the report said. Memory stocks will remain priced for scarcity until then.
Over the weekend, China’s leading DRAM maker put a date on its challenge. CXMT Corp said it has made “key progress” on a new memory cell structure, the South China Morning Post reported.
President Cao Kanyu said CXMT plans to introduce a server memory product built on it by the end of 2026.
That deadline is the wildcard. Samsung and SK Hynix (SKHY) are chasing the same design, and The Elec reported that Samsung aims to mass-produce chips using it by 2028.
CXMT’s target is about 11 weeks away. However, introducing a working product is very different from achieving the high manufacturing yields required for volume production to disrupt the market supply.
Also read: Nvidia, SK Hynix send strong signal to Micron investors
The new cell sidesteps China’s biggest handicap
DRAM cells are measured against F, the narrowest line a factory can print. Mainstream chips use cells of six square F, while CXMT’s design fits each cell into four by standing the transistor upright, according to Seeking Alpha. That is a third less space at the same line width, gained through geometry rather than finer printing.
Finer printing is where China is stuck. Shim Dae-yong, a former SK Hynix vice president, told The Korea Herald earlier this year that extreme ultraviolet lithography is effectively unavoidable at advanced DRAM nodes. US-led export controls have kept those tools out of China since 2019, the paper noted.
Shim said China’s realistic path was to go vertical and “narrow part of the gap by pushing vertical integration without EUV.” He meant stacking chips, but a vertical transistor applies the same idea inside every cell.
The same report cited a reported yield of about 50% on CXMT’s DDR5 chips, short of the 80% to 90% usually needed for commercial viability. A progress claim from a newly listed company is not a shipped product.
Still, CXMT can afford to keep trying. It raised 57.92 billion yuan ($8.6 billion) in July in the largest mainland Chinese semiconductor offering on record, Reuters reported. Money does not fix yields, but it buys time to do so.
The shortage story now has a 2028 problem
Reuters named Chinese competition and a potential slowdown in AI spending as risks to the longer memory outlook. A denser cell is how that competition could arrive sooner.
It puts more memory on every silicon wafer, so supply can grow before new factories open. If CXMT gets there first, extra supply lands while investors are still pricing scarcity through 2028.
TrendForce expects conventional DRAM contract prices to rise 10% to 15% in the fourth quarter, down from roughly 60% in the second, according to Reuters.
Mirae Asset Securities analyst Kim Seok-hwan told Reuters that investors now want to know “whether the sharp earnings growth that started a year ago would be sustainable.” A new supply route makes that harder to bank on.
Micron investors are paying for a long shortage
For US investors, Micron is the cleanest way to own the memory boom. Its SEC filing reports fiscal fourth-quarter revenue of $54.23 billion and an 86.8% gross margin. Margins that high last only while buyers have few alternatives.
The filing also shows customers paid Micron about $12.7 billion in contract deposits during fiscal 2026. Buyers do not prepay for chips they expect to find easily. CEO Sanjay Mehrotra said Micron expects “an even stronger fiscal 2027.”
Analysts polled by S&P Global rate Micron a consensus Strong Buy, with an average price target of $1,555, according to Stock Analysis. That implies about 51% upside, which leaves little room for a faster Chinese ramp.
More Artificial Intelligence:
- AI’s biggest business opportunity may not look like AI
- AI racks are outgrowing old power: 2 chipmakers have a strategy
- BofA splits software into winners and losers as AI agents arrive
Export controls were written for flatter chips
The hardest wall in US chip controls is the EUV ban, because finer lines drove memory progress for decades. The industry’s next step builds upward instead, and Samsung, SK Hynix and CXMT all have vertical roadmaps, according to Seeking Alpha.
When the race shifts from printing to building, a chokepoint guarding the old method loses some of its grip. Korean chipmakers still hold the yields and customer trust Shim called the real gap.
That makes this a deeper wildcard than one product launch. The question is whether the next generation of DRAM gets decided by a manufacturing shift the export controls were not designed to stop.
Related: TSMC’s $46.7 billion quarter leaves 1 question for investors
