Micron's stock sees choppy trading as China fears loom large

By Hannah Pedone

CXMT's reported expansion plans initially spooked Micron investors, but the company's shares then erased their intraday losses

Micron's stock was down about 30% from its June peak.

ChangXin Memory Technologies, the world's fourth-largest memory company, caught the attention of investors around the globe when it went public last month in Shanghai and saw its shares surge more than 400% above above their listing price.

Now Wall Street is focused on what comes next for CXMT (CN:688825). It hasn't exactly been a secret that the DRAM manufacturer wants to expand, but investors initially still seemed to be surprised by a report on Monday saying that the company is considering building a second memory-chip plant in Beijing.

In turn, shares of U.S. memory-chip maker Micron Technology (MU) fell as much as 4.5% on Monday, before clawing back into slightly positive territory.

Rosenblatt Securities analyst Kevin Cassidy told MarketWatch that there's a "knee-jerk reaction" for investors to sell shares of Micron on any CXMT-related news, though he noted the Chinese company's desire for expansion isn't new.

And while the CXMT "competitive threat" has been a concern for U.S. memory investors, there's still uncertainty over how the Chinese company's technology stacks up with that of other memory companies. Cassidy said he expects to learn more at the Future of Memory and Storage Summit this week in Silicon Valley.

See also: Why every tech giant wants to look like a cybersecurity company in the AI era

Morningstar senior equity analyst William Kerwin pointed out that shares of Micron were down roughly 30% since their peak in late June, which he told MarketWatch is relatively consistent with other hardware and artificial-intelligence-exposed companies. He said that AI concerns more broadly - such as hyperscaler spending - could also be driving the recent pressure on Micron shares.

"The market is pricing in more uncertainty today that the rate of AI spending continues for several years," Kerwin said, noting that there are fears brewing over memory overcapacity.

"Skyrocketing memory prices are a key driver of higher spending from AI customers. Even if their buildout plans were consistent, higher prices for the same memory brings the total spending up," he added. "If CXMT brought a glut of new supply online, this could pressure memory prices and thus overall AI spending."

Kerwin said that CXMT is "ramping volumes aggressively" - as are Micron, SK Hynix (SKHY) and Samsung Electronics (KR:005930) - and he expects that could put pressure on DRAM prices by 2028.

That said, Kerwin noted that CXMT accounted for just roughly 6% of DRAM production last year, so he believes that the company bringing new supply online would not be a near-term concern.

CXMT did not immediately respond to a request for comment.

-Hannah Pedone

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08-03-26 1407ET