Micron and SK Hynix Face Big Threat From China’s YMTC. One Is Better Placed.

Micron shares have risen nearly 700% in the past 12 months. (Photo by Justin Sullivan/Getty Images)

Key Points

• Yangtze Memory Technologies aims to become the world’s largest NAND flash memory producer before 2028 as it prepares to list in Shanghai.
• The Chinese company’s ambitions pose a risk to Micron Technology, but present a larger threat to South Korean rivals Samsung and SK Hynix.
• Micron is less exposed because NAND chips represent only about a quarter of its revenue and it has already lost a large portion of Chinese revenue.

Chinese companies are gunning hard for the memory-chip market. It’s a risk for Micron Technology but probably more of one for its South Korean rivals SK Hynix and Samsung Electronics .

Markets are getting more detail about Chinese memory-companies’ ambitions as they come to the public markets. Yangtze Memory Technologies, or YMTC, has told investors it is aiming to become the world’s largest NAND flash memory producer before 2028 as it prepares to list in Shanghai, the Financial Times reported, citing people familiar with the matter.

YMTC is showing big ambition. It had a NAND market share of 13% in the first quarter of this year, according to Counterpoint Research. That put it roughly equal with Micron but well behind market leader Samsung’s 29% or SK Hynix’s 18% share.

Micron is making from NAND chips but they only represent about a quarter of its revenue and it has less of the market to lose to YMTC than its Korean peers. Micron’s hopes of growth are pinned on high-bandwidth memory, due to its use for artificial-intelligence hardware.

Micron also has another protection—it has already lost a large portion of its Chinese revenue. Mainland China represents around 7% of Micron’s total revenue according to FactSet, compared with 19% for SK Hynix.

The amount of revenue Micron has made in China has been falling since Beijing’s Cyberspace Administration told companies involved in the country’s critical information systems to stop buying chips from Micron in 2023. The move was widely seen as retaliation against U.S. attempts to restrict exports of advanced chips to China. Micron was subsequently reported by Reuters to have stopped supplying server chips to Chinese data centers

At the time that was a painful blow for Micron, but several years on it might prove to have been a blessing in disguise.

Micron shares were down 0.3% in premarket trading while SK Hynix’s American depositary receipts were down 0.2%.

Write to Adam Clark at adam.clark@barrons.com

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