The transition to DDR5 and HBM3 has gained momentum, but memory from previous generations is still very popular. Against this background, Chinese DRAM manufacturers Changxin Memory (CXMT) and Fujian Jinhua are offering huge discounts on DDR4 chips – up to 50% compared to similar chips from South Korean manufacturers. In some cases, the price of new DDR4 chips turns out to be lower than those restored using reballing.
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CXMT’s production capacity increased from 70,000 wafers per month in 2022 to 200,000 in 2024. The company intends to increase production volumes to 300,000 wafers per month and capture 11% of the global DRAM market in the coming years. Fujian Jinhua, despite US government sanctions, also managed to increase DDR4 production.
The oversupply of DDR4 chips has led to intense price competition, with Chinese manufacturers offering prices 50% lower than Micron, Samsung and SK hynix, and 5% lower even for used memory chips after reballing. This aggressive pricing is driving down prices in the DDR4 market, significantly impacting the consumer segment. However, industrial customers remain cautious about DRAM memory from Chinese manufacturers.
In response to cost pressure, Korean DRAM manufacturers are cutting back on DDR4 production and moving to DDR5 and HBM3, chips that Chinese suppliers are currently unable to mass produce. The move is aimed at maintaining profitability and countering the competitive advantage of Chinese manufacturers in the DDR4 segment. The transition to DDR5 and HBM3 is expected to stabilize the DRAM market by addressing oversupply and redirecting resources to more advanced, high-demand memory technologies.
The Chinese government has actively supported the expansion of DRAM chip production through subsidies and national policies, promoting domestic production growth. This support allows Chinese manufacturers to offer highly competitive prices without worrying about immediate profitability, as their goal is to dominate both local and international markets.
Chinese DRAM makers are also exploring indirect strategies to enter regions such as India, where they are looking to partner with Taiwanese brands. This approach is intended to mitigate the political and economic risks associated with US sanctions policies and expand its presence in markets wary of direct Chinese products.
CXMT recently experienced a massive production delay caused by human error. 65,000 wafers were scrapped—almost a third of the monthly production. However, this has not stopped the company from expanding: capacity is growing, and modernization continues at factories in Hefei and Beijing.