Even Elon Musk says Chinese memory chip makers are catching up

Micron's stock was falling Tuesday morning.

Shares of Micron Technology were falling in premarket action Tuesday and are set to fall for the fourth session in a row as momentum builds for rivals in China.

Micron's stock (MU) was extending losses that were partly spurred by reports of China's ChangXin Memory Technologies (CN:688825) announcing progress on a technique to improve memory density on a single chip by fitting more memory cells into the same space. The company said a new product for server memory based on the 4F square cell architecture could launch later this year, according to the South China Morning Post.

Elon Musk weighed in on the concerns, writing in a post on X on Monday: "When China figures out how to manufacture a product, their ability to scale is often greater than the rest of the world combined."

He pointed to China's progress on lithium batteries and solar power. And while Musk said his own space-exploration company, SpaceX (SPCX), is ahead of the rest of the world on the amount of weight its rockets can carry into orbit, he said China "does a majority of non-SpaceX mass to orbit."

The memory market could work out differently, Musk said, though random-access memory, which is used in computers and laptops for temporary storage, was essentially a commoditized product only a few years ago, he added. The artificial-intelligence buildout has sent RAM into a major global shortage that has led to high prices and large profits for memory makers, including Micron.

While China looks to be quickly catching up on the current and next generation of low-power double data rate memory, or LPDDR5 and LPDDR6, according to Musk, he said new chip architectures such as stacked high-bandwidth memory "will be harder to solve."

Micron's stock was down 4.9% ahead of the market open on Tuesday amid declines across the broader chip sector.

Mizuho trading-desk analyst Jordan Klein said the selloff among chip stocks reflects an "extremely crowded" AI and chip trade, in which stcoks are heavily owned and there can be high volatility.

"And the foundation has grown extremely wobbly," he said in a note to clients, pointing to comments from Broadcom (AVGO) CEO Hock Tan comparing the AI trade to a casino with investors not fully understanding what they are investing in.

In Klein's view, the current pressure on chip stocks "reduces risk" heading into earnings results for ASML Holding (ASML) and Taiwan Semiconductor Manufacturing (TW:2330).

Meanwhile, Chinese memory maker Yangtze Memory Technologies is preparing for an initial public offering in China, according to Counterpoint Research. The firm is looking to debut on Shanghai's STAR Market as it has reached third place in the global NAND memory market by shipment volume in the second quarter of this year, putting it behind Samsung Electronics (KR:005930) and SK Hynix (SKHY), and ahead of Japan's Kioxia Holdings (JP:285A) and Micron, Counterpoint Research said.

"With AI driving the NAND super cycle, YMTC has become the fastest-growing vendor, with prudent investments in capability and capacity despite geopolitical headwinds," Counterpoint senior analyst Jeongku Choi said in a statement. She added that the company's 2026 revenue is expected to grow six times faster than the rest of the industry.

-Britney Nguyen