CXMT’s Threat To DRAM Triopoly
7 Min. Read Time
Key News
Asian equities were mixed as India outperformed while South Korea and Taiwan underperformed.
Broadcom CEO Hock Tan’s comments on potential AI financing issuess and "extremely high expectations" were cited as a factor in weakness overnight. He has, until now, been a big beneficiary of such spending.
DRAM chip maker CXMT’s new 4F square chip announcement was also cited as it threatens to erode SK Hynix, Samsung, and Micron’s dominant market share. The new higher-memory chip will enter production by year-end. With that said, CXMT fell by -2.79% today, though foreign ownership is tiny. There are only 4 US asset managers that own CXMT, with yours truly the third-largest, according to the SEC’s 13F public filings.
Both Hong Kong and Mainland China opened lower but then grinded higher to mitigate losses. Both markets had a defensive and value bias as banks, oil and gas, and non-ferrous metal stocks outperformed. Semiconductors were lower, as were auto and electric vehicle (EV) stocks, on export value-added tax (VAT) reduction. Alibaba fell by -0.92% and was Hong Kong’s most heavily traded stock by value, despite IDC reporting its AI chip unit T-Head had 7% market share of “China’s AI accelerator market” in the 1st half of 2026 behind Huawei and Nvidia, which have a combined 35% market share. The company also released AI-powered glasses N1 and N1 Pro.
Tencent was down by -0.14% as it starts efforts to sell a $5 billion bond offering to fund AI efforts. Healthcare stocks were lower as Hong Kong-listed Genscript Biotech fell by -15.61% as Cathie Wood's Ark sold Twist Bioscience. If she’s selling, I’d be buying! Coincidentally, President Xi gave a speech at the National Health Conference. The Mainland-listed AI supply chain was mixed, as semiconductor stocks lower, while technology hardware’s electronic equipment and communications equipment were higher. The National Team’s favored Mainland-listed China equity ETFs had average volumes today, with small net buying and inflows.
September inflation and trade data will be reported tonight. The International Monetary Fund (IMF) cut China’s 2026 GDP target to 4.5% on higher energy prices and weak domestic consumption.
A Mainland media source questioned who is behind the selling in mainland listed AI supply chain and STAR Board stocks. According to sources, insurance companies allocated to the space following a strong performance run through Q2, though the market rolled over, as South Korea’s market is likely embarking a painful deleveraging process. Insurance companies increased their equity position by RMB 60 billion YTD to RMB 6.39 trillion. The speculation is that the insurance companies’ stop-loss orders kicked in, prompting them to reduce positions and limit losses despite their long-term holding periods. It is hard to know for certain, but it makes sense.
A globe-trotting, Asia-based strategist recently made positive comments on Hong Kong stocks, citing a bottoming in Hong Kong and Mainland China. I like the contrarian call, having made a small personal investment in a Hong Kong-listed real estate company months ago when the Western media couldn’t stop talking about China’s real estate market decline, i.e., a sign of the sentiment bottom. My investment has not done much, neither good nor ba, but we’ll see how things play out.
Mainland media reported that the PBOC has approved Visa’s “bank card clearing institution” without a joint partner, unlike the previous approvals for American Express and Mastercard, which required a local joint venture partner. The move breaks China UnionPay’s monopoly on processing credit card transactions. Is it any surprise that this came just after the meeting between Trump and Xi in DC?
Tencent bought back 237,000 shares overnight and KE Holdings (US Ticker: BEKE) bought back 422,934 shares, according to data released after the close.
Last Night's Performance
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.69 versus 6.69 yesterday
- CNY per EUR 7.48 versus 7.48 yesterday
- Yield on 10-Year Government Bond 1.67% versus 1.67% yesterday
- Yield on 10-Year China Development Bank Bond 1.73% versus 1.74% yesterday
- Copper Price +0.12%
- Steel Price -0.32%
