WASHINGTON — Samsung Electronics and SK hynix are facing pressure from both China and the United States. China's largest DRAM maker, ChangXin Memory Technologies (CXMT), has topped a 10% share of the global DRAM market for the first time, while the Trump administration has warned it will impose targeted chip tariffs on companies that do not build more plants on U.S. soil.
CXMT accounted for 10% of global DRAM revenue in the second quarter of this year, according to market research firm Counterpoint Research on the 3rd. It is the first time the company's quarterly share has reached double digits. Its share, which stood below 1% in 2023, rose to 4% in the second quarter of last year and 8% in the first quarter of this year before reaching 10%.
The company built its growth on a niche opened up by the race in high-bandwidth memory (HBM). As Samsung Electronics, SK hynix and other major memory makers concentrated on HBM, an essential component in the artificial intelligence era, supply of commodity DRAM shrank relatively, and CXMT moved aggressively into that gap. Rising demand for commodity DRAM also worked in its favor, as AI servers require eight to 10 times more memory than conventional servers.
Its other weapon is its Chinese customer base. CXMT supplies smartphone makers including Xiaomi, Oppo and Vivo, as well as big tech firms such as Alibaba, Tencent and ByteDance. The more those customers expand overseas, the wider CXMT's own overseas reach becomes. Revenue from outside mainland China accounted for 63.8% of the total in the first half of this year, up about 27 percentage points from a year earlier, according to a CXMT report.
CXMT has channeled funds raised in a recent initial public offering into expanding capacity and developing technology. Unlike in the past, when it was confined to older DRAM, the company is now mass-producing DDR5 for servers and LPDDR5 and 5X for mobile devices, and is pushing toward mass production of HBM3E. Chinese fabless firms including T-Head, Alibaba's chip design unit, and Cambricon Technologies are testing their in-house processors with CXMT's HBM3E, according to The Information. If plans stay on schedule, related products could reach the market as early as the beginning of next year.
The other pressure on Samsung Electronics and SK hynix is tariffs. U.S. Commerce Secretary Howard Lutnick said in an interview with Bloomberg TV on the 2nd that the Trump administration has repeatedly said there are no tariffs for companies that produce in the United States, adding that on chip tariffs, companies unwilling to start construction in the country will have to pay a price to reach the world's largest market.
When the host said that from SK's or Samsung's perspective they had effectively been put on notice, Lutnick agreed, saying the companies will build plants in the United States and need to, and that it is essential for them to do so. He had also said at a July 9 concrete-pouring ceremony for Micron's memory fab in New York State that he wanted to bring Samsung Electronics and SK hynix to the United States to build plants.
Lutnick also said the share of chip production in the United States stood at about 1% when the Trump administration took office but would be raised to 50% by the end of its term, adding that $1.2 trillion in construction commitments has already come in, with TSMC at $265 billion and Micron at $250 billion accounting for more than $500 billion between the two companies. The remarks imply the two companies will be exempted from tariffs in proportion to their investments. Samsung Electronics and SK hynix, which have not announced new chip plant investments since the Trump administration took office, could instead face tariffs that weaken their price competitiveness in the U.S. market.
Lutnick also signaled that chip tariffs would follow the approach applied to pharmaceuticals. He said chip tariffs are very simple and that the approach has already been a great success with pharmaceuticals, meaning that companies building production facilities in the United States do not have to pay tariffs during the construction period. The Trump administration is imposing 100% tariffs on patented drugs, and as of July had announced plans to impose 100% tariffs on generics after two years and 200% after three years — a strategy of threatening steep tariffs to draw pharmaceutical plants into the country.
Earlier, Lutnick said in an interview with CNBC that chip tariffs were under review and would be a targeted and careful tariff policy. Asked about a report last week by U.S. online outlet Politico that the tariffs would be steep and would link tariffs to manufacturing investment in the United States, he said that was exactly right.
Politico had reported, citing sources, that the U.S. government was considering expanding the scope of the tariffs beyond chips themselves to finished products containing them, such as laptops, game consoles and data center servers. Bloomberg noted that the tariffs could be extended to data center servers and consumer electronics. Setting tariff rates and quotas by country and applying country-specific guidelines to major chipmakers are also under discussion.
