The memory chip sector is experiencing a concentrated selloff driven by multiple overlapping pressures. Micron Technology (NASDAQ: MU) closed down 3.88% on Monday, while SanDisk fell even deeper at 5.97%. Both bellwether stocks have declined in six of the past seven trading sessions, with Micron now nearly 20% below its June high, teetering on the edge of a technical bear market.

The trigger for this correction stems from a triple shock: the Korean market catching up on losses after a holiday, the early termination of Samsung and SK Hynix's largest-ever buyback program, and ChangXin Memory Technologies (CXMT) announcing in Shanghai a key breakthrough in its 4F² next-generation DRAM architecture with plans to launch server memory products by year-end. Rich Privorotsky, Goldman Sachs' EMEA head of trading, summarized the situation as "memory remains the epicenter," pointing directly to the market's core concern: despite extremely impressive near-term fundamentals, worries about peak earnings are weighing on valuations.

Yet the paradox here is that the memory industry's fundamentals have never been stronger, but investors have already shifted their gaze to 2027-2028, when continued Chinese memory capacity expansion and new Korean fabs coming online simultaneously could reverse the supply-demand landscape. As Jon Withaar of Pictet put it, memory stocks "have become value stocks, cheap on current earnings," but "retail and fast-money hedge funds are chasing growth, not value."

Korean Market Catches Down, Buyback Support Disappears

The Korea Composite Stock Price Index (KOSPI) plunged 3.65% on Monday to close at 6,384.2 points, with the closing price hugging the 200-day moving average support level of 6,376. The tech-heavy KOSDAQ dropped 4.8%, while the semiconductor index KRXSEMI tumbled 5.2%. SK Hynix and Samsung each fell about 4.5%, with Goldman Sachs' Seoul trading desk describing the day's action as "one-way selling from the open."

The direct cause of this catch-up decline was the Korean market needing to digest two prior trading sessions of US chip stock losses after being closed for the Hangul Day holiday. Foreign investors sold net for a fifth consecutive day, with the tech sector seeing US$1.3 billion in single-day net selling, including US$782 million dumped in SK Hynix and US$415 million in Samsung. Retail investors bought against the tide, net purchasing US$710 million in Samsung, but Goldman noted that retail net buying has been trending downward.

The deeper structural issue is the disappearance of buyback support. As previously reported, the combined buyback program of approximately 55 trillion Korean won (about US$40 billion) between Samsung and SK Hynix — the largest in Korean history — ended weeks ahead of schedule, with Samsung's buyback effectively terminating on October 6. In the three trading sessions since the buyback ended, KOSPI has fallen roughly 8%. KOSPI is now down about 30% from its June 22 record high, with SK Hynix falling even deeper at 45%.

Analysts suggest that the Korean market, which led the rally during the memory upcycle, is also the first to break down during downturns, potentially reprising its role as a leading indicator.

CXMT's 4F² Breakthrough Raises Long-Term Supply Concerns

Weekend news from Shanghai became an important catalyst for this selloff. According to Shanghai Securities News, at the Fourth Integrated Chips and Chiplets Conference held October 9-10, CXMT President Cao Kanyu announced that the company had achieved a key breakthrough in 4F² architecture research and officially announced plans to launch a new generation of DDR5 RDIMM products incorporating 4F² architecture and hybrid bonding technologies by year-end, directly targeting the server memory market.

The core significance of the 4F² architecture lies in its density leap. The current mainstream in the DRAM industry is the 6F² architecture, where each memory cell occupies a square area of 6 times the minimum feature size. 4F² means each cell area is reduced by about one-third, theoretically enabling approximately 50% higher memory density on the same wafer area at the same process node. CXMT's core innovation in its 4F² architecture is a self-developed VSG (Vertical Surrounded Gate) transistor, which enhances gate control capability through a vertically surrounding channel structure while addressing leakage and short-channel effects, and achieving area scaling through a vertical transistor layout.

The leap from 6F² to 4F² is fundamentally a transformation of transistor channel orientation from horizontal to vertical layout, requiring integration of entirely new process flows and making it impossible to follow the design and manufacturing systems of the 6F² era. CXMT also decoupled DRAM and CMOS processes, achieving high-speed interconnection through wafer-level hybrid bonding, which is viewed as a key turning point for DRAM technology transitioning from 2D scaling to 3D integration.

It is reported that CXMT initiated 4F² research and patent filings from its founding, with over 300 public patent families, a number reportedly leading domestic and international peers. The company published papers on 4F² architecture in 2021 and continued disclosing R&D progress in 2023 and 2025. In 2025, CXMT also published a paper at IEDM introducing results from wafer-level bonding experiments between DRAM and CMOS on a 12-inch wafer platform.

For Samsung and SK Hynix, this timeline constitutes direct pressure. SK Hynix only unveiled its 4F² roadmap in 2025, while Samsung, according to Korean media outlet The Elec, aims to achieve mass production of sub-10nm DRAM based on this architecture by 2028. If CXMT delivers 4F² DDR5 RDIMM products on schedule by year-end, it would lead the two Korean giants by approximately two years at the cell architecture level.

Strong Near-Term Fundamentals, But the Market Is Already Pricing the Peak

The memory industry's current fundamental data remains impressive, which is precisely the market's dilemma — the strong numbers are already fully priced in, and investors have begun discounting risks further out.

Taiwan's Nanya Technology reported third-quarter results that Goldman Sachs' Taipei trading desk called "another astonishing quarter": revenue reached NT$133.6 billion, up 62% quarter-over-quarter and surging 612% year-over-year; gross margin of 85.7%, up 6.2 percentage points quarter-over-quarter; operating margin of 80%; blended average selling prices up over 60% quarter-over-quarter, with more than half of the increase coming from contract resets on long-term agreements expiring in 2025. Management expects contract prices to still achieve double-digit gains in 2027, with gross margins maintained above 80% considered "achievable."

However, Goldman Sachs' Taipei trading desk was blunt in its assessment: "There is a lack of sufficient near-term catalysts to drive further re-rating." Samsung's third-quarter operating profit nearly ninefold increase should have reignited the memory rally, but instead triggered a selloff — which in itself reveals where market expectations stand.

Goldman Sachs Prime Book data shows that last week, the US information technology sector abruptly shifted from being the most net-bought sector in four of the prior five weeks to the most net-sold sector, marking the fastest pace of selling in seven weeks. Tech hardware, memory and peripherals, and semiconductors were the most concentrated sub-sectors for selling.

The pressure on memory stocks is not coming from deteriorating fundamentals, but from the market pricing in a cycle top ahead of time.

Meanwhile, the market's core narrative has shifted from "how strong are near-term fundamentals" to "what will the supply-demand landscape look like in 2028." Goldman Sachs' Korea research team listed six key focus points for Samsung's October 29 earnings call, with the first being: whether the company will, like Micron, explicitly state that memory supply will become tight in 2028.

Additionally, Acer CEO Jason Chen previously stated publicly that "the supply shortage problem has completely disappeared" and predicted memory prices would peak around mid-2027. Acer, HP, and Asus have already adopted CXMT chips in their PC products. ASML is reportedly raising spare parts prices for Korean customers by about 10%, and Samsung and SK Hynix have accepted the increase, effective January 2027.

Several important events are ahead this week: TSMC will report earnings on Thursday, ASML will release results on Wednesday, and SEMICON West will also be held — these events will provide new directional signals for the chip sector.