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The Last Page.
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China Says It Can Build the Chip Behind Micron’s 87% Margin
A Chinese rival promises a memory chip that holds more data by year’s end. Korea’s chip giants lost a tenth of their value in a day. One report on October 27 shows whether your S&P 500 fund gets hurt too.
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Today’s story is about a Chinese threat to Micron’s profits. The message below is from Jeff Brown, about a different AI bet: an Elon Musk supplier.
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This new form of AI could create so much wealth that Elon Musk calls it “an infinite money glitch.”
The CEO of Nvidia, Jensen Huang, is on record predicting this will be “the next wave” of the AI boom.
And that it will launch “the next multi-trillion-dollar industry.”
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The story
Last weekend, at a chip conference in Shanghai, CXMT made a promise. China’s biggest maker of memory chips said it would launch a server chip that holds more data by year’s end.
Markets heard a price war coming. Micron, America’s only big memory maker, closed at $989 on Monday and traded near $875 before Thursday’s open. In Seoul, Samsung and SK Hynix each lost about a tenth of their value on Thursday alone.
This one runs through your index fund. AI companies now make up about 40% of the S&P 500, and Micron sits inside it.
The prize is the margin. Last quarter, Micron kept about 87 cents of every sales dollar after paying to make its chips. In mid-2025 it kept 38.
The two camps were on the record within days. Hock Tan, who runs Broadcom, said in Singapore on Monday that “a lot of investors have no clue what they are investing in.” Park Yeon-ju of Mirae Asset Securities in Seoul called the drop in chip stocks “excessive relative to earnings.”
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DRAM
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Short-term memory for computers, phones and AI servers. Micron, Samsung and SK Hynix make most of the world’s supply.
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8%
How far Korea’s stock market fell on Thursday, led by Samsung and SK Hynix
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87%
What Micron kept from each sales dollar after making its chips last quarter, up from 38% in mid-2025
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40%
Share of the S&P 500 now in AI companies, per Motley Fool
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For many of you, that index fund is also what you plan to leave your children. The message below is about passing savings down in gold instead.
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Over $84 trillion is expected to pass from one generation to the next this decade.
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If China’s chip stays a promise
Run forward to January 2027
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If it ships in volume
Run forward to September 2027
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Best case
JANUARY 2027. CXMT showed its server chip in December, as promised. It came with a slide deck and very few samples. Big buyers tested it and kept ordering from Seoul and from Micron in Boise.
Mass production slipped toward 2028, as Korean engineers had expected. SK Hynix reported a strong quarter on October 27, and the panic of mid-October read like one bad week.
Memory prices stayed high because AI servers kept eating the supply. Micron’s margin held up, and Korea won back most of what it lost.
Your index fund made back the dip by Christmas. The one cost you kept paying was at the store, where laptops and phones stayed pricier than they were two years ago.
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Worst case
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SEPTEMBER 2027. CXMT’s chip arrived early and in large numbers. ByteDance, the owner of TikTok, had a five-year deal with CXMT worth more than $7 billion. It filled its servers first.
Other buyers in China followed. The extra supply pushed memory prices down around the world, and Micron’s margin slid back toward where it stood in 2025. Its stock followed the margin down.
Samsung and SK Hynix lost sales first. Then investors feared more price wars and sold other AI stocks in your index fund.
The one bit of good news came from the store. A new laptop cost less than it had in years.
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Chip stocks fell on Thursday, and gold rose more than 1%. The message below is about one signature in Washington and what it could do to gold.
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How it ends
You get a memory boom that cools without breaking, unless SK Hynix’s October 27 report shows buyers holding off for China’s chip.
We ran it both ways. CXMT made a promise with no specs, no samples and no date for mass production. Korean engineers expect real volume no earlier than late 2027.
China can dent the margin long before it wins the race. Buyers only have to believe a new supplier is coming. Then they can push back on price.
A Chinese surprise has rattled chip stocks before. On January 27, 2025, a Chinese AI lab called DeepSeek knocked 17% off Nvidia in a day, about $590 billion of value. Within months Nvidia was back at records, because demand for its chips kept growing.
Wolfe Research expects memory demand to outrun supply through 2028. If that holds, the boom survives and only the margin gets trimmed.
For you, that means a bumpier ride in the AI part of your fund. Your next laptop will not get cheaper soon either.
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SK Hynix’s third-quarter report on October 27, the day before the Fed’s rate decision. Listen for whether big buyers are delaying orders or asking for lower prices because of China. If they are, the worst case has started.
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Before you go: Priority Gold on why the Fed is watching gold.
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The Last Page.
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Priority Gold endeavors to provide the most accurate useful information and helpful advice to the audience at its best. But there is no 100% guarantees of completeness, accuracy, usefulness or timeliness in or about the content. Any advice offered by Priority Gold are just our opinions and not to be relied on by anyone or any purpose. Seek your own legal, financial, tax, investment, and advice before opening an account with Priority Gold. All decisions regarding the purchase or sale of precious metals are solely at your decision only. This is an advertisement.
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