[Edaily Reporter JAEMIN SONG ] As China’s Changxin Memory Technology (CXMT) moves to enter the NAND flash market following its entry into the DRAM market, warning signs of a “chicken game” have emerged. The concern is that if China’s volume-driven offensive is added to the NAND capacity expansions by existing manufacturers, the cutthroat competition seen in the past could be repeated.

According to Reuters and other sources on the 21st, CXMT is moving forward with plans to build a NAND research and development (R&D) and production line at its new Beijing plant and to establish a dedicated research organization. It is also reported to have begun discussions on product supply with potential customers, including storage providers for AI and supercomputing. Although still in the R&D phase, this is interpreted as a move by CXMT—which has focused on DRAM—to expand its business scope to include NAND.

Meanwhile, Yangtze Memory Technology (YMTC), China’s largest NAND manufacturer, is closing in rapidly. According to Counterpoint Research, YMTC’s global NAND revenue share rose by 3 percentage points, from 11% in the second quarter of last year to 14% in the second quarter of this year. During the same period, SamsungElectronics’ share fell from 31% to 28%, and SK hynix’s dropped from 20% to 19%. As of the second quarter of this year, several companies—including Micron (15%), Kioxia (14%), and SanDisk (11%)—hold double-digit market shares, resulting in a more fragmented competitive landscape compared to the DRAM market.

Established companies are also continuing to expand their investments. Last month, Japan’s Kioxia began site preparation at its Kitakami plant to build a new fab (Fab 3) for producing advanced 3D NAND. The company aims to begin operations in fiscal year 2029. Foreign media reports also indicate that SK hynix is considering building a new NAND production facility in the U.S. through its subsidiary, Solidigm.

The problem is that the NAND market has more competitors than the DRAM market, which is dominated by SamsungElectronics, SK hynix, and Micron. While demand for NAND is currently strong due to investments in AI data centers, the supply-demand balance could rapidly destabilize if new production capacity floods the market all at once.

The NAND market has a history of simultaneous production increases leading to sharp price drops. In the mid-2000s, competition intensified as SK Hynix, Micron, Intel, and others entered the NAND market, while SamsungElectronics and Toshiba also expanded their production capacity. Compounded by a slowdown in demand, the average selling price (ASP) of NAND plummeted by 63% year-over-year in 2008. At the time, profitability deteriorated to the point where companies had to adjust production volumes, and the NAND market suffered aftereffects similar to the DRAM “chicken game.”

There is also significant concern about the technological catch-up. An industry official stated, “While DRAM requires extreme ultraviolet (EUV) processes and high-bandwidth memory (HBM) demands stacking technology, the technological gap for NAND is relatively small,” adding, “Since some equipment can be used for both DRAM and NAND, it is not impossible for CXMT to enter the NAND market.”

Some in the industry estimate the technology gap between South Korean companies and China in the NAND sector to be around one to two years. Given that Chinese companies are rapidly expanding their production capacity, experts point out that rather than engaging in price and cost competition in the mass-market segment, it is crucial to widen the gap in the high-value-added market before China’s volume-driven catch-up gains full momentum.

Another industry official said, “Ultimately, it’s more important to move toward high-value-added products than to compete with China on cost,” adding, “Various attempts are needed to develop new architectures, such as high-bandwidth flash (HBF).”