Elon Musk's latest remarks on China's manufacturing scale capabilities have added further fuel to the competitive anxiety already brewing in the chip industry.

Overnight, news of a technological breakthrough by Chinese memory chip maker ChangXin Memory Technologies (CXMT) sent shockwaves through the U.S. chip sector 鈥?the Philadelphia Semiconductor Index fell 2.7% on Monday, hitting a three-week low. Memory chip-related stocks led the decline, with Micron Technology, SanDisk, and SK Hynix ADRs among the biggest losers, as market concerns intensified over Chinese manufacturers rapidly entering the high-margin AI server memory market.

In response to the selloff, AI analyst Melvin said he simply could not understand the wave of selling in memory stocks, arguing that the market reaction was overblown and that the selloff was unreasonable.

Musk subsequently posted on social platform X, stating that once China figures out how to manufacture a product, its scaling capacity often exceeds the combined total of the rest of the world, citing lithium batteries and solar power as supporting examples. He also expressed clear concern about China's pace of catching up in the memory chip sector, noting that general-purpose standard specifications such as LPDDR5 and LPDDR6 are "something China appears to be rapidly conquering."

Musk: China's Scale Capacity Is a Systemic Advantage

In his post, Musk characterized China's manufacturing scale capability as a systemic advantage rather than an isolated phenomenon. He wrote: "When China figures out how to make a product, its scaling capacity often exceeds the combined total of the rest of the world. We have seen this with lithium batteries and solar power."

Using SpaceX as a reference point, he noted that SpaceX is one of the few exceptions its mass to orbit is roughly an order of magnitude greater than all other launch vehicles in the world combined. But he immediately added that even so, China currently accounts for the majority of non-SpaceX mass to orbit, calling SpaceX "an outlier in the matrix."

On memory chips, Musk's assessment was even more direct. He stated that RAM was merely a low-margin commodity just three years ago, while LPDDR5 and LPDDR6 use general-purpose standard designs that "China appears to be rapidly solving." He also pointed out that the newer-generation HBM architecture, the SRAM layer beneath the logic die, and 3D-stacking RAM above the logic layer while simultaneously addressing thermal dissipation will be far more difficult technological challenges to overcome.

CXMT Technology Breakthrough Triggers Market Selloff

Musk's remarks did not come out of nowhere. Over the weekend, Dr. Cao Kanyu, President of ChangXin Memory Technologies (CXMT), announced at an industry event that the company had achieved a key breakthrough in next-generation memory cell architecture and planned to launch DDR5 server memory products based on this architecture by the end of 2026.

The core advantage of the architecture lies in a smaller memory cell area. In the conventional architecture common in traditional DRAM, F represents the minimum feature size, while the design can theoretically accommodate approximately one-third more bits per unit area, thereby reducing unit cost and making it more suitable for the large-capacity memory modules required by AI servers. Cao stated that the design employs a proprietary vertical surrounding gate transistor to suppress leakage current, directly targeting the high-margin AI server DRAM market.

This news sharply escalated market concerns about Chinese manufacturers accelerating their penetration into the high-end memory chip market and served as the direct trigger for the broad decline in chip stocks on Monday. Tech stocks were the worst-performing sector in the U.S. market on Monday, with memory chip-related names bearing the brunt. Micron fell below the $1,000 mark, ultimately closing down about 4%; SanDisk closed down nearly 6%; SK Hynix ADRs and Super Micro Computer both dropped more than 4%; Seagate Technology fell over 3%; Quantum declined more than 9%; and Corning also suffered a significant drop.

The market's selling logic is clear: if Chinese manufacturers can penetrate the high-end memory chip market previously dominated by U.S. and South Korean companies at lower cost and greater scale, the profit margins of the relevant companies will face substantial compression. Musk's public remarks have, to a certain extent, reinforced investors' expectations for this evolving competitive landscape.