Monday's close on Wall Street pushed the memory sector into the spotlight.

Micron Technology fell 3.88%, with its share price dropping below $1,000 per share, down nearly 20% from its June high and approaching technical bear market territory. SanDisk dropped 5.97%.

The optical communications sector was not spared either. Ciena plunged 9.95%, while Lumentum and Coherent fell 9.78% and 7.87% respectively, and Corning dropped 6%.

The fire quickly spread to Asia. On the first trading day after the holiday in the South Korean market, the KOSPI opened down 3.1%, with losses rapidly widening to over 4%. The exchange triggered the SIDECAR mechanism to suspend program selling. SK Hynix fell more than 6% intraday, Samsung Electronics dropped nearly 5%, and both the KOSDAQ and the semiconductor index fell around 5%. The Nikkei 225 weakened in tandem, dropping more than 1,200 points intraday.

A-shares came under pressure following the open. The Shanghai Composite opened down 0.96%, the ChiNext Index fell 2.18%, and computing hardware concepts led the declines. Several representative names in the memory chain were hit hardest: ChangXin Technology fell 4.55% in early trading, GigaDevice dropped 5.73%, and Longsys declined 3.29%. In Hong Kong, both the two-times long SK Hynix and two-times long Samsung Electronics products fell more than 10%.

Weighing on sentiment was the retreat of supportive forces. South Korea's two major memory giants had previously jointly announced a buyback plan totaling approximately 55 trillion Korean won, close to $40 billion — unprecedented in scale for the Korean capital market — which had been treated by funds as a safety cushion for share prices. However, this initiative concluded weeks earlier than originally planned, with Samsung's buyback actually terminating on October 6. Once the support stopped, the index immediately lost its underpinning, and the KOSPI fell about 8% cumulatively over the following three trading days.

It was not just buybacks that were withdrawn. Foreign investors net sold for a fifth consecutive trading day. Compared to the June 22 high, the KOSPI has retreated about 30%, with SK Hynix down 45%. The confidence bought back with real money was withdrawn just as decisively.

What is harder to digest than the market action is the report card handed in by competitors. At the 4th Integrated Chips and Chiplets Conference, ChangXin Technology announced key progress in the development of its next-generation 4F² architecture DRAM, and by year-end will launch DDR5 RDIMMs integrating the 4F² architecture with wafer-level hybrid bonding, aiming directly at the server memory market. Compared to the current mainstream 6F² solution, 4F² compresses cell area by about one-third, and memory density under the same wafer and process node can theoretically increase by about 50%, with the core being its self-developed VSG vertical surrounding gate transistor.

The lead in technology roadmap is even more concerning. SK Hynix did not announce its 4F² roadmap until 2025, while Samsung's goal is to achieve mass production of sub-10nm DRAM by 2028. If ChangXin delivers on schedule by year-end, the generational gap will be widened to about two years.

The market share curve is also shifting upward in tandem. ChangXin's global DRAM revenue share rose from 4% in the second quarter of 2025 to 10% in the second quarter of 2026, placing it fourth globally.

Elon Musk added another blow on social media. He said that once China masters the manufacturing process for a certain product, its scale capability will far exceed that of other regions in the world, citing lithium batteries and solar panels as precedents. In his view, memory chips could replicate this trajectory. RAM was still regarded as a low-margin commodity in earlier years, and standardized designs like LP5 and LP6 naturally make it easy for different manufacturers to expand production freely. If Chinese manufacturers quickly solve manufacturing and yield challenges, the competitive landscape of the traditional RAM market will undergo even greater changes. He also left some room, noting that emerging technologies like HBM and 3D stacking will be more difficult for Chinese manufacturers to master.

The numbers coming from the demand side are also unfavorable. Counterpoint statistics show that global smartphone shipments in the third quarter of 2026 fell 20% year-on-year, hitting a same-period low since 2012. The memory chip crisis has impacted the smartphone market for two consecutive quarters, with global smartphone retail prices rising about 20% cumulatively this year. By manufacturer, Samsung ranked first with a 23% share but saw shipments decline 3%, Apple captured 22% for the first time exceeding one-fifth in a third quarter, Xiaomi's shipments fell more than 30% with its share dropping to 10%, and both OPPO and vivo fell more than 20%. The more prices rise, the slower consumers are to upgrade, using their devices longer and increasingly considering refurbished phones. The prosperity driven by memory price increases is being diluted in turn by end-user demand.

Putting these threads together, what the market is really trading is quite clear. One is valuation. This rally in memory stocks had already priced in optimistic scenarios of tight supply-demand and elevated prices for 2027 and even 2028. When earnings delivery becomes something within expectations, Samsung's nearly ninefold operating profit growth in the third quarter actually triggered selling. Goldman Sachs stated bluntly that there is a lack of sufficient catalysts recently to drive further re-rating. When expectations are too fully priced in, even good news becomes a reason to sell.

The other is competition. The focus of concern has shifted from short-term prices to whether the supply-demand landscape will reverse in 2028. Signals such as ChangXin's architectural breakthrough, combined together, have led investors to price in intensified industry competition ahead of time. Goldman Sachs U.S. prime brokerage data shows that last week the U.S. IT sector abruptly shifted from being the top net buy to the top net sell, with selling pressure released relatively quickly over seven weeks, concentrated in technology hardware, memory and peripherals, and semiconductors. Favorable news kept landing, yet chips were accelerating their exit.

In the short term, this week's earnings from TSMC and ASML, as well as Samsung's earnings call on October 29, will provide new clues on the medium-term supply-demand situation for memory. The market is particularly interested in whether Samsung will, like Micron, give guidance on tightening supply in 2028. The story of cyclical stocks is never new: when they rise, the next few years are imagined rosily, and when they fall, the worst-case scenario is played out in advance.