China Can Build The Memory, It Can't Build The Base Die

The semiconductor sector faces a sharp selloff, with memory stocks hit by concerns over China's domestic DUV lithography progress. The Chinese DUV ramp is gradual; five machines in 2026 and twenty in 2027 won't meaningfully alter DRAM supply or pricing in the near term. The DRAM market remains structurally protected until China achieves EUV capabilities, while NAND is more vulnerable to Chinese competition, especially from YMTC. I remain bullish on SK hynix and Micron for the medium term, as supply constraints and high margins persist through 2027-2028.

The semiconductor industry has officially entered bear territory. The selloff has been unfolding since June. But, this week has marked a sharp pivot with many semi names down materially in a matter of days: