Dear WIMM Reader,
Today, we look at what is happening in the memory supply chain: Micron, SK Hynix and Samsung. …and how will end?
Onto the update:
Snapshot
Tim Cook (Apple) in The Wall Street Journal:
Cook said during his time working in the electronics supply chain, from IBM to Compaq to Apple, he had never seen a commodity price swing like the one from the past six months. “This is a hundred-year flood,” said Cook. “I’ve never seen anything like it in any area in over 40 years.”
Will this trend continue? Yes, because it takes time to build the fabs. Again, The Wall Street Journal:
Samsung Electronics and SK Hynix plan to invest more than $500 billion in a new chip-making hub in southwestern South Korea, collaborating with the government’s push to bring the artificial-intelligence boom to less-developed regions.
The initiative, announced by the South Korean government Monday, envisions the creation of four new memory chip-making plants in the southwest, diversifying from the two companies’ current production centers which are all in the Seoul region.
Memory, also called DRAM, and storage, also called NAND, are like elements of a mid-20th-century office: The memory is a desk that holds all the papers a worker needs to perform a task, while storage is the filing cabinet that holds everything else. Smartphones use DRAM memory to run apps currently in use; they use NAND storage to file away photos and videos, for example.
Also, WSJ provides some estimates:
Top companies in DRAM: Micron, SK Hynix and Samsung
Top companies in NAND: Samsung, Sk Hynix, Kioxia, Micron, SanDisk and YMTC.
Memory is, at its core, a commodity market. Most players lose money over time because the industry is cyclical, capital-intensive, and brutally competitive. It is a very hard business to survive in. In fact, after years of bankruptcies and consolidation, only three major players remain: Micron, SK Hynix, and Samsung. Just look at the Micron share price before the AI boom:
Super flat until the AI boom.
What has changed now is demand. The same memory chips that once went mainly into devices from Apple, Nintendo, and PC makers are now being absorbed at scale by the hyperscalers building AI data centers. In other words, demand has shifted from consumer electronics to AI infrastructure.
That does not change the basic nature of the business: memory remains a commodity, and at some point, prices will fall again. But based on the analysts I have followed, that downturn is not expected before late 2027 or 2028. Until then, my view is that these stocks still have room to move higher, especially Micron and SK Hynix.
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