In recent months, memory chip prices have continued to soar, creating a clear divide between winners and losers in the stock market. Investors widely believe this trend will be difficult to reverse in the short term. Companies ranging from game console maker Nintendo to major PC brands and Apple supply chain partners have seen their stock prices decline due to pressured profit outlooks. Meanwhile, the stock prices of memory chip producers have surged to record highs, forming a stark contrast. Fund managers and analysts are currently intensively evaluating companies' coping capacities—identifying which can hedge costs through long-term supply agreements, which can pass on pressure through price increases, and which can reduce memory usage through product redesigns to gain an advantage in this industry shift.
The market has already positioned itself for this scenario: since the end of last September, a Bloomberg-compiled index of global consumer electronics manufacturers has fallen by 12%, while a basket index including memory makers like Samsung Electronics Co. has surged over 160%. The key question is how much of this is already reflected in stock prices.
A Fidelity International fund manager, Vivian Pai, stated, "The risk that is not yet fully appreciated relates to duration—current valuations largely price in an expectation that industry disruptions will normalize within one or two quarters." She added, "We believe industry tightness could persist," potentially even through the remainder of this year.
Earnings reports and conference calls frequently mention memory chip shortages and pricing issues. Investors have heard the warning signs. Qualcomm's stock fell over 8% last Thursday after the smartphone processor maker indicated that tight memory supply would constrain handset production. Nintendo saw its largest single-day drop in 18 months on the Tokyo exchange the next day after warning that supply shortages would pressure its profit margins. Logitech International SA's stock has declined approximately 30% from its peak last November, as rising chip prices weakened the demand outlook for PCs.
"During this earnings season, memory pricing has truly jumped from a background topic to headline news," said Charu Chanana, Chief Investment Strategist at Saxo Bank. "The market broadly understands that memory prices are rising and supply is tight—this is no longer new information, so I believe it is priced in. However, it appears the duration of the supply tightness is now starting to be questioned."
Concerns about demand and profits stemming from the memory "super cycle" are pressuring the corporate world. Furthermore, massive investments by US hyperscalers in AI infrastructure could exacerbate the memory chip shortage, complicating the situation. Large-scale AI infrastructure builds, led by companies like Amazon.com Inc., have shifted production capacity away from high-bandwidth memory towards conventional Dynamic Random-Access Memory (DRAM). This has led to what some describe as a "super cycle," breaking the typical boom-and-bust pattern of memory supply and demand.
Over the past few months, spot prices for DRAM have skyrocketed by over 600%, even though end-demand from products like smartphones and automobiles remains weak. Furthermore, AI has also generated new demand for NAND chips and other storage products, driving up costs in those areas as well.
Consequently, memory chip manufacturers have become standout winners within the tech sector. Since the end of September, shares of South Korea's SK Hynix Inc., a major supplier of HBM to NVIDIA Corp., have risen over 150% in Seoul. Among more mainstream chipmakers, Japan's Kioxia Holdings Corp. and Taiwan's Nanya Technology Corp. have each seen their shares rise around 280% over the same period, while SanDisk Corp.'s stock has surged over 400% in New York.
"Historically, memory cycles typically last 3-4 years," said Jian Shi Cortesi, a fund manager at GAM Investment Management in Zurich, adding that she has held memory chip stocks for a long time. "The current cycle has already exceeded previous cycles in both length and magnitude, and we have not yet seen the demand momentum weaken."