Memory makers are earning record profits from higher prices, as Samsung said buyers get no relief before 2028, SK Hynix's profit jumped seven-fold and Apple's inventory surged 154% as memory costs climbed. Yet the companies' shares have mostly fallen while the S&P 500 rose. Kioxia's outlook showing demand leveling off, China's CXMT claiming a memory breakthrough and fears of a 2029 glut weigh on them.
Updated Nov 11
Semiconductor Equipment & Materials, Computer Hardware, Semiconductors
The reasoning of the connection that opened this thesis. It is not updated.
The nearest comparison is the 2000s LCD panel price war. Korean and Taiwanese makers built huge capacity, and panels became a commodity. But displays were standard, so Chinese makers entered easily. HBM (high-bandwidth memory) differs in design from ordinary memory. In leading-edge logic chips, a closer precedent, China built plants (SMIC) yet stayed 4-6 years behind TSMC for over a decade. Samsung and SK Hynix spent 5+ years getting good HBM2E and HBM3E output. In 2018-2019, as AMD gained share, investors treated Intel as a commodity CPU maker. They missed its dominant Xeon data center business, and the stock stayed cheap for 18 months before rising. Micron fits that pattern, as commodity talk hides its strong AI business.
Even if China cannot make high-bandwidth memory (HBM) yet, ordinary DDR5 and LPDDR5 memory still brings most of Micron's revenue. CXMT's scale puts real pressure on those prices, and the share price ignores that margin loss. Timing is the weakest point. If CXMT reaches 350,000 wafer starts by end of 2026 and undercuts prices, Micron's average selling price falls even if HBM holds. The deciding sign would be Micron guiding ordinary memory prices down 15%+ in its next earnings call, with HBM the only bright spot. That would prove the HBM point but bring a painful near-term earnings miss the stock would not survive at its current valuation.
26 for · 9 against
Reports that Huawei and CXMT are building large memory chip plants in China raise fears that the few big memory makers will lose pricing power. That weighs on the valuation of Micron, the purest US memory chip company.
Analysts cut Micron's expected earnings on the idea that all memory prices will fall. They miss two things. China's new plants will serve its own AI chips, and they cannot make competitive high-bandwidth memory (HBM). US export controls also keep Nvidia, AMD and big US cloud companies tied to Western HBM makers such as Micron and SK Hynix, with no Chinese option for years.
The AI data center build-out is raising demand for high-bandwidth memory (HBM) faster than new plants can add supply. Each new AI chip needs HBM, and that order can go only to Micron or the Korean makers. Once analysts count Micron's HBM sales apart from ordinary memory, likely after Micron's own guidance, investors may value it like other AI suppliers. Micron, which is growing HBM3E output, gains most.
Average move since Tenji added each name: -12.4% · S&P 500 since the thesis opened Jul 27: +2.1% · 1 of 5 names moving with the thesis
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