Is "super cycle" of memory becoming the new normal? Downstream profits are persistently squeezed, and the dividend period for chip giants is nowhere in sight.

In the past few months, the price of memory chips has continued to soar, forming a distinct pattern of winners and losers in the stock market, and investors generally believe that this trend is unlikely to reverse in the short term. From game console manufacturers like Nintendo, major personal computer brands to Apple Inc. supply chain companies, many companies have seen their stock prices fall due to pressures on profitability. At the same time, the stock prices of memory chip manufacturers have skyrocketed to historic highs, creating a stark contrast. Currently, fund managers and analysts are intensively evaluating the ability of each company - which ones can hedge costs through long-term supply agreements, which ones can pass on the pressure through price increases, and which ones can reduce memory usage through product redesign to gain an advantage in this industry transformation. The market has long been prepared for this: since the end of September last year, Bloomberg's global consumer electronics manufacturers index has fallen by 12%, while a basket of indices including memory manufacturers like Samsung Electronics has surged by over 160%. The question is to what extent this has already been factored into the prices. Vivian Pai, a fund manager at Fidelity International, says: "What has not yet been fully appreciated is the risk in terms of duration - current valuations largely factor in the expectation that industry disruptions will return to normal in one to two quarters." She added, "We believe the industry tension may continue," possibly even until the end of this year. In financial reports and conference calls, companies frequently mention the shortage of memory chips and price issues. Investors have heard the alarm bells. QUALCOMM Incorporated's stock price fell more than 8% last Thursday, as the smartphone processor manufacturer warned that tight memory supply would limit phone production. Nintendo's stock in the Tokyo stock market fell by the largest amount in 18 months the next day, as the company warned that supply shortages would put pressure on its profit margins. Swiss peripheral equipment manufacturer Logitech has fallen by about 30% from its peak in November last year, as rising chip prices weaken the outlook for personal computer demand. Charu Chanana, chief investment strategist at Shengbao Bank, said: "Memory chip prices have indeed jumped from a background topic to headline news this earnings season. It seems the duration of supply tightness is now being questioned." "Super cycle" of memory Concerns about demand and profits are putting pressure on the business community, and the massive investments made by super large US companies in artificial intelligence infrastructure could further exacerbate the shortage of memory chips, making the situation even more complicated. The construction of artificial intelligence infrastructure, led by companies like Amazon.com, Inc., has shifted capacity from high-bandwidth memory to traditional dynamic random-access memory (DRAM). This has led to what some describe as a "super cycle," breaking the usual cycle of prosperity and recession in memory supply and demand. In the past few months, the spot prices of dynamic random-access memory have soared by more than 600%, despite continued weak demand for end products such as smartphones and cars. Furthermore, artificial intelligence has spawned new demand for NAND chips and other storage products, pushing up costs in these areas as well. As a result, memory chip manufacturers have become prominent winners in the tech sector. Since the end of September, SK Hynix in South Korea (NVIDIA Corporation's main supplier of HBM) has seen its stock price rise by over 150% in Seoul. In more ordinary chip manufacturers, Japanese Kioxia Holdings and Taiwanese company Nanya Technology have each seen their stock prices rise by about 280%, while SanDisk in the US has seen its stock price rise by over 400% in New York. "In history, the memory cycle usually lasts for 3-4 years," said Jian Shi Cortesi, a fund manager at GAM in Zurich, adding that she has held memory chip stocks for a long time. "The current cycle has already exceeded previous cycles in terms of length and scale, and we have not yet seen a weakening in demand."