What happened
Morgan Stanley analyst Shawn Kim has turned bearish on the memory chip sector, warning of a NAND oversupply and DRAM weakness, according to a report circulating in the market. Citrini analyst Jukan confirmed the report's authenticity via sources and noted that Kim has held this view recently, which may be a factor in the recent pullback of South Korea's KOSPI index.
Why it matters for the market
The report highlights that NAND module makers' inventory has risen to about 13 weeks, with demand cooling significantly. It expects NAND price increases to slow to around 5% in the fourth quarter, while spot prices have already fallen for two consecutive months. Additionally, Chinese memory maker CXMT is rapidly expanding capacity, gradually balancing supply and demand.
What traders should watch
If NAND weakens, the report suggests DRAM should also be viewed bearishly, and it predicts HBM market growth will be limited to about 40%. The bearish outlook on memory chips could pressure related stocks and indices, particularly the KOSPI, which has seen sustained declines in recent weeks.
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