Yahoo Finance
For decades, semiconductor cycles followed a fairly predictable sequence.
Demand improved, companies bought more equipment to make more chips, unit shipments increased so that supply exceed demand, and pricing eventually weakened as oversupply returned to the market.
Investors therefore learned to focus primarily on unit growth because pricing historically lagged demand rather than led it.
That relationship has now changed, particularly in memory.
The current semiconductor recovery is not being driven by a surge in semiconductor units.
Instead, it is being driven by constrained supply initially, then by a shortage.
In many respects, memory suppliers have inverted the traditional semiconductor cycle by limiting capacity additions as a result of increased Capex (capital expenditure) spend in recent years in anticipation of strong demand for AI and concomitant memory chips.
Following the severe downturn that began in 2022, memory manufacturers spent several years cutting capital expenditures, delaying wafer fab equipment purchases, and slowing capacity expansion.
Suppliers became far more disciplined after watching prior cycles destroy profitability through overspending.
For example, in my March 18, 2024 Seeking Alpha article entitled "Micron's Fiscal Q2 2024 Earnings Preview With Eyes On HBMx," I noted: The analyst who called NVIDIA in 2010 just named his top 10 stocks and SSNLF wasn't one of them.Get them here FREE.
Memory Pricing Trends: The DRAM industry, including leaders like Micron and Samsung Electronics Co., Ltd.
(OTCPK:SSNLF), has observed a strategic pullback in memory production capacity investments (capex), as shown in Chart 1.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | ▲ +0.34% |
| WTI Crude | $96.90/bbl | ▲ +0.21% |
| EN590 Diesel | $846/MT | ▲ +0.18% |
| Jet Fuel A-1 | $1090/MT | ▲ +0.55% |
| Mazut M100 | $450/MT | ▼ -0.15% |
| Bitumen 60/70 | $470/MT | ▲ +0.08% |
| Sulphur Gran 99.5% | $470/MT | ▼ -0.44% |
| Urea 46% Gran | $650/MT | ▲ +1.12% |
| NPK 16-16-16 | $460/MT | ▼ -0.28% |
| Nat Gas TTF | $15.42/MMBtu | ▲ +0.92% |
Price alerts · Industry news
Comments
Post a Comment