(Bloomberg) — The relentless surge in memory chip prices over the past few months has driven a vast divide between winners and losers in the stock market, and investors don’t see any end in sight.
Companies from game console maker Nintendo Co. to big PC brands and Apple Inc. suppliers are seeing shares slump on profitability concerns. Memory producers, meanwhile, are soaring to unprecedented heights. Money managers and analysts are now assessing which firms can best navigate the squeeze by locking in supplies, raising product prices or redesigning to use less memory.
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A Bloomberg gauge of global consumer electronics makers is down 12% since the end of September while a basket of memory makers including Samsung Electronics Co. has surged more than 160%. The question now is how much is priced in.
“What remains underappreciated is the risk around duration — current valuations largely factor in that the disruption will normalize within one to two quarters,” said Vivian Pai, a fund manager at Fidelity International. “We believe industry tightness is likely to persist,” possibly through the rest of the year, she added.
Memory chip shortages and pricing are being mentioned frequently by companies in earnings reports and conference calls. Investors are hearing the alarm bells.
Shares of Qualcomm Inc. fell more than 8% last Thursday after the smartphone processor maker signaled memory constraints will limit phone production. Nintendo slid the most in 18 months in Tokyo the day after it warned of margin pressure from the shortages.
Swiss peripherals maker Logitech International SA has seen its stock slide around 30% from a November peak as higher chip prices damp the outlook for PC demand. Shares of Chinese electric vehicle and smartphone makers from BYD Co. to Xiaomi Corp. have also been sluggish on worry related to the chip shortages.
“Memory prices have really moved from a background conversation to headlines this earnings season,” said Charu Chanana, chief investment strategist at Saxo. “The market broadly understands that memory prices are up and supply is tight — that’s no longer new information, so I would assume that’s priced in. But it does look like the timeline of this supply tightness is now starting to be questioned.”
Memory ‘Supercycle’
Concerns over demand and earnings are weighing on the corporate landscape, compounded by worries that massive AI infrastructure spending by US hyperscalers will further exacerbate memory-chip shortages. The massive build‑out of AI infrastructure led by the likes of Amazon.com Inc. has shifted production capacity toward high-bandwidth memory and away from traditional DRAM.
