Can Memory Chipmakers Shed Their Boom-and-Bust Reputation in the AI Era?

At a glance

BofA Korea's head of research says memory chip companies like Samsung Electronics and SK hynix could see their market valuations change if they can keep posting steady earnings, driven by demand from AI data centers. He stressed that the key condition is maintaining higher profits, rather than relying on memory prices rising further.

Key points

1. 1

   In the past, memory companies spent most of their profits from boom periods on equipment investment and posted large losses during downturns.

2. 2

   He sees AI service companies buying memory as infrastructure they will use for a long time, which could make demand more stable than before.

3. 3

   He believes delays in building data centers in some parts of the United States will not change the industry's overall growth.

4. 4

   He considers concerns about Chinese competition overblown for at least a few years, because the gap in equipment investment with Chinese companies is large.

Why it matters

Chip stocks have recently dropped sharply, and this shows that whether the memory industry can keep its profits steady is the key factor that could change how investors value it.