存储暴跌，一夜惊魂

Original Author: Su Yang

Original Editor: Xu Qingyang

Original Source: Tencent Technology

Overseas memory giants are caught in the eye of the storm, with a combined market cap loss of nearly $43 billion overnight on July 28.

The past trading day saw a "night of terror" for memory leaders like SK Hynix and Micron. SK Hynix and Samsung Electronics both fell over 13%, wiping out a combined market cap of about $28 billion. On Tuesday's US market, Micron closed down 8.85%, SanDisk plunged 14.25%, Seagate fell 8.53%, and Western Digital dropped over 6.9%, with a total market cap loss of approximately $14.8 billion.

Tuesday, screens in a Hana Bank trading room in Seoul display the benchmark KOSPI index and closing prices for Samsung Electronics and SK Hynix stocks.

Public data shows SK Hynix has retraced about 45% to 47% from its June high, with a market cap loss of nearly $600 billion; Micron Technology has corrected over 30% from its peak; Japan's Kioxia has shrunk by nearly half within a month.

In stark contrast to the plummeting stock prices, the memory giants have just delivered their best-ever earnings reports.

The Logic of Earnings Unable to Support Stock Prices

On July 7, Samsung Electronics released its Q2 preliminary earnings, with quarterly operating profit reaching 89.4 trillion KRW, surging 18 times year-over-year, even surpassing the total profit sum of 2023 to 2025. However, this stunning earnings report not only failed to lift the stock price but caused Samsung to plummet over 10% intraday, dragging the KOSPI index down nearly 5%.

The same anomaly played out with other giants.

SK Hynix's Q2 earnings report released on the 29th showed revenue of 79.3 trillion KRW, up 257% year-over-year; operating profit was 60.5 trillion KRW, up 557%, with operating profit margin climbing to 76%.

Micron Technology reported revenue of $41.5 billion for the quarter ending May 2026, a massive 346% surge year-over-year, gross margin skyrocketing to 84.6%, and free cash flow reaching $17.6 billion. Micron management even boldly stated: "Demand far exceeds supply capability, and this boom will last until 2028."

With fundamentals red-hot, the stock prices of memory leaders have plunged. The first clue and potential trigger is the cross-market pair trade activity generated by SK Hynix's ADR issuance in the US – "going long on US ADRs, shorting on domestic Korean stocks."

Bloomberg, citing a UBS report to clients, stated that many global portfolio managers who previously did not include SK Hynix shares listed in Korea in their investment asset classes can now purchase the new SK Hynix ADRs.

"Buying the ADRs and selling the common shares in Korea from day one looks like a sure-win trade," the UBS report read.

Another stimulating factor is related to South Korean regulatory adjustments.

On July 16, the South Korean Financial Services Commission suddenly announced tighter rules for single-stock leveraged ETFs, raising the minimum margin requirement from 10 million KRW to 30 million KRW and limiting each person to buying a maximum of 20 shares per transaction.

JPMorgan analyst Nikolaos Panigirtzoglou pointed out that at the time, the position size of memory chip leveraged ETFs relative to the market cap of related companies was three times that of regular stock ETFs. During the stock price decline phase, the mandatory end-of-day rebalancing mechanism of leveraged ETFs triggered programmed automatic selling, instantly creating a "capital stampede."

That day, SK Hynix fell another 11%, Samsung slumped over 8%, and the panic wave quickly swept through Europe and the US.

Looking at a longer timeframe, the recent pullback in memory concept stocks is related to concerns about "imbalanced investment returns" regarding Silicon Valley giants' AI investments and related capital expenditures.

On July 22, Google released its Q2 report and raised its full-year capital expenditure from $180–190 billion to $195–205 billion, but its stock fell both after hours and the next day. The core reason was that endless high capital expenditures suppressed free cash flow, creating uncertainty about AI investment returns. This is a common issue Microsoft, Amazon, and Meta will face next.

Rating agency Moody's also issued a timely warning: The nearly $1 trillion annual AI arms race is forcing cash-rich giants like Google and Microsoft to rely excessively on debt and off-balance-sheet financing. Currently, the direct debt of the six major cloud service providers totals approximately $460 billion.

This means that as long as the guidance from these giants falls even slightly short of expectations, the market will re-price the highly sensitive HBM supply chain stocks.

Shinhan Securities analyst Kang Jin-hyuk summarized this: "As investors refocus their attention on concerns about the sustainability of the AI investment cycle and the increasing competitiveness of China's memory industry, the market's risk aversion sentiment has been completely ignited."

Compounded by these various reasons, memory concept stocks experienced a "Black Tuesday" on July 28.

Sundeep Gantori, Chief Investment Officer for Equities at Standard Chartered Bank, stated that the current sell-off reflects an overall deterioration in market sentiment towards the semiconductor sector, with some institutions even predicting in their latest reports that memory prices will peak in 2027.

"The Big Short": Betting Boldly Against Memory

At the most panicked moment in the market, Michael Burry, the inspiration for "The Big Short," publicly disclosed through his personal column that he is heavily shorting the memory chip sector and continuously increasing his position.

Reviewing Burry's position-building trajectory: On July 2, he established his first short position on Micron Technology, with an entry price of approximately $1,051.87; On July 25, he increased his short positions on Micron (stock price $933.86) and Nvidia (stock price $210.28), while also establishing a short position on the SOXX Semiconductor ETF.

Burry's heavy bet against memory is primarily based on three points:

First, valuations are severely deviated from moving averages. Micron, as the only pure DRAM stock in the US market, has experienced 34 deep corrections of over 30% in its 42-year history. Its current price deviation from the 200-day moving average has hit a record high since 1984, even surpassing the peak of the 2000 internet bubble.

Second, return on capital is extremely mediocre. Micron's long-term median ROIC (Return on Invested Capital) is only 4%, and its ROE (Return on Equity) is only 7%. Historically, about one-third of its quarters have actually been in a "capital destruction" state.

Third, there is a risk of inflated end-user demand. Burry firmly believes that the strong demand triggered by Nvidia does not entirely come from genuine end-user consumption but is an illusion driven by off-balance-sheet financing and capital recycling arrangements, citing the Bank for International Settlements (BIS) 2026 annual report as evidence.

"The Big Short" Burry Shorting Memory Stocks

Regarding the recently announced expansion plans by the Korean giants, Burry even asserted this is the "landmark turning point where the semiconductor boom cycle shifts from prosperity to decline," predicting a correction of at least 30% for the entire sector.

However, dissenting voices exist in the market. Bulls argue that Micron's just-reported quarterly earnings are the best in the company's history, with revenue, profit margins, and cash flow all setting records.

An analysis from tech media CoinCentral points out the true logic behind Burry's bet: He is not betting on an immediate collapse of end-user demand, but rather gambling that memory manufacturers' capital expenditures will spiral out of control – Micron's own massive $27 billion capital expenditure is sowing the seeds for a "sharp decline" in the next downturn cycle.

High Stakes and Consequences

Just weeks before the "stampede," the global memory industry was immersed in an unprecedented "super alliance."

At the San Francisco AI Summit from July 24 to 25, the SK Group signed a long-term agreement worth over $500 billion with Nvidia, securing HBM supply and HBM4 co-development. Combined with partnerships with Microsoft and Anthropic, the total scale reached approximately $750 billion.

Simultaneously, Samsung Electronics signed a memorandum of understanding with Broadcom worth up to $200 billion. The combined total of approximately $950 billion in orders from the two companies has been called the largest long-term semiconductor supply lock-in in history by foreign media.

Around the same time, AMD acquired MEXT, attempting to use flash memory to "disguise" as DRAM to reduce memory costs, and Meta locked in a multi-year NAND supply agreement with SanDisk.

This new round of alliances among Silicon Valley giants failed to positively influence memory concept stocks. More than the short-term stock price fluctuations, what truly unsettles long-term capital is a super industrial plan announced by the South Korean government at the end of June – Samsung and SK Group will jointly invest 800 trillion KRW (approximately $516 billion) to build four new wafer fabs in southwestern Korea, aiming to double memory chip production capacity within five years.

Including the supporting 550 trillion KRW HBM packaging hub and data center construction, the total investment scale reaches a staggering 1,350 trillion KRW (about $880 billion), equivalent to 5% of South Korea's 2024 GDP.

Memory manufacturers increasing production means the "supply discipline" and strict financial controls maintained by the industry for two years are broken.

Over the past two years, memory manufacturers successfully pushed memory chip prices back to high levels precisely by strictly controlling production and shifting capacity towards high-profit HBM. Now, SK Hynix's 2026 capital expenditure is expected to jump dramatically by 43% to 40 trillion KRW, and Micron's capital expenditure for fiscal year 2026 has also doubled year-over-year.

Morningstar analyst Jing Jie Yu warns that as these new production capacities come online en masse between 2027 and 2028, the industry will inevitably face severe price erosion.

Analytics firm AInvest states that the manufacturers' expansion is no longer a victory parade driven by AI demand but a replay of the script from the 2022–2023 overcapacity and price collapse cycle.

Although it typically takes 18 to 24 months from fab construction to production ramp-up – for example, Samsung's P5 fab is scheduled for mass production in the second half of 2027 – and TrendForce judges that the DRAM supply shortage pattern will be difficult to fundamentally reverse before that, the stock market always trades on expectations, not the present.

It can be said that South Korea's super expansion plan shattered the market's fantasy of "sustainable high chip prices." The "night of terror" for the memory sector is essentially a disconnect between fundamentals and expectations.

Now, the sensitive capital market has begun pricing in potential oversupply in 2027 in advance. According to "The Big Short" Burry's expectation, the window between the second half of 2027 and 2028, when Korea's new fabs enter mass production, will be the true test for the memory industry.