Semiconductor memory continues its upward trend. Is it time to focus on allocating resources to this sector?
- Core Viewpoint: AI computing demand is spreading from GPUs to memory chips, driving a revaluation of the memory chip industry's status and ushering in the "second half of the super cycle." However, cyclical risks and high premium arbitrage pressures remain potential threats.
- Key Factors:
- NVIDIA's Vera Rubin chip has a surging demand for HBM and memory bandwidth, making memory a performance bottleneck for AI systems on par with GPUs, rather than an accessory.
- Movements of industrial capital (e.g., SK hynix negotiating to acquire an Intel factory, Korean giants meeting with NVIDIA) show that players are systematically increasing their bets, not pulling back.
- The cyclical nature of the memory chip industry has not changed. Historical data shows that cycle tops often see a 30%-50% decline, so be cautious of correction risks.
- SK hynix's U.S. ADR (SKHY) trades at a high premium of approximately 29.8% over its underlying Korean stock. With a conversion window opening on July 29th, arbitrage trading could force the ADR price to fall significantly.
The US chip sector continued its strong upward momentum last night.
Micron closed up about 12%, SanDisk closed up 14%, and SK Hynix closed up 13%. The gains of these three memory chip giants, taken individually, rival the daily volatility of altcoins in the crypto market. But the impact of this surge goes beyond the numbers themselves—it directly shattered the "memory cycle has peaked" consensus that had been gradually forming in the market over the past few weeks.
The notion that "the super cycle for memory chips is over" – a judgment that had been sounding increasingly convincing – was unequivocally rejected by capital overnight.
1. Why the Continued Surge? Two Fundamental Logics Are Being Restructured
On the surface, this appears to be an emotionally driven revenge rally. However, breaking down the driving factors reveals two deeper industrial logics undergoing repricing.
Logic One: Memory Becomes the "Second Ticket"
Over the past two years, the narrative core of the AI industry chain has revolved around one word: GPU. Nvidia is the undisputed king, and whoever buys the most GPUs leads in the AI arms race.
But now, this narrative is undergoing a critical expansion.
Nvidia's next-generation AI chip architecture, Vera Rubin, has entered mass production and shipment. This chip demands memory bandwidth and capacity at an unprecedented level—the parameter scale of models on the horizon is also expanding synchronously. Meanwhile, Kimi K3's 2.8 trillion parameters mean that during inference, HBM, DRAM, and traditional storage must be persistently loaded, unlike the past where data could be shuttled between CPU and GPU.
In simple terms: Memory is no longer an "accessory" to the GPU; it is becoming an independent bottleneck, on par with the GPU, determining AI system performance.
The compute narrative is shifting from "just buy GPUs" to "memory is the second ticket." When the status of memory is elevated to equal that of compute power, the valuation framework of the entire industry chain needs to be rewritten—this is the core reason why capital is suddenly flowing back into memory chips.
Logic Two: The Industry is Doubling Down, Not Contracting
Contrary to the pessimistic narrative of "peak capital expenditure," actual actions at the industry level indicate that players are increasing their bets, not hitting the brakes.
Recent news flow also explains this phenomenon:
First, SK Hynix is reportedly in talks to acquire Intel's wafer fab in Ohio, USA. If this deal goes through, Hynix would gain DRAM manufacturing capabilities on US soil—a strategic reinforcement of its global production capacity and a way to pave the path for securing orders from major US clients amid rising geopolitical uncertainties.
Second, the CEOs of South Korea's three tech giants—Samsung, SK Hynix, and Naver—are reportedly flying to Silicon Valley this week for a roundtable meeting with Nvidia CEO Jensen Huang. This marks the first time top players from the memory manufacturing, GPU dominance, and large model development sectors are sitting at the same table—the depth and breadth of industrial collaboration far exceed previous market imagination.
These signals collectively point to one judgment: the industrial status of memory chips is undergoing a systematic reassessment. They are no longer passive commodity suppliers but strategic nodes on par with GPUs in the AI infrastructure chain.
Market opinions suggest that the second half of the memory super cycle may have just officially begun.
2. But Don't Pop the Champagne Just Yet—The Destiny of Cyclical Stocks Remains
Having said that, "the second half has begun" does not mean "blindly chase gains."
The memory chip industry has an iron law that, no matter how optimistic you are about the current demand surge, you cannot ignore it: cyclicality.
History has repeatedly shown us: the cyclical peak in the semiconductor industry often ends with a 30% to 50% decline. This is not speculation; it is the standard outcome of every memory super cycle over the past two decades.
The current second half may indeed have begun, but this does not mean the valuation bubble left over from the first half has been fully digested. The second half can make you money, but it can also lose you money.
3. An Easily Overlooked "Landmine": SK Hynix ADR's 29.8% Premium
If you chased SK Hynix's US-listed ADR (ticker: SKHY) last night, there is a risk that may be materially impacting your holdings.
SKHY's current stock price is around $173, but it trades at approximately a 29.8% premium compared to the underlying ordinary shares of Hynix on South Korea's KOSPI market. After deducting this premium, the fair value based on the Korean underlying stock is around $120.
More critically: On July 29th, which is just 5 trading days away, the SKHY ADR will become fungible with the Korean underlying stock.
What does this mean? It means arbitrage funds can buy the cheaper underlying shares on the Korean market, convert them into ADRs, and sell them on the US market—capturing the nearly 30% premium through this operation. When a large amount of arbitrage capital flows in, the ADR price will be forcibly pulled down towards parity with the ordinary shares.
Even if the Korean underlying stock itself doesn't fall, SKHY could drop significantly due to the premium convergence. If you chased it at a high premium level above $170, this risk isn't just theoretical; it's materializing in your portfolio statement.
4. Final Thoughts: Bullish Direction, Bumpy Ride—Options Are the Best "Seatbelt" Now
Based on the analysis above, the current situation can be summarized in one sentence: Bullish on the big picture, but the journey will be full of turbulence.
You may agree that the second half of the memory super cycle has begun, but you also know that cyclical stocks can face a 30%+ pullback at any time.
In moments like this—"believing in the direction but fearing the process"—options are the most suitable risk management tool.
The BIT platform's options feature will officially launch this week, enabling you to:
- Hold underlying stock + Buy Put Options: Use a small premium to lock in downside risk within a manageable range.
- Buy Both Calls and Puts: Earnings season is volatile, and direction is uncertain? Bet on both sides; profit as long as the move is big enough.
- Buy Call Options only: Bullish on the second half but don't want to go all-in on the underlying stock? Use options for leveraged exposure with maximum loss limited to the premium paid.
Margin long, short selling, option insurance—three directions, one platform. In the second half of the memory super cycle, you can capture upside opportunities while protecting against downside risks during pullbacks.
Risk Warning: Option trading involves risks and may result in the total loss of the premium paid. Using margin financing further amplifies risks. The strategies and figures mentioned are for illustrative purposes only and do not constitute investment advice. Actual trading results may vary depending on market conditions. Please make decisions carefully based on your own risk tolerance.
