HSBC issued a report stating that while investor sentiment toward memory semiconductor stocks has weakened due to concerns about a semiconductor cycle peak, it is too early to worry. According to Investing.com on the 14th (local time), HSBC noted in a recent report that investors cited slowing earnings growth and weakening stock price momentum as major concerns, but the firm assessed that new growth drivers are emerging for memory semiconductor companies. The analysis comes as market participants debate whether the memory semiconductor cycle has reached its peak, with factors including Meta's cloud server market entry and aggressive production capacity expansion by manufacturers raising supply-demand concerns.
HSBC Identifies Multiple Growth Catalysts for Memory Sector
HSBC expects High Bandwidth Memory (HBM) prices to increase driven by DRAM price rises, with average selling prices (ASP) likely to rise further as next-generation HBM4 adoption accelerates. The firm also cited growing demand for NAND driven by SO-CAMM2 (next-generation notebook memory standard) growth and expanding high-performance memory demand for AI agents as positive factors.
Long-Term Supply Contracts Expected to Improve Valuation
HSBC analyzed that the expansion of 3-5 year long-term supply contracts will increase earnings visibility for the next 2-3 years and reduce profit volatility, potentially leading to valuation improvements.
HSBC Compares Current Cycle to 1990s PC Supercycle
HSBC compared the current memory market conditions to the 1990-1995 personal computer (PC) supercycle, forecasting that the spread of agentic AI will increase work productivity and transform work environments. The firm diagnosed that the possibility of cloud service providers (CSPs) reducing capital expenditures amid intensifying competition is limited.
HSBC also expected that as the HBM4 transition progresses, HBM price increases will be larger than those for general-purpose DRAM.
SK Hynix Named Top Pick with HBM4 Market Leadership
HSBC presented SK Hynix as its top pick among memory semiconductor stocks. The firm based this recommendation on SK Hynix's high proportion of HBM and SO-CAMM2 products, and expectations that the company will maintain a 50-55% market share in the HBM4 market in 2027.
Samsung Electronics Maintains Buy Rating on Multiple Factors
HSBC maintained a buy rating on Samsung Electronics, positively evaluating the possibility of HBM4 competitiveness recovery, foundry business improvements, and potential for additional general-purpose DRAM price increases in the second half of this year.
Market Concerns Include Cycle Peak and Supply Expansion
Market concerns about the memory semiconductor cycle reaching its peak have recently emerged. Factors cited include the possibility that Meta's entry into the cloud server market could slow future capital expenditure growth, and potential supply-demand deterioration due to aggressive production capacity expansion by memory semiconductor manufacturers.
Additional risk factors identified include the possibility that customers may lower product specifications as memory costs increase, delays in new technology adoption, and aggressive expansion by Chinese manufacturers.
SK Hynix ADR Rebounds 27% After Initial Decline
SK Hynix's American Depositary Receipt (ADR) plummeted nearly 10% on the 13th, its second trading day, but closed overnight at $193.92, up 27.29% from the previous trading day.
FAQ
What new growth drivers did HSBC identify for memory semiconductor stocks?
HSBC identified several growth drivers including HBM price increases driven by DRAM price rises, accelerating HBM4 adoption, SO-CAMM2 growth for next-generation notebook memory, and expanding high-performance memory demand for AI agents. The firm also noted that 3-5 year long-term supply contracts will increase earnings visibility and reduce profit volatility.
Why did HSBC name SK Hynix as its top pick among memory stocks?
HSBC selected SK Hynix as its top pick based on the company's high proportion of HBM and SO-CAMM2 products, and expectations that SK Hynix will maintain a 50-55% market share in the HBM4 market in 2027. The firm also maintained a buy rating on Samsung Electronics citing HBM4 competitiveness recovery potential and foundry business improvements.
How did SK Hynix ADR perform in recent trading?
SK Hynix's American Depositary Receipt (ADR) fell nearly 10% on the 13th during its second trading day after listing, but rebounded sharply in overnight trading, closing at $193.92, up 27.29% from the previous trading day.
