Memory shortage to last until 2030's:
According to SK Hynix's CEO today at the Nasdaq IPO press conference.“The rate at which demand is increasing far exceeds the speed at which we can increase supply.”Customers are signing long-term contracts because “they believe that the shortage situation will last for longer.”Coupled with the fact that there are significant lead times and contraints involved with expanding/building fabs.I think it's evident now that a structural change has already taken place in the memory market.Which is confirmed by the Chairman also today:“It’s not a cyclical business anymore. Even in a downturn, the long-term agreements help maintain volumes and memory prices.”Yep, LTAs with minimum volume commitments and price floors. So, for now, there won't be significant margin compression back down to historic ~50-60% levels like I've seen proposed recently.Not to say that this will last forever, cos it won't since it'll all boil down to demand/supply gaps - which are currently expanding at a rapid rate.
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
Post your comment
No Comments