On September 15, Morgan Stanley launched a report drastically decreasing SK Hynix's goal inventory worth by 54%, from 260,000 received (roughly $200) to 120,000 received, and adjusting Samsung Electronics' goal inventory worth downward by 27.6%, from 105,000 received to 76,000 received. The causes cited have been a lower in demand for normal DRAM resulting from diminished smartphone and PC demand and an oversupply of high-bandwidth reminiscence (HBM), main to cost drops. Morgan Stanley additionally downgraded its funding opinion on the Korean tech sector from “neutral” to “cautious.”
The report, titled “Winter Looms,” follows final month's “Prepare for the Peak,” which warned of an AI bubble. It constantly took a pessimistic view of Korean reminiscence semiconductor firms, citing sluggish demand for normal DRAM and an oversupply of AI-specific HBM.
Morgan Stanley predicts that subsequent yr, the provision of HBM by reminiscence firms will attain 250 billion gigabits (Gb), exceeding the demand (150 billion Gb) by 66.7%. It additionally forecasts that Samsung Electronics' full-scale entry into the HBM market can be a significant trigger of the oversupply.
The semiconductor trade views this outlook as excessively pessimistic. They argue that Morgan Stanley ignored the traits of the HBM market, which produces personalized merchandise with buyer approval. SK Hynix and Samsung Electronics have publicly introduced that “HBM volumes are sold out until 2025.”
Critics additionally argue that Morgan Stanley underestimated the AI investments by massive tech firms, that are the premise for HBM demand. The report predicts that the AI funding development charge of 10 main tech firms will drop considerably from 52% this yr to eight% subsequent yr. This contrasts with Bloomberg's forecast of a 33.7% enhance this yr and a 13.4% enhance subsequent yr for 13 main tech firms. Mizuho Securities additionally said, “The HBM market will continue to grow as AI server investments increase.”
Morgan Stanley additionally expects normal DRAM to peak within the fourth quarter of this yr and decline from subsequent yr till 2026, citing the dearth of restoration in IT product consumption that makes use of semiconductors. The international PC and smartphone markets are certainly sluggish, with experiences indicating that the pre-order quantity for Apple's ‘iPhone 16' sequence throughout the first weekend of its launch decreased by 13% in comparison with its predecessor. However, Samsung Electronics and SK Hynix said, “The demand for memory for smartphones and PCs is neither decreasing nor increasing.”
Many consider that Morgan Stanley's outlook on the overall DRAM market is overly pessimistic in regards to the “mismatch between supply and demand.” Morgan Stanley cited subsequent yr's reminiscence capital expenditure reaching $100 billion (about 133 trillion received) as one of the explanations for the oversupply. However, contemplating that semiconductor firms are specializing in high-value merchandise like HBM and enterprise SSDs, many analysts consider that the chance of an oversupply of normal DRAM is low.
Morgan Stanley's dismissal of Samsung Electronics and SK Hynix's declare that “focusing on HBM production will inevitably reduce the supply of general DRAM” as “baseless” additionally lowers the credibility of the report. Additionally, the report omitted the rising market for AI PCs and AI telephones, which use greater than twice the quantity of normal DRAM and NAND flash as common merchandise.
An trade insider criticized, “Morgan Stanley has often shown an ‘Indian rain dance’ behavior, continuously issuing negative reports until the market downturn.”
