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Feb 17
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WATCH
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Mark Cranfield
Cross Asset Strategist, Bloomberg
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These three companies are the dominant AI hardware players in Asia, trading at "multi-year highs" with "very stretched valuations," having absorbed tremendous capital flows. Asian markets are currently closed for Lunar New Year. Liquidity mismatch risk. If US tech/AI equities slip while Asian markets are closed, investors cannot adjust positions. When Asian markets reopen, there is a high risk of a "rush for the exit" to unwind these crowded, high-valuation trades, especially since they lack the defensive bid of US hardware players during the holiday. WATCH for a pullback upon market reopen; potential SHORT if US tech weakness persists this week. US Tech rebounds strongly before Asian markets reopen, validating the high valuations. |
Bloomberg Markets
US-Iran Nuclear Talks in Geneva; Trump Will B...
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Feb 16
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AVOID
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Neil Campling
Tech/TMT Analyst
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"Samsung is also saying they will be impacted negatively because they make smartphones, PCs and TVs... inflate prices on everything from laptops to cars." While Samsung makes chips, their massive exposure to consumer electronics means they are a net victim of rising component costs. Higher memory costs crush margins on hardware or kill demand if passed to consumers. AVOID hardware manufacturers with high memory exposure who lack the pricing power of the hyperscalers. Samsung's memory division profits outweighing their consumer electronics losses. |
Bloomberg Markets
Memory Chip Shortage is Global Crisis in the ...
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Feb 16
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LONG
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Neil Campling
Tech/TMT Analyst
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AI chips (specifically Nvidia's Rubin) use 8-10x more memory than H100s. Hyperscaler capex is $600B, but memory supply is constrained. Spot prices are estimated to be up 60% QoQ. You cannot build a fabrication plant in 3 months. The supply-demand imbalance is structural and worsening. This grants immense pricing power to the memory oligopoly (Micron, SK Hynix, Samsung). South Korea (EWY) is the geographic proxy for this trade. LONG Memory Producers and Korean Equities. Global recession crushing demand for consumer electronics (phones/PCs) which these companies also rely on. |
Bloomberg Markets
'Shared Values' discussed in Munich; RAM Conc...
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Feb 16
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SHORT
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Neil Kaplan
Bloomberg Senior Strategist
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Musk and Cook warn that memory shortages are "beginning to hammer profits" and "inflate price tags on everything from laptops to cars." Kaplan notes Samsung is "impacted negatively" because, despite making chips, they are heavily exposed to manufacturing smartphones and PCs where costs are rising. The memory shortage acts as a tax on hardware OEMs. Higher Bill of Materials (BOM) costs squeeze margins. Unlike pure-play chip makers, these companies cannot fully pass costs to consumers without hurting demand. SHORT. The "crisis" narrative suggests margin compression for heavy hardware manufacturers. If these companies successfully pass costs to consumers or if memory prices stabilize faster than expected. |
Bloomberg Markets
Musk, Cook Warn of Memory Chip Crisis as Dema...
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Feb 16
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LONG
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Min Min Low
China Correspondent, Bloomberg
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While US software/logistics stocks fall, the KOSPI (Korea) is pushing higher. Samsung is rising "inexplicably" to some, but the reporter notes Korean tech is concentrated in Hardware, not Software. Hardware is the "pick and shovel" of AI, whereas Software/Services are the victims of AI automation. Investors are rotating out of "AI Victims" (Software) into "AI Enablers" (Hardware/Memory), benefiting the Korean market. LONG Korean equities and Memory Chip manufacturers as a hedge against the US AI scare trade. Global recession dampening hardware demand. |
Bloomberg Markets
AI 'Scare Trade' Takes Hold; Talabat FY Earni...
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Feb 13
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LONG
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Mixo Das
Asia Equity Strategist, J.P. Morgan
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J.P. Morgan set a base case target of 6,000 and a bull case of 7,500 for the KOSPI. Samsung and SK Hynix are warning of supply shortages in memory chips. The memory sector is lifting the entire Asian benchmark, insulating it from the US "scare trade." The bull case assumes capital repatriation and a broadening rally beyond just two stocks (Samsung/SK Hynix) into defense and shipbuilding. LONG. The sector is benefiting from a supply/demand imbalance and rising prices across all memory categories (DRAM/NAND). Global equities entering a prolonged downturn would drag Korea down regardless of sector strength. |
Bloomberg Markets
Chinese Stocks Can't Wait for Holiday Break, ...
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Feb 13
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LONG
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Grace Tam
Chief Investment Adviser, BNP Paribas Wealth Management
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Tam states they favor "AI enablers" specifically "semiconductors, arms, the infrastructure, and especially some of the power related themes." She highlights severe shortages in memory chips and logic wafers in Taiwan and South Korea. While the market sells off "AI losers" (software), the capital expenditure on data centers is not slowing down. This creates high earnings visibility for the hardware manufacturers supplying the shortage. LONG the upstream hardware providers. A sudden halt in global AI CapEx spending. |
Bloomberg Markets
How AI Is Proving to Be a Double-Edged Sword ...
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Feb 13
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LONG
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Peter Elstrom
Senior Editor, Bloomberg Technology
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Samsung has sent its first shipment of HBM (High Bandwidth Memory) to customers. Kioxia forecasts better-than-expected operating income due to strong data storage demand. The "AI Angst" trade does not apply to the hardware enablers. Data centers require massive memory upgrades. Samsung catching up to SK Hynix creates a broader supply base for Nvidia, validating the "supercycle" in memory chips. Additionally, the Korean government is incentivizing "Ants" (retail investors) to repatriate cash into domestic stocks. LONG. Strong secular demand for memory (HBM) combined with domestic liquidity flows in Korea. Oversupply if Samsung ramps production too quickly. |
Bloomberg Markets
AI Angst Rocks Asia Markets | The Asia Trade ...
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Feb 12
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LONG
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Guy Johnson
Anchor, Bloomberg
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Lenovo and Cisco are down because "memory prices are up," squeezing their margins. ASML is seeing strong orders for AI glass. If hardware makers (Lenovo) are getting squeezed by component costs, the component makers (SK Hynix/Samsung) have pricing power. UBS notes semi margins remain extremely high (40%+) and the AI hardware trade is not over. LONG the Memory/Semi supply chain. Oversupply in memory chips later in the year. |
Bloomberg Markets
Nuveen to Buy Schroders in Near £10 Billion D...
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