Memory chip boom faces inevitable cyclical bust
The guest argued that the current pricing power of memory chipmakers is temporary and will collapse once new industry capacity comes online.
The argument
While bulls point to forward sales booked out to 2027 or 2028, Wu argued that memory remains a highly commoditized, cyclical business. He expects prices to drop sharply once new capacity from competitors, including Chinese firms entering the DRAM market, comes online.
The thesis, stress-tested
✓ What validates it
- ✓Chinese DRAM manufacturers successfully scaling production
- ✓A peak and subsequent decline in high-bandwidth memory contract prices
▸ Risks discussed
- ▸Capacity delays extending beyond 2028
- ▸Sustained demand from AI inference chips outstripping new supply
Hear it yourself
"I don't think Microsoft basically Microsoft historically has always been more conservative, and I think this is the reason why we saw a bit of pullback. And I think from that point of view, like and, again, in the case of Google and Amazon, the funny thing was that yeah. So Amazon and Google, they're like the CapEx basically picked up again in q one. But then again, both companies basically book a massive revaluation of their holdings of Anthropic to offset that. Okay? And that, of course, we know is totally, like, artificial kind of stuff. Right? I mean so I think from that point of view I mean, the"
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