Seagate’s sharp drop spills over into Taiwan’s stock market memory stocks! Samsung’s former DS president: Chips may start to fall in the second half of next year

Seagate's slow capacity expansion caused a sharp drop in stock price, dragging down the Taiwanese memory group. Former Samsung DS president also warned that, as Chinese capacity rapidly expands and AI investment benefits fall short of expectations, memory chip prices may face a decline in the second half of next year.

Capacity can't keep up with demand, Seagate plunge impacts memory stocks

Global hard drive and memory giant Seagate's stock price plummeted during the early hours of U.S. trading, closing down over 6%. The main reason for the plunge was that Seagate CEO Dave Mosley revealed that adding production equipment or expanding factory space to produce more chips would take too long.

He emphasized that even if more capacity is eventually obtained, this decision would slow the growth rate of the technology. These comments sparked concerns among market investors, with questions arising about whether the supply chain can meet the huge demand driven by AI development.

Seagate's industry peers' stocks were sold off. Including Micron, SanDisk, and Western Digital, their stock prices were also affected, all falling about 5% at close.

Image source: Google Finance Seagate's stock price plummeted during the early hours of U.S. trading, closing down over 6%.

Seagate's plunge impacts Taiwan's memory stocks

Taiwan stocks opened this morning, with memory group stocks also affected. Memory controller chip giant Phison (8299) tumbled nearly 10%, with the stock price dropping to 2,465 NT dollars; Nanya Technology (2408) fell more than 9%, to 277.5 NT dollars; Winbond Electronics (2344) also declined nearly 9%, with trading volume exceeding 127k shares.

Other stocks including Silicon Motion (2451), ProMOS (8271), Powertech Technology (4967), and Adata (3260) also saw declines of about 3% to 5%, with the overall group showing a serious weakness and downward trend.

Image source: CMoney Seagate's stock plunge impacts Taiwan's memory group

Former Samsung president warns memory chip prices may fall next year

The supply and demand structure of the global memory market is hiding variables. According to South Korean media "Seoul Economic Daily," Kyung Kye-hyun, former president of Samsung Electronics' semiconductor division, publicly stated at the 285th forum of the Korea Academy of Engineering (NAEK) in Seoul that South Korean companies are aggressively expanding memory capacity.

He cited data from multiple international market research firms predicting that, as global memory capacity rapidly expands, supply will significantly increase by the second half of next year, leading to a reversal in memory chip prices, with the effects fully manifesting by the first half of 2028.

Kyung Kye-hyun further pointed out that if large tech companies' capital expenditure returns fall short of expectations, these companies are likely to cut back on AI investments. At that point, the entire market will face not only downward price pressure but also the risk that memory demand itself may shrink after 2028.

Additionally, Kyung Kye-hyun openly stated that South Korea's semiconductor industry faces serious structural problems.

Although South Korea holds up to 70% of the global DRAM market share, its global market share in chip design (fabless) is only about 1.5%. Compared to Taiwan's complete supply chain, South Korea lacks a comprehensive semiconductor ecosystem that includes chip design.

Therefore, he recommends that South Korea must move toward becoming a deep tech manufacturing nation, developing system semiconductors and autonomous AI technologies, and effectively integrating AI into existing manufacturing advantages.

Is the super cycle of memory peaking? Still to be observed

The current super cycle in the memory market largely depends on the continued expansion of capital expenditure by tech giants.

In recent months, the demand for building AI data centers has driven large tech companies to continuously increase procurement of graphics processing units (GPUs), high-bandwidth memory (HBM), and high-capacity DRAM, making memory stocks one of the favorite investment targets among global investors.

However, from Seagate's capacity expansion delays causing a stock price crash to Kyung Kye-hyun's warnings, all indicate underlying correction pressures in the supply chain. Whether this AI-driven memory investment frenzy is about to end or enter a new phase of industry restructuring remains to be closely watched by the market.

Further reading:
DDR5 32G breaks 10,000 NT dollars! AI demand concentrates, memory industry cycle for the first time in 25 years

AI's demand for memory causes shortages, affecting gaming consoles! Rumors suggest PS6 and new Xbox may be delayed