Cutting SK Hynix's target price, warning of the imminent arrival of a memory chip winter! Morgan Stanley's pessimistic research report has sparked opposition.

Recently, Morgan Stanley released a research report, slashing the target price of SK Hynix by 54% from 260,000 Korean won to 120,000 Korean won, and reducing the target price of Samsung Electronics by 27.6% from 105,000 Korean won to 76,000 Korean won. The reason cited was that due to a decrease in demand for general-purpose DRAM caused by reduced demand for smartphones and PCs, as well as oversupply of High Bandwidth Memory (HBM), prices have fallen. Morgan Stanley also downgraded its investment rating on Korean tech stocks from "neutral" to "cautious". The report, titled "Winter is Coming", follows last month's "Prepare for the Peak" report, which warned of an artificial intelligence bubble. The firm has maintained a pessimistic view on Korean storage semiconductor companies due to soft demand for general-purpose DRAM and oversupply of AI-specialized HBM. Morgan Stanley predicts that HBM supply from memory chip companies will reach 250 billion Gb next year, exceeding demand (150 billion Gb) by 66.7%. The firm also forecasts that Samsung Electronics' full entry into the HBM market will be a major factor contributing to oversupply. Criticism However, the semiconductor industry believes this outlook is too pessimistic. They argue that Morgan Stanley overlooks the nature of the HBM market, which produces customized products when approved by customers. SK Hynix and Samsung Electronics have publicly stated that "HBM is sold out by 2025". Critics also argue that Morgan Stanley underestimates the AI investments of large tech companies, which are the basis of HBM demand. The report predicts that the growth rate of AI investments from the top 10 tech companies will drop significantly from 52% this year to 8% next year. This contrasts sharply with a forecast of 13 major tech companies which are expected to grow by 33.7% and 13.4% this year and next, respectively. Mizuho Securities states that "the HBM market will continue to grow with the increasing investment in AI servers". Morgan Stanley also predicts that general-purpose DRAM will peak in the fourth quarter of this year and decline from next year until 2026 due to a lack of recovery in semiconductor consumption for IT products. The global PC and smartphone markets are indeed slowing, with reports indicating that pre-orders for the Apple Inc. (AAPL.US) "iPhone 16" series in its first weekend were 13% lower than the previous generation. However, Samsung Electronics and SK Hynix have stated that "demand for memory in smartphones and PCs has neither decreased nor increased". Many believe that Morgan Stanley's view of the overall DRAM market being "unmatched in supply and demand" is too pessimistic. Morgan Stanley points out that next year's memory chip capital expenditure will reach $100 billion (approximately 133 trillion Korean won), which is one of the reasons for oversupply. However, considering that semiconductor companies are focusing on high-value products like HBM and enterprise solid-state drives (SSDs), many analysts believe that the likelihood of oversupply of general-purpose DRAM is low. Morgan Stanley's assertion that Samsung Electronics and SK Hynix focusing on HBM production will inevitably reduce supply of general-purpose DRAM is considered "unfounded" and reduces the credibility of the report. Furthermore, the report overlooks the growing market for AI PCs and AI smartphones, which use double the amount of DRAM and NAND flash memory compared to regular products. A industry insider criticized: "Morgan Stanley often releases negative reports, especially when the market is sluggish."