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Last Monday FTAV explored how the highly concentrated memory chip industry was driving a wild stock market rally. And memory mania doesn’t seem to be slowing down. A whole lot has happened just since last week.
Samsung reported bumper earnings but apparently not enough for its stock to keep up with sky-high expectations. SK Hynix had a $26.5bn ADR offering in the US which seems to have gone pretty well. Other stocks don’t seem to know what to do. And a memory controller design company called ScaleFlux is pondering an IPO, according to The Information.
Alphaville couldn’t find out much about ScaleFlux besides a few press releases and articles in industry publications. Per their website it “accelerate[s] data movement between compute, memory, and storage to scale AI, data centre and enterprise infrastructure”.
SemiAnalysis, the bible of semiconductor industry news, has written little about the company outside of a mention from 2022. Apparently, the company was one of the first to deploy production-qualified computational storage, meaning it was maybe ahead of the curve several years ago in integrating chips and processors with storage to avoid bottlenecks. PitchBook estimates it has raised $288mn from investors, most recently at a $1bn valuation in 2021.
Does everyone know surprisingly little about a company considering a big IPO? Is memory in a weird and crazy hype cycle? Do most people buying memory stocks not know the difference between FPGAs, ASICs, and ARM cores? And did investors only just recently realise that (shockingly) computers use RAM?
We don’t know. But when a category of stocks is putting up 15-fold quarterly profit surges and tumbles upon earnings that show 19-fold year-on-year growth it’s clear we are in a weird moment for a weird market.
There’s an old saying on Wall Street that when the ducks are quacking you feed them. And right now investors are quacking for memory, and finance types are understandably keen on slaking their appetite. Reports that a little-known 12-year-old memory “start-up” is readying an IPO is a good example of the phenomenon.
Of course, the memory mania could be coming to an end. The big memory makers — primarily Micron, Samsung and SK Hynix — have all fallen sharply from their June peaks on fears that the party might be over.
On the other hand, prices for memory chips at DRAMeXchange are still creeping up, and the DRAM ETF took in another $1.9bn last week, lifting its one-month inflows to nearly $9bn. It doesn’t seem like the memory excitement has faded.
Anyway, it’s probable that things will stay memorable in the coming weeks (sorry).
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