Leonid Zadorozhnykh @ProDoser: "On Monday more than a..."

Finland

On Monday more than a trillion dollars vanished from US stocks, and over half of it came out of six memory chip companies. My portfolio took the hit. I did not sell anything. Two headlines caused it. China began producing its own DUV chipmaking machines, the tools ASML has dominated for twenty years. And CXMT, China’s biggest memory maker, went public in Shanghai and jumped 472% on day one. The market read one story from that. China builds its own equipment, floods the world with cheap memory, everyone’s profits shrink. $MU (Micron Technology, Inc.) fell about a third from its June high. ASML dropped 7% in a day. Here is the part that got skipped. Chip machines print circuits using light. Finer light, finer pattern. DUV is a thick pen tip. EUV is about fourteen times finer. You can still draw fine lines with a thick pen, but you have to go over the same spot again and again, and every pass costs money and risks a smudge. That is why Chinese factories pay far more per usable chip. And the industry is moving toward EUV, not away from it, because it is the cheaper way to do the job. China cannot buy EUV at all. $ASML (ASML Holding NV) will ship around 130 DUV machines this year. China’s plan is five. CXMT is the more serious story, and it still has limits. Their memory costs over 30% more per chip to make. In the high end memory used for AI they are roughly three years behind. Revenue jumped 719% last quarter while shipments barely moved, so that was prices rather than new supply. Now the actual reports. $MU went from about $9 billion of quarterly revenue a year ago to over $41 billion, and guided the next quarter to $50 billion. It can only supply half to two thirds of what customers are asking for. $SKHY (SK hynix Inc ADR) posted record revenue and profit this morning and the stock fell anyway, because analysts wanted more. Management said it sees no sign of AI spending slowing and has signed five year supply contracts with around ten customers. Nobody signs five year deals expecting a price crash. $VRT (Vertiv Holdings Co) which builds data centre power and cooling, reported this morning too. Sales up 24%, guidance raised, and customer prepayments doubled in six months. $GEV (GE Vernova LLC) which makes the turbines behind all of it, is sitting on a $176 billion backlog and already selling its 2030 production. Meanwhile $GOOG (Alphabet) raised its 2026 building budget to around $200 billion. Microsoft reports tonight and is expected to guide higher still. Buyers are spending more, suppliers are earning more, and the shares went down. DeepSeek was going to end this. So was every efficiency breakthrough since. Each time, cheaper computing led to more of it being built. So I did nothing. My power and grid holdings cushioned the fall, which is why I own them. My memory position is down and I am comfortable holding it, because the contracts behind it run to 2029 and 2030. My investment horizon is years, not next quarter. If China really is closing a twenty year gap, that shows up in quarterly numbers over years, not next Monday afternoon. What would you need to see before calling this more than a price drop? ℹ️ Disclaimer: This post reflects my personal opinions and market observations and is not financial advice. 🤝 You can start copying my trades from just 300$ - check pinned post for more details. ⚠️ Past skyrocketing gains are not a guarantee of future results.

Not investment advice. The author may have financial interests in the mentioned instruments.