Silver

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 Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noreferrer noopener" class="deco-link">website policy</a>&nbsp;prior to making financial decisions.
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<p class="has-drop-cap">Sales and profits of memory chip manufacturers have been <a href="https://www.wsj.com/articles/the-memory-chip-nightmare-is-nearly-over-e4e571e6" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">trending downward</a> lately as sky-high demand driven by the COVID-19 pandemic started to dwindle in 2022. However, interest in these companies and their stocks could witness a resurgence as a new demand driver emerges amid the current <a href="https://tokenist.com/ai-can-boost-net-margins-for-companies-by-4-over-a-decade-report/" rel="dofollow" class="deco-link">AI craze</a>.</p> 
<h3 id="memory-chipmakers-grappling-with-waning-demand-but-ai-could-come-to-the-rescue">Memory Chipmakers Grappling With Waning Demand, But AI Could Come to the Rescue</h3> 
<p>Stock prices of memory chip manufacturers have faced mounting challenges recently compared with their 2022 peaks. This decline has been attributed to a growing stockpile of inventory stemming from the diminishing demand.</p> 
<p>However, a new demand catalyst has arisen thanks to the unprecedented boom in the AI sector. Notably, <a href="https://tokenist.com/how-the-ai-boom-could-be-nvidias-iphone-moment/" rel="dofollow" class="deco-link">the biggest makers of AI chips, like Nvidia</a> (NASDAQ: $NVDA), have been switching to a new computer memory interface known as High Bandwidth Memory (HBM), enabling significantly faster data transfers.&nbsp;</p> 
<p>According to research firm TrendForce, global demand for HBM chips is projected to surge by 60% year-over-year in 2023 and by an additional 30% next year. Currently, South Korean semiconductor company SK Hynix is the only company producing the most advanced generation of HBM chips – one factor behind its strong stock price ascent this year.</p> 
<p>But other industry giants are also trying to gain from the <a href="https://tokenist.com/ai-firms-scramble-for-power-as-chip-demand-outpaces-supply/" rel="dofollow" class="deco-link">skyrocketing demand for AI chips</a>. One of these companies is the electronics giant Samsung, which, according to analysts, is estimated to see 10% of its DRAM revenue represented by HBM sales in 2024.&nbsp;</p> 
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<h3 id="samsung-operating-profit-down-78-in-q3-but-potential-upside-remains">Samsung Operating Profit Down 78% in Q3, But Potential Upside Remains</h3> 
<p>Expectations that the new HBM chips could revive the demand for global chipmakers could lead to a much-needed boost to these companies’ sales and, consequently, their stock prices.</p> 
<p>As the coronavirus pandemic-driven demand levels began to cool down in 2022, memory chip prices have plunged more than 50% since their peaks. Last week, Samsung said in a preliminary earnings report that its operating profit <a aria-label="slumped 78% in Q3 (opens in a new tab)" href="https://www.barrons.com/articles/samsung-chip-stock-micron-intel-4f2b89a4" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">slumped 78% in Q3</a> from a year ago. However, it tripled quarter-over-quarter.&nbsp;</p> 
<p>Because of this, Samsung recorded limited gains in the stock market, climbing around 22% year-to-date. But, if the South Korean tech behemoth can leverage the HBM demand like its compatriot SK Hynix, it would open up fresh upside to the company’s stock.&nbsp;</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe> 
<p><em><strong>In your opinion, which company will dominate the AI chip market in the long term? Let us know in the comments below.&nbsp;</strong></em></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/memory-companies-are-having-a-bad-year-but-an-ai-silver-lining-emerges/">Memory Companies are Having a Bad Year, But an AI Silver Lining Emerges</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Memory Companies are Having a Bad Year, But an AI Silver Lining Emerges

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