Memory-chip shares sold off sharply on Nov. 5 despite record profits, as traders focused on slower price increases, weakening demand from smartphones and PCs, and emerging constraints on the data-center construction that has supported the artificial-intelligence spending cycle.
SK Hynix fell 9.46% to 1.264 million won, leaving the stock 57.7% below its June 25 peak of 2.987 million won. Samsung Electronics declined 7.57%, while U.S.-listed memory companies also fell during the session. The retreat came after SK Hynix reported third-quarter operating profit of 83.33 trillion won and an operating margin near 80%, while Samsung reported operating profit above 107 trillion won.
The market reaction points to an increasingly demanding outlook for memory manufacturers: exceptional current profitability is being weighed against signs that the pace of price growth is cooling and that end markets may struggle to absorb further cost increases.
Memory prices are still rising, but at a slower pace
TrendForce's tracking of mainstream DRAM contract prices shows the sector has moved beyond the explosive increases seen earlier in the year. Contract prices rose between 90% and 98% quarter on quarter in the first quarter, then increased by 58% to 63% in the second quarter. By the third quarter, the gain had narrowed to 13% to 18%.
That moderation does not mean prices have begun falling. TrendForce raised its forecast for fourth-quarter PC DRAM contract-price gains on Oct. 30 to 13% to 18%, from its previous forecast of 10% to 15%. The research firm cited suppliers' decisions to devote more capacity to server-grade memory, tightening supply for PC-focused products.
The change in the price-growth trajectory is central to the market's concern. Memory companies have benefited from an unusually tight supply environment and booming demand for high-performance memory used in AI servers. Their earnings have climbed rapidly as selling prices increased faster than costs. Once price increases slow, traders tend to reassess how long margins near 80% can last.
Market reports have also circulated around the prospect that Samsung and SK Hynix may reduce PC DRAM supply by more than 40% next year. Such reductions could support prices, though they also underline how heavily suppliers may need to manage output as demand from traditional consumer electronics remains weak.
Consumer demand is limiting room for higher costs
Kioxia's latest results provided a direct indication of the strain in consumer-facing memory markets. The Japanese flash-memory maker reported revenue of roughly 2.48 trillion yen and operating profit of about 1.99 trillion yen for the July-to-September period, according to its Oct. 30 disclosure. That produced an operating margin above 80%.
Yet Kioxia's guidance for the December quarter implied revenue growth of only about 1% from the previous quarter. The company pointed to weak smartphone and PC demand, along with limited willingness among device makers to absorb higher memory costs. Its shares declined following the disclosure.
Smartphone shipment data reinforces that pressure. Counterpoint Research said in an Oct. 26 report summary that global smartphone shipments fell 20% year on year in the third quarter, the lowest third-quarter level since 2012. A weaker handset market reduces the industry's ability to pass expensive memory components through to consumers.
Qualcomm also flagged the impact of rising memory costs on Nov. 4. During its earnings call, the company said memory pricing was compressing the scale of the handset industry, while its handset-business revenue fell 26% from a year earlier, according to the call recap.
Apple offered a similar warning. John Ternus, Apple's chief financial officer, said on the company's Nov. 2 earnings call: "What we're seeing with memory pricing right now is unprecedented." Apple guided for December-quarter gross margin of 45% to 46% and cited higher memory costs among the factors affecting profitability.
The comments from Apple, Qualcomm and Kioxia place a limit on the industry's pricing power. Memory suppliers can restrict capacity, but device makers facing weaker sales and squeezed margins may reduce orders, delay product launches, or seek cheaper configurations.
Data-center expansion faces local resistance
The AI-server market has been the strongest source of demand for advanced DRAM and NAND products, particularly high-bandwidth memory. That demand now faces a separate risk: local opposition to the electricity use, land requirements and infrastructure demands of large data centers.
Ballotpedia's tally through Nov. 4 showed that 46 of 47 decided local votes related to data centers favored some form of restriction. The measures ranged from outright bans and construction moratoriums to stricter conditions for projects receiving tax incentives and requirements for further public votes.
Other tallies used narrower or different definitions of relevant ballots. One count recorded 38 restrictions passing in 44 related votes, while Senator Bernie Sanders cited 43 communities backing limits out of 44. No nationwide pause on data-center construction was under congressional review.
The local measures do not automatically halt planned AI infrastructure projects. Yet they could lengthen permitting, add costs and complicate access to power in regions where large computing facilities are planned. That would affect the timing of server deployments, which in turn shapes demand for the high-end memory products that have driven the sector's earnings boom.
Global energy figures add context to those local disputes. Large data centers consumed 415 terawatt-hours of electricity in 2024, or roughly 1.5% of global power use, according to the energy estimates cited in the supplied materials. Consumption is projected to approach 945 terawatt-hours by 2030. The issue is especially acute where grid capacity, transmission lines and available land have not expanded as quickly as computing demand.
Long-term supply deals offer visibility, not immunity
SK Hynix said in an Oct. 27 disclosure that long-term agreements covered more than half of its planned capacity for 2027 and 2028. The company expects memory shortages to continue through 2030. Micron chief executive officer Sanjay Mehrotra also said, according to a Nov. 3 report summary, that supply conditions would improve only gradually by 2028.
Those commitments give manufacturers a degree of sales visibility, particularly for advanced products tied to data-center customers. They do not guarantee that current margins will remain intact if contract-price gains flatten or if customers reassess data-center spending schedules.
China's growing memory industry adds a longer-term supply variable. TechInsights commentary cited in Oct. 5 and Oct. 19 report summaries said ChangXin Memory Technologies had entered volume production with its fifth-generation DRAM process and could potentially double capacity by 2028 under the most aggressive scenario. Yangtze Memory Technologies was also described as continuing NAND upgrades.
Valuations have fallen sharply as the outlook has become less certain. A Nov. 4 report summary estimated that major memory shares were down about 45% on average from their 2026 highs, compared with a roughly 29% decline in the Philadelphia Semiconductor Index. The same material placed the sector's 2027 forward price-to-earnings ratio near 3.5 times, with another estimate putting it at 3.6 times.
The next earnings reports will test whether slower price increases can coexist with the industry's extraordinary current profitability. The most immediate signals will come from DRAM contract negotiations, demand from handset and PC makers, and whether power and permitting constraints delay the data-center projects underpinning AI-memory orders.
To navigate volatility like this memory-chip selloff, learn how technical analysis sharpens entries across markets.
Disclaimer: The content on this page is provided for general informational purposes only and does not represent the views or financial advice of Toobit. We make no guarantees regarding the accuracy or completeness of this information and shall not be held liable for any errors, omissions, or outcomes resulting from its use. Investing in digital assets involves risk; users should independently evaluate their financial situation and the risks involved. For further details, please consult our Terms of Service and Risk Disclosure.
