Stanphyl Capital
Managing Member & Portfolio Manager at Stanphyl Capital, Value Investor
Cheap, open-source AI looks incompatible with expensive data-center buildouts that pay very high chip prices, one reason to stay short the iShares Semiconductor ETF. Companies are racing for cheaper AI options, and @financialjuice reports Apple is discussing buying memory chips from Chinese companies, suppliers not in the ETF, as others presumably will too. x.com x.comÂ
Memory makers' pricing power looks unsustainable because betting on a long-term bottleneck is betting against human ingenuity. Memory players are squeezing customers in a way ASML and TSMC historically chose not to; Micron may have the right to get back at Apple, but that hurts long-term relationships, and disregarding the non-AI business could come back to bite. Even if inference demand drives memory prices, as @bnemethbrown argues, whether regular DRAM gets commoditized is still open. x.com … Show more
Shorting Apple should be the play tomorrow on a new Bloomberg report, via @StockMKTNewz, that Apple is negotiating to buy memory chips from two Chinese semiconductor makers on a Pentagon blacklist to ease the impact of the global memory shortage. x.comÂ
SOXX's extreme selling sets up a semiconductor relief bounce next week before another leg lower. Per Heis, SOXX had its third-highest red-volume week and tied its longest nine-day losing streak; the four other top red-volume weeks averaged an 8.4% gain the following week. This is not a heavy bet: preserve capital, keep short-term setups small and accumulate core dips for the long term. x.comÂ
CXMT's refusal to sell DDR5 to a Taiwanese server maker adds evidence that it will not flood the memory market with cheap supply and pressure prices for Samsung Electronics and SK hynix. Per Taiwanese media, a veteran industry analyst also said Apple found CXMT's memory as expensive as the three major suppliers' and that CXMT had no intention of lowering prices. x.comÂ
Apple stock remains unattractive as memory costs threaten demand and supply. Nikkei reports memory-driven iPhone price hikes dampened demand, with October Pro and Pro Max component orders cut at least 15%; Chinese media instead cite a slight Pro dip and Pro Max rise. Apple may still lack long-term memory supply deals, according to market chatter; Korean analysts expect sharp NAND and DRAM price hikes for Apple early next year. x.com x.com x.com x.comÂ
The US government urging Apple to stop sourcing memory chips from China, per Kalshi, makes Chinese memory maker CXMT an obvious short. The pairing is short Apple and CXMT, long Micron and Sandisk. x.comÂ
Apple lags on AI and suffers from AI-driven cost shocks to components such as memory and storage. x.comÂ
AI-related numbers will prove effectively made up, setting up a 'biblical' rotation out of semiconductor stocks (SOXX) by the time it is done. Confidence that the capex bubble has burst is high. x.comÂ
Semiconductor stocks feel overextended and need a period of digestion. x.comÂ
Apple is the obvious flight to safety in US markets because it wins on access to cheap memory and on open-source AI. x.comÂ
