u/F2PBTW_YT

Talking about cycles means you are approaching DRAM from a wrong perspective. DRAM (the actual DDR) are commodities which trade extremely competitively which eventually results in oversupply pricing cycles. HBM on the other hand, which is what the big 3 companies are now selling, is not a commodity. It does not follow demand and supply crunches. These are proper products that are priced to scarcity and are contractually bound. Their sole purpose is for pairing with AI-related accelerators like Nvidia chips and does not fulfill the typical memory needs of your phone and laptop. Spot prices of DDR are going up now because the big 3 are shifting their production focus to HBM and this is where CXMT comes in to sweep up the demand for DDR. CXMT does NOT produce HBM so HBM is still in continued scarcity until 2028/2029 based on current demand.

Over the past 2 months, the market had succumbed to mad euphoria and it was bloody for an entire major economy like South Korea. It is totally normal (and expected) to see a sharp reversal and a prolonged period of bleeding as paper-handers were and are so keen to let go their shares for a loss at every sharp upwards spike. I firmly believe the bleeding will continue with volatility decay being a problem for at least the next month. And I am saying this as a shareholder of RAM (2x DRAM). We will keep seeing upwards pressure with immediate "sucker's rallies" for a while because the IV on DRAM is 70+% and RAM is 140+%. These are ridiculously large numbers.

Here's what I am doing. I am taking every opportunity to short puts (8 or 9 strike) and buy shares at a discount while closing those puts and selling those shares at every spike, slowly reducing my average cost over time and gradually DCA-ing. It is painful, but with the high IV it only makes sense to short those puts (NOT buy calls). I am obviously not selling covered calls because the train will arrive any time. Plan your entry. For those who don't understand options, don't bother. Just diamond hands/DCA - or neither.

#the bad

Of course, I may be totally wrong and 10 other competitors start taking on the HBM production capabilities to fight the contractual prices down and everything goes to shit. But I honestly don't believe HBM fabs can be built so quickly since even SK Hynix, with the excess cash, expects 3 more years for new fabs to come online. However, is also possible that the whole AI momentum slows down and orders are culled. Critically, Google recently restructured their DeepMind focus group with John Jumper gone to Anthropic and Demis Hassabis leaving the helm which isn't great news for Gemini in my humble opinion. Meta pulling out of the race recently was also really bad news for AI in general. Excess compute means fewer demand for chips and memory. With that said, I don't think the world is going to slow down on the demand for compute. Many big corporations are only NOW starting to incorporate AI into their workflows/policy/reporting and I am not even talking about MNCs. Many non-US companies are picking up the pace and taking on enterprise subscriptions. My own company only just signed up for Copilot (trash) premium to wet their feet and being a user of Claude Professional I know for a fact they will want to pay more for a better agentic model next time. The number of industries that AI will be a core component of is also staggering (robotics, SaaS, consultancies, banking, commodities, food and even p*rn).

Give the memory industry another 1 month of breathing space and then let's talk again. For now, STFU about cyclicality.

Seen a lot of posts wrongly claiming DRAM to be a scam. The tl;dr is it is not a scam.

There are a few things that allows DRAM to function. Firstly, it is not a MU/SK Hynix/Samsung ETF. It is 76% in those and 24% in the rest of all memory. If the top 3 are performing but the 24% aren't, you will not see the same gains.

Secondly, due to the sheer weight of the top 3 holdings, the ETF cannot hold 100% shares because of fund regulations. They hold part in shares and part in derivatives - swaps to synthetically match the economic exposure of holding shares. Because of the need for swaps, there must come a cost. This cost prices above the management fees btw. They use the 25% of the fund NAV in T Bills solely as swap collateral and financing. However, the T Bills do not dilute the fund and instead gives you some additional yield. I.e. The fund has an itemized holding totalling about 125%.

Thirdly, there's a phenomenon of premium collapse. When an ETF is overbought, it starts to trade at a premium over its underlying. Authorized Participants will periodically crush the extra premium for their own gain to normalize the value of the ETF. I'm not surprised that DRAM must have been trading at a huge premium following its recent hype. This will normalize over time.

Fourthly, FX is also another factor to beat down DRAM but it is actually working in DRAM's favour now so I will not discuss it.

There are lots of structural costs to setting up DRAM so it is not as simple as it appears to be. However, I would still recommend holding DRAM over going long underlying shares.

1. SKHY: this ticker is supposed to match 000660 1:10 in value. Fx considered, it is actually traded at a 20-25% premium. Hedgies will eventually find a way to collapse the premium. This can be done by short SKHY long 000660 and then converting the KR shares to ADRs. You can't do so that don't think about it.

2. 005930 (Samsung): most brokerages don't give you that ability to invest directly into KR shares. Even if they do, you'd be paying multiple layers of commissions from FX and share purchasing. There's also FX exposure risk.

3. MU: Probably the best and saved for last. The only issue is counterparty exposure risk. You're betting 1 of the 3 giants will come on top as the winner in this bloody race. I wouldn't be so sure of that as KR is a strong leader in all things electronic. 50% of their economy is also in SK Hynix and Samsung and they will not let their giants fall.

My 2 cents.