Korean media: Stock surge reaches 858% — Michael Burry: "Korea's semiconductor spending drives rise, marking the beginning of the end"... How long will the storage super cycle last?

Since the start of the year, shares of U.S. memory company Western Digital have surged by 858%, with a further 10.9% gain on June 30 alone. On the same day, Wall Street’s Bernstein upgraded Western Digital’s target price from $1,700 to $3,000 in one leap. As of June 30, driven by semiconductor momentum, the S&P 500 rose 14.9%, and the Nasdaq climbed 21.4% in the second quarter—marking the largest single-quarter gains in six years. On July 1, this wave of enthusiasm spread to Asia: after opening, Samsung Electronics rose 1.05%, while SK Hynix gained 1.58%.

Yet signs of a market top are becoming increasingly evident. Among the “three giants” of memory, Micron’s stock rose only 0.79% on June 30 in U.S. markets. Michael Burry, the real-life inspiration behind the film *The Big Short*, has labeled this rally as “the beginning of the end.” Just how long can this semiconductor-driven super cycle continue?

"Beginning of the end"... Even Burry bets on going long

On July 1, according to CNBC, Burry wrote on his Substack platform: “The direct reason for today’s stock surge is South Korea’s massive investment announcement,” but “I believe this marks the beginning of the end—now it’s just a matter of time.” In other words, current gains are fueled by momentum originating from South Korea, but that momentum will inevitably fade soon. On June 30, the South Korean government announced plans to establish a second semiconductor production hub in the country’s southwest region, prompting Samsung Electronics and SK Hynix to commit a total investment of 89.6 trillion KRW (approximately RMB 3.9 billion).

He also expressed concerns about the overall valuation of semiconductor companies, citing the Philadelphia Semiconductor Index. Currently, the index trades at roughly 65% above its 200-day moving average—a level only reached during the dot-com bubble of 2000, indicating an overheated market environment.

His warnings go beyond words. He has established short positions against Caterpillar, NVIDIA, Applied Materials, Tesla, and the SOXX semiconductor ETF. Notably, Caterpillar—the so-called global AI infrastructure investment “barometer”—has surged 86% year-to-date—and was, for the first time, shorted at $1,060.98 per share. Burry stated: “I’ve never shorted Caterpillar before,” adding, “(in the past) it was always a stock where long positions delivered strong returns.” Yet on that day, Caterpillar still rose 3.07%, closing at $1,064.90. Market animal spirits continue racing in the opposite direction of Burry’s short bets.

Western Digital surges 10.9% in a day, up 858% year-to-date... Target price now $3,000

The recent frenzy is clearly evident in Western Digital’s performance. Closing at $2,273.73 on June 30, the stock soared 10.9% in a single day, with a year-to-date gain of 858%. On June 22, it even hit a record high of $2,354.39 intraday. Bernstein analyst Mark Newman raised the target price from $1,700 to $3,000, reaffirming his view that the stock offers “superior returns compared to the market.”

The rally is no longer based merely on sentiment. This quarter, Micron reported sales of $41.5 billion, with NAND business revenue skyrocketing 360% year-on-year—delivering stellar results. Enterprise SSD sales surpassed $5 billion for the first time. As AI training requires GPUs and high-bandwidth memory (HBM), bottlenecks emerge when processing millions of inference tasks. This shift means market focus is expanding from GPUs to memory and storage.

Micron up only 0.79%... The turning point may be July 10

Why did Micron’s gain amount to just 0.79%? Markets are waiting for July 10. On that date, SK Hynix will issue American Depositary Receipts (ADRs)—a mechanism allowing U.S. investors to trade foreign stocks directly on U.S. exchanges. Once SK Hynix, which holds around 60% of the HBM market share, becomes accessible to American investors, capital currently concentrated in Micron could be diverted.

U.S. investment research firm The Motley Fool analyzed: “After July 10, Micron’s stock might decline,” but “there won’t be a massive sell-off.” While SK Hynix is already publicly listed and available for purchase, the key difference lies in accessibility. Over the past year, Micron’s stock has risen nearly 800%—any excuse could trigger massive profit-taking.

"Supply shortage until 2027" vs. "Typical cyclical boom"... Predictions sharply divided

The core debate ultimately hinges on whether this cycle is truly different. Micron CEO Sanjay Mehrotra stated: “Global memory shortages are likely to persist well beyond 2027.” His reasoning: in 2023, memory prices plummeted to one-third of normal levels (Micron’s gross margin then stood at -7.3%), and aggressive pricing pressure from major clients left little room for industry expansion. Then came the sudden surge in AI demand, locking in supply shortages. The multi-year construction timelines for cutting-edge fabs serve as structural constraints underpinning this cycle.

Others remain optimistic, arguing that memory companies are transitioning away from volatile quarterly spot pricing—moving toward long-term contracts with minimum price guarantees. With reduced volatility, memory may be redefined not as a cyclical commodity but as a foundational infrastructure asset.

Under the same logic, skeptics reach conclusions diametrically opposed to Mehrotra’s. NAND is a classic example of a cyclical product that can rapidly shift from scarcity to oversupply—a pattern repeatedly seen throughout history. Burry’s warning of “the beginning of the end” rests precisely on this premise. Eric Johnston of Cantor Fitzgerald pointed out: “The current narrative assumes semiconductor firms will generate enormous profits in coming years—but mega-scale players are making mistaken investments.”

Source: Chosun Ilbo

Original article: toutiao.com/article/1869495458419788/

Disclaimer: This article represents the views of the author(s) alone