Cathie Wood of ARK Funds Steers Clear of Memory Chips, Citing Brutal Boom-and-Bust Pattern

Trading Random
6 hours ago

The memory-chip industry is vulnerable to severe boom-and-bust swings, and the situation could deteriorate further as Chinese manufacturers expand production, according to Cathie Wood of ARK Investment Management LLC.

Wood, who gained widespread recognition by wagering on disruptive innovation, informed investors in Hong Kong that ARK steers clear of conventional memory-chip companies because prices can plummet rapidly when supply exceeds demand.

She noted that although high-bandwidth memory is currently in short supply, the arrival of additional Chinese producers risks upending pricing and intensifying price fluctuations throughout the industry.

"The trend is up, but the cycles are vicious," Wood remarked. If "you get a few more incremental competitors, especially out of China, the volatility will increase."

While South Korea's SK Hynix Inc. and Samsung Electronics Co., together with US-based Micron Technology Inc., control top-tier memory supply and HBM packaging, Chinese state-supported firms like CXMT Corp. have swiftly expanded DRAM output to capture market share. SK Hynix and Samsung's shares have fallen 51% and 36% from their peaks this year, respectively.

Separately, Wood stated that ARK is less drawn to China's tech sector than to those elsewhere, partly because anti-involution measures cannot resolve the deflationary issue or shield the economy from a deep property downturn.

Wood also countered Broadcom Inc. CEO Hock Tan's caution that the artificial intelligence trade has turned speculative. She brushed aside concerns of a market bubble, anticipating that AI will drive enormous productivity gains.

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