- Morgan Stanley warns the memory chip cycle will enter its final stage in the fourth quarter, potentially ending steep price increases.
- Micron (MU) has already seen a price dip over the last month despite record quarterly revenue.
- Chinese firms are introducing new competition that could meet global demand before production fully ramps up.
Micron, SK Hynix, and Samsung have ridden a massive AI-driven memory chip boom over the past year, but analysts now warn the cycle could be nearing its end. According to Morgan Stanley, the memory chip cycle will enter its final stage in the fourth quarter, signaling a move toward a late-stage industry downturn.
Consequently, steep price increases that fueled the market may soon reverse as supply catches up with demand. Micron has already experienced a price dip over the last month, even after reporting record revenue in its latest quarterly earnings.
Meanwhile, all three manufacturers continue full-steam production to meet global demand. Micron recently announced a $250 billion investment plan for the U.S. to boost domestic production.
What is likely to happen is that production will increase and companies will meet global demands, leading to an industry-wide correction. Investors are also questioning the sustainability of increased data center spending.
Chinese firms are bringing fresh competition that could pose additional challenges. Demand may be met before production ramps up, leaving Micron entering an uncertain period.
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