Spot prices for DRAM have skyrocketed by more than 600% over the past few months, fueling a narrative of a "super cycle" in the memory chip shortage and creating a rare divergence in stock market performance. While shares of memory manufacturers have soared, companies in the consumer electronics, mobile phone, and PC supply chains are facing significant profit margin pressures.

According to Bloomberg data, a global index tracking consumer electronics manufacturers has fallen by 12% since the end of September. In stark contrast, a stock index of memory manufacturers, which includes Samsung, has surged more than 160% over the same period.

Market attention is now focused on the duration of the supply tightness. Vivian Pai, a fund manager at Fidelity International, noted that market valuations currently reflect an expectation that disruptions will normalize within one or two quarters. However, she believes the industry's tight supply conditions could persist, potentially lasting through the end of the year.

Capital is being reallocated based on companies' ability to manage costs and secure supply. Shares of Qualcomm fell over 8% last Thursday after the smartphone processor maker warned that memory constraints would limit handset production. Similarly, Nintendo's stock recorded its largest single-day drop in 18 months the day after it signaled that the shortages would pressure its profit margins.

End-device manufacturers are finding themselves in a difficult position regarding profitability. Issues such as production limitations due to the memory chip shortage and profit erosion from rising component costs are frequently mentioned in corporate earnings reports and conference calls.

Beyond gaming console maker Nintendo and smartphone chip giant Qualcomm, end-device manufacturers across various sectors are feeling the pressure. Shares of major PC brands and Apple suppliers have declined due to concerns about profitability. The outlook for PC peripheral makers like Logitech has dimmed as higher chip prices are expected to dampen PC demand.

"The issue of memory chip prices has truly moved from a backstage topic to a headline story this earnings season," said Charu Chanana, Chief Investment Strategist at Saxo. "The market widely understands that memory chip prices are rising and supply is tight—this is no longer new information, so I believe it's largely priced in. However, the timeline for this supply tightness is now starting to be questioned."

In sharp contrast to the struggles of end-device makers, memory chip manufacturers have emerged as standout winners in the tech sector. SK Hynix, a key supplier of HBM for Nvidia, has seen its shares surge over 150% since late September last year. Manufacturers of more conventional chips have seen even more staggering gains: Japan's Kioxia Holdings and Taiwan's Nanya Technology have both risen approximately 280% in that period, while shares of SanDisk have jumped over 400%.

Based on data from Bloomberg as of February 10, 2025, prices for both DRAM and NAND have increased substantially since last autumn. The DRAM spot price has soared more than 600% in recent months. While end-product demand from sectors like smartphones and automobiles remains weak, artificial intelligence is creating new demand for NAND chips and other memory products.

The biggest question for investors now is: how long will this "super cycle" last, and how much of this expectation is already reflected in current stock prices?

Jian Shi Cortesi, a fund manager at GAM Investment Management in Zurich, stated that she maintains long-term holdings in memory chip stocks. "Historically, memory chip cycles typically last 3-4 years," she said. "The current cycle has already exceeded previous ones in both length and magnitude, and we aren't seeing signs of the demand momentum weakening."

Fidelity's Pai pointed out that current valuations largely assume supply disruptions will normalize within one to two quarters, but the reality could be more severe. She believes the industry's tight conditions could persist until the end of the year.

The market is also watching to see how end-device manufacturers will respond to the supply crisis—whether by locking in supply agreements, raising prices for consumers, or redesigning products to use less memory. Judging by current stock performance, investors have already formed clear, divergent views on the ability of different companies to navigate these challenges.