DeepSeek Cuts HBM Usage, Samsung and SK Hynix Shares Drop Over 3%
nashnova research
DeepSeek's latest model claims to need less high-bandwidth memory (HBM), sending Samsung Electronics and SK Hynix down over 3% on Friday and stalling a nascent rebound — yet foreign funds are already re-examining the valuation gap in Korean memory stocks.
What did DeepSeek say, and why did memory stocks get hit immediately?
DeepSeek's new model claims it can run with less HBM — high-bandwidth memory, the specialized chips sitting next to AI processors to shuttle data at high speed.
This means → the market fears that if AI models need less HBM, Samsung and SK Hynix's most profitable product lines could see weaker demand.
Both stocks fell over 3% Friday, erasing early gains from an initial rebound after July's sharp sell-off.
What kind of roller coaster have retail investors been on?
Korean retail investors first drove Samsung and SK Hynix sharply higher, then reversed course as doubts grew over AI prospects.
This month alone, retail investors have net-sold over $10 billion across the two stocks and continue to exit leveraged ETFs linked to both chipmakers.
In plain terms = retail piled in, then stampeded out — and that violent back-and-forth is itself amplifying the volatility.
Foreign funds see value — so why aren't they buying in size?
Isaac Thong, senior investment director at Aberdeen's Asia Income Fund, said his view on Korean memory chipmakers is "decidedly more positive than on other parts of the semiconductor sector."
The numbers: Samsung trades at roughly 2.7× book, SK Hynix at about 5× — versus an average of 11× for Philadelphia Semiconductor Index constituents. Forward P/E for both sits near 4×; the global chip benchmark is around 19×.
This means → the valuation discount is real. But both stocks remain over 25% below their highs, and daily swings of 5%+ are still routine — volatility is near levels last seen during Covid and the 2008 financial crisis.
How scary is the volatility?
Matthew Tuttle, CEO of Tuttle Capital Management, put it bluntly: "These stocks are very volatile. There are other ways to capture similar returns with far less volatility."
In plain terms = foreign funds aren't uninterested in the bargain — but the ride is so rough that they can get comparable returns on a calmer ticket.
This reflects a core standoff: valuation appeal and volatility risk are currently cancelling each other out.
Is the DeepSeek shock a short-term sting or a lasting headwind?
Ha Seok-Keun, CIO of Eugene Asset Management, said DeepSeek's new model "may trigger short-term concerns about slowing semiconductor demand."
But he added that new models from Meta and OpenAI "will have a larger impact on industry fundamentals by boosting real-world AI usage and chip demand."
Jung In Yun, global CEO of Fibonacci Asset Management, was more direct: this is "sentiment-driven pressure, not a sustained sector sell-off" — cheaper AI could drive broader adoption, offsetting the demand reduction from efficiency gains.
Korean memory stocks — value trap or volatility trap?
BULL
Valuations deeply discounted
Forward P/E near 4× — less than a quarter of the global chip benchmark.
Long-run demand logic intact
Lower AI costs → wider adoption → total chip demand may actually rise.
Foreign funds turning positive
Aberdeen and peers explicitly favor memory over the rest of the semi sector.
BEAR
Volatility scaring off capital
Daily 5%+ swings are still common; vol near crisis-era peaks.
Retail stampede amplifies risk
Retail net-sold over $10 billion this month; leveraged ETFs face ongoing redemptions.
HBM demand ceiling in question
DeepSeek shows AI models can run on less HBM — the demand ceiling may be lower.
In plain terms = the bargain is real, and so is the roller coaster — whether foreign capital flows back hinges on when volatility comes down.
市场有风险，内容仅供研究参考，不构成投资建议。