Samsung market cap crosses $1 trillion amid memory chip rally

Samsung Electronics (005930.KS, SMSN.IL) reached a $1 trillion market cap on Wednesday as the memory chip shortage drives the hardware manufacturer — and other memory chip developers — even higher.

Market Domination Host Josh Lipton and Yahoo Finance Tech Editor Dan Howley sit down to discuss the rally occurring in the memory chip landscape.

Let's start on Samsung, uh, reaching that $1 trillion valuation. What what is driving that, Dan? Is that AI demand? Is it memory chips? Explain that.

It's yeah, it's it's AI, yes. Both. To both. Yes. Yes. Um it's both the memory uh and storage. So when it comes to these AI data centers, they need tons of memory to be able to handle these AI workloads. Uh they need tons of storage to hold on to those AI data sets. So, uh by the way, this is all very annoying because when I grew up, RAM was RAM, now we call it memory because everyone's dumb, I guess. And storage is just, you know, memory. Whatever.

Anyway, so we have all of this this need and a bottleneck. There's like four, three big companies that can do all this. There's Samsung, Micron, and SK Hynix. Uh that's about it when it comes to this huge availability. Samsung's the largest memory maker in the world. Uh demand is astronomical. And so they're able to say, you guys pay us a little more and maybe we'll get you the memory first. You know, we'll we'll see how it goes.

Uh that's great for them. Uh sucks for me, uh and you and everyone else around the world because now we're waiting to get RAM, memory, excuse me. uh for things like smartphones, laptops, things like that. Uh you know, and it's it's making things more difficult for the rest of us. So that delay or that demand means uh now uh Apple basically uh this is on a hunch, uh why they've done this, but they stopped shipping certain versions of their Mac Mini, of their Mac Studio, different uh uh memory configurations.

Could be because they're running short on the ability to sell those with that amount of of memory. Uh and, you know, we're going to see more kind of uh demand destruction as prices rise on things like laptops and smartphones. iPhone, that's basically insulated. People are going to spend on premium phones, no matter what. But when you're looking at those entry level phones or those entry level laptops, the stuff that, you know, you would sneak into let's not not sneak in, but get into Best Buy at like the Crack Dawn on a Sunday after they they show that flyer where it's like, oh, 350 bucks for a laptop. That's going to just disappear. And so, you know, don't buy that laptop first of all because it's going to be trash and you're just throwing away 350 bucks. Wait a week and maybe get a different one. But either way, those are all going to kind of go away. And it's benefiting Micron, SK Hynix, and Samsung.

Those three, Dan, those three players, would you say Samsung has some type of advantage over a Micron or an SK Hynix? Is there a competitive edge there?

I would say it's scale. SK Hynix uh was uh uh and I believe Micron were ahead on the high bandwidth for memory. Uh but Samsung's ramping that or has ramped that. So they're doing great on that now and basically, uh you know, we'll see another generation of memory at some point, but at this point, it feels as though everything being equal, Samsung's got just a massive footprint globally.

Some of the moves you've seen in these stocks, Dan. I mean, Micron is screaming higher. Sandisk is a rocket ship. Do do some of these moves, do they do they make sense to you or do you think wow, we're getting over our skis?

Yeah, I mean, I don't ski, so I'll say that's a bad thing. No, uh I uh I think so the thing about the memory industry is it's super cyclical, right? Like

Now, somebody, I get pushback on that though. I'll tell you what I hear some analysts say. Well, they'll say it used to be cyclical. It used to be boom and bus, but they'll say and I've had very smart tech analysts come to say, hey, this time AI changed things. This is a a different kind of cycle. That's the thing.

Sure, but at a certain point, this massive buildout will slow. And so that's where I think that cycle picks back up, right? I mean, are we going to see that anytime soon? Who knows? You know, we've heard different reports about we hear uh about all these deals, you know, 5 gigawatts here or, you know, 500 megawatts there. You know, are those stood up yet? Is is the the the memory actually purchased? Is it sitting there? Does that still need to be manufactured? Is this just, you know, a deal where we're going to have this built out, I don't know, two years from now? So I think that's I think where the the big disconnect is as far as this goes. At a certain point though, this is not sustainable, this this rate, right? So we'll see, you know, a slowdown in manufacturing these. It doesn't necessarily mean that we'll stop seeing a high demand. Those uh systems that we see inside of these data centers will have to be replaced at certain points. Yada, yada, yada. But I I don't necessarily think that memory and storage will continue on this past path forever.