Global Chip Spectrum Eye: The Ghost Story Behind Korea’s Fault

Original by: Yvonne

Original source:See you on Wall Street

A sharp sale in South Korea’s stock market is turning into a storm sweeping the global semiconductor plate, and the collapse was not simply a result of a deterioration in basics, but rather of an overstretching of technology, a fine-tuning of industry expectations, and a confluence of panic caused by a series of policy anecdotes。

ON TUESDAY, AS THE WEIGHT OF THE GLOBAL MEMORY CHIP, THE KOREA CONSOLIDATED EQUITY INDEX (KOSPI) DROPPED BY 10 PER CENT A DAY AND TRIGGERED A MELTING MECHANISM. THE COMBINATION OF THREE-STAR ELECTRONS AND SK HERCULES CONTRIBUTED TO A DROP OF OVER 70 PER CENT. THE RAPID SPREAD OF PANIC INTO THE GLOBAL MARKET AND ITS DIRECT IMPACT ON THE UNITED STATES EQUITY SEMICONDUCTOR INDUSTRIAL CHAIN LED TO A 13 PER CENT ONE-DAY FALL IN AMERICAN LIGHT TECHNOLOGY AND A 8.5 PER CENT DROP IN DATA FROM THE WEST。

The direct fuse that triggered this wave of sale was a resonance in a series of high-intensity messages。

THE COVERAGE BY THE KOREAN MEDIA OF THE POSSIBLE SLOWDOWN OF THE PRODUCTION OF ADVANCED ARTIFICIAL INTELLIGENCE CHIP STORAGE BY SK HERCULES HAS SERIOUSLY SHAKEN THE MARKET ' S EXPECTATIONS OF THE DEMAND FOR AI HARDWARE. AT THE SAME TIME, DOMESTIC POLICY DISCUSSIONS ON THE TAXATION OF UNREALIZED GAINS FROM EQUITIES AND REGULATORY WARNINGS OF OVERHEATING THE LEVERAGE ETF HAVE SHATTERED MARKET CONFIDENCE。

Analysts pointed out that the extreme volatility was driven more by mechanical sales of algorithms, forced silos of bulk-leveraging funds and a rebalancing of institutions than by an instant deterioration of fundamentals。UNDER THE MULTIPLICITY OF PRESSURES, GLOBAL INVESTORS ARE FOCUSING CLOSELY ON THE FORTHCOMING AMERICAN LIGHT SCIENCE AND TECHNOLOGY NEWS TO ASSESS THE TRUE STATE OF AIR AND VALUATION SUPPORT OF THE AI INDUSTRIAL CHAIN。

GHOST STORY ONE: HBM SLOWING DOWN AND YVETTE CUTTING OFF A SUSPICIOUS CLOUD

The immediate cause of underlying concerns is the marginal change in supply chain strategies for high-end chip storage。

Wall StreetKK HERCULES IS CONSIDERING SLOWING DOWN THE PRODUCTION SLOPES OF THE 6TH GENERATION HIGH BANDWIDTH STORAGE CHIP (HBM4), DELAYING SOME CONVERSION OF THE PRODUCTION LINE AND RE-DRILLING THE RESOURCES TOWARDS THE GENERIC DRAM。

The logic behind this strategic adjustment is the reversal of the profitability of products。

AT PRESENT, THE PROFIT MARGIN OF THE GFDM IS 15 PER CENT HIGHER THAN THAT OF THE HBM, AND THE GER IS EXPECTED TO PEAK AT 90 PER CENT DURING THE YEAR. HEREIn addition, media reports cite sources of information that the production projections for the next generation of “Rubin” chips in Inweida are declining, giving rise to speculation that the market is likely to weaken the supply of HBM and the expected surge in demand for AI。

This concern is equally evident at the macro-industrial chain level。

As mega-data centre operators are under pressure from capital spending surges and free cash flows are expected to shift, the market is beginning to question whether these technology giants, which are “sources of funds”, will compress the hardware procurement budget, thus constraining the collection of the entire storage, chip, network and server supply chain。

Ghost Story II: Policy and Tax "The Black Swan", Unrealized Gain Tax Fright

At a time of disagreement over the fundamentals of the industry, an exploratory paper on tax reform has caused great panic on Korean soil。

According to the Korea Associated Press, a multi-party forum on tax reform was held jointly by Korean parliamentarians to advocate for a “income tax consolidation” transition that would explore the incorporation of “unrealized gains” (book value added) on assets such as stocks and real estate into the tax system。

Although the proposal includes a gradual path such as deferred taxation, it is no less than a heavy pound of space for the Korean stock market, which is already in a high valuation area. Experts warned that taxation only when assets are realized would have a “frozen effect”, but the expectation of taxing unrealized gains would directly prompt investors to run and sell before the policy is set。

MOREOVER, KOREA’S FAILURE TO GET ON THE MMC’S WATCH LIST, AS WELL AS LAST WEEK’S COMMENT BY THE PRESIDENT ABOUT HIS CONCERN ABOUT THE “WEALTH EFFECTS” OF STOCK-MARKET VOLATILITY, FURTHER EXACERBATES POLICY UNCERTAINTY。

GHOST STORY THREE: LEVERAGE ETF AND NEGATIVE GAMMA

From a quantitative and technical point of view, this collapse was a classic structural collapse。

According to ZeroHedge, Charlie McElligott, a quantitative security strategist in Nomura, pointed out that large inflows of money to single stocks and storage themes, leverage ETF, had a huge “real and synthetic” negative gamma effect。

This market structure has led to pro-cyclical and mechanical financial flows — that is, the market is falling and the sales are becoming heavier。Charlie McElligott states that during the sale period, the Zero Expiry (0-DTE) option traders were active at the height of their time, completely breaking down the buyout that they tried to copy. This, combined with the pre-supplier position adjustment of the right traders, further exacerbated the systemic downward spiral。

This effect means that, as markets fall, marketers and ETF regulators must mechanically sell more stocks to maintain a balance of risk exposure. In his report, Chris Cha, director of Goldman Sachs’ high-contact transactions in Korea, disclosed that the leverage ETF in Korea had reached $9.1 billion, while the offshore leverage ETF tracking of SK Hercules and Samsung was $21 billion。

THE CHANGE IN ATTITUDE OF KOREAN FINANCIAL REGULATORS HAS FURTHER AGGRAVATED THE TECHNICAL CHALLENGES. THE DIRECTOR OF THE KOREA FINANCIAL SUPERVISORY AUTHORITY (FSS) PUBLICLY EXPRESSED REGRET AT THE FAILURE TO PREVENT THE LISTING OF THE SINGLE STOCK LEVER ETF LINKING SAMSUNG AND SK HERCULES AND WARNED THAT ITS SIDE EFFECTS WERE INCREASING. THE DISCUSSION AT THE SUPERVISORY LEVEL OF TIGHTENING THE BOND LOAN AND RESTRICTING THE ISSUANCE OF ETFS HAS DIRECTLY SHAKEN THE TECHNICAL BUYOUT THAT HAS UNDERPINNED THE RECENT INCREASE。

Ghost story four: Demobility, disassembly and pension reversals

The collapse revealed an extreme homogeneity in the purchasing structure of the Korean stock market。

According to Alexander Redman, the leading stock strategist in Singapore, CLSA, the rise in the Korean market is almost entirely bulk-driven and the degree of internal foaming is disturbing. This month, the Korean diaspora balance rose to a record 38.5 trillion won (approximately $25 billion). Kim Namho, the fund manager in Seoul, stated that the huge bond debt triggered a forced stairwell after noon and accelerated the free fall of the market。

At the same time, the traditional stabilizer became the main seller。

ACCORDING TO THE GOLDMAN SACHS REPORT, THE DOMESTIC STOCK POSITION OF THE KOREAN NATIONAL PENSION (NPS) EXCEEDED THE 28.8 PER CENT CEILING AS A RESULT OF THE PREVIOUS STOCK MARKET BOOM. IN ORDER TO REBALANCE ASSETS, IN JUNE THE NPS ESTABLISHED THE LARGEST NET SALE SINCE APRIL 2021 ($1.5 BILLION)。

When pensions move from passive support to mechanical supply, adding foreign investment to the field, the marginal mobility of the market is quickly depleted。

External macro-pressure: expected cooling of interest rates and testing of financial performance

While domestic fundamentals and technologies resonate downward, global macro-environment variables also increase market vulnerability。

The expected unexpected resurgence of the Fed ' s interest rate hike constituted a systematic suppression of the high-valued technology unit. US bank analyst Aditya Bhave predicted that the Fed would re-inflate interest rates in September, October, and December of this year, with a cumulative increase of 75 basis points to address service-sector inflation and salary growth。

In the wake of extreme market turbulence, investors are focusing their attention on the forthcoming publication of American Light Science and Technology。According to Goldman Sachs, the market's expectations in the run-up to the US dollar have been pushed to a very high level, which also provides the incentive for early financial gain. Piperstone Group strategist Dilin Wu stated that the luminous report card would be the real test of the sustainability of the AI hardware investment boom。

As CLSA strategist Alexander Redman put it, the magnitude of this volatility is closely related to the extent of the market ' s inherent hash drive and foamization. Although in the medium term the upward cycle and AI demand logic of the chip storage have not yet been proven, the global chip unit is experiencing a painful expected replacement and valuation digestion, with the impact of forced deleveraging and multiple hearsays。