CLSA: Memory Industry Correction Nears End as Major Firms Signal Strong Fundamentals

CLSA Research has released a report indicating that despite extremely strong Q2 2026 financial results and optimistic outlooks from ASML (ASML-US) and TSMC (TSM-US) (2330-TW), global semiconductor stocks continue to face downward pressure.

The Philadelphia Semiconductor Index has declined 20% from its June peak, while South Korean memory giants Samsung Electronics and SK Hynix have dropped 30% and 37% respectively. Market concerns center on the sustainability of AI capital expenditures, compounded by recent reports suggesting that Chinese AI models like Kimi 3 are rapidly closing the performance gap with top U.S. models at lower costs, potentially affecting demand for computing power and memory.

CLSA remains bullish on cloud hyperscalers’ capital spending through 2027, believing its forecasted 31% growth (reaching $1.1 trillion) has upside potential. The firm argues that intensified competition among AI models is ultimately positive for AI demand—just as in the past, improved model efficiency and lower costs should drive broader AI adoption and expand use cases.

CLSA reaffirms its "Outperform on High Conviction" rating for SK Hynix’s Korean shares with a target price of 3.7 million KRW, and maintains "Outperform" ratings for Samsung Electronics and Micron (MU-US), with target prices of 540,000 KRW and $1,700 respectively.