Seek .(US:SKLTY)2025-02-09 04:54Summary of the Conference Call Transcript Industry Overview - The report focuses on the Memory Market, particularly the impact of DeepSeek's R1 model on the demand for AI hardware in data centers and the overall memory sector dynamics [2][51]. Key Points and Arguments 1. Market Dynamics: - The memory sector has experienced an 11% decline in average share prices over the last two weeks, compared to a 9% decline in the SOX index [2]. - Concerns about a slowdown in GPU demand are prevalent, but the report emphasizes the growth potential from edge-AI migration and the AI ASIC market [2]. 2. Demand Projections: - The report anticipates a 25% to 40% adoption rate for edge AI in PCs and smartphones by 2026, with a potential 220%+ upside in edge-AI bit demand, translating to a 20% increase in global DRAM Total Addressable Market (TAM) [2][10]. - The inference demand for HBM is expected to be limited, with more upside potential for conventional DRAM due to the low attach rate of HBM for inference ASIC chips [2]. 3. Supply and Demand Analysis: - A 10% decline in HBM demand could lead to a 2.5% surplus in ex-HBM bit supply, indicating that the HBM market remains tight despite concerns of oversupply [9][18]. - The report suggests that 20% weaker demand could result in a significant oversupply scenario, necessitating a reallocation of HBM wafer inputs [18]. 4. CSP Capex Outlook: - Major Cloud Service Providers (CSPs) like Microsoft and Alphabet reported strong growth in their datacenter divisions, with capex guidance raised to US$80 billion and US$75 billion respectively for FY25 [51]. - Despite concerns about AI infrastructure spending, CSPs are expected to continue investing heavily in data clusters [51]. 5. Competitive Landscape: - The competition among memory makers is intensifying with the introduction of GDDR7 and LPDDR6, which promise higher speeds and improved efficiency [25]. - Samsung, SK Hynix, and Micron are all expected to begin mass production of GDDR7 memory modules in 1Q25, highlighting the competitive nature of the market [25]. 6. Investment Recommendations: - The report recommends investors to focus on the NVDA-centric supply chain and highlights SK Hynix as a preferred pick in the Asian memory space [2]. - Investors are advised to consider edge AI proxies and key players in the Apple supply chain for potential growth opportunities [55]. Other Important Insights - The report notes that ASICs are expected to become a larger driver of HBM demand in the long term, although short-term visibility remains stronger for merchant GPUs [36]. - The memory sector's performance has been lackluster, with an average decline of 10% over the past three months, attributed to macro risks and the impact of DeepSeek [51]. - The report anticipates volatility in memory stock prices in the near term as investors adjust their earnings growth expectations [55]. This summary encapsulates the critical insights and projections regarding the memory market and its dynamics, particularly in relation to AI and edge computing trends.