‘Memory supply crisis’: Wall Street triggers huge selloff in fear of looming chip shortages

Good morning. On Fortune’s radar today:

There’s a “memory supply crisis” among chipmakers, Deutsche Bank says.

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U.S. futures decline after big selloff in Asia and Europe as traders reject tech stocks

Traders are selling tech stocks today in reaction to Apple’s announcement that it would have to raise the prices of its devices to cover the cost of rising memory and storage chip prices. 

Cold shoulder: “There seems to be a mini ice-age in Asia this morning,” Deutsche Bank’s Jim Reid told clients this morning. “SoftBank is around -14% lower after the NYT suggested that OpenAI may delay its IPO until 2027. This follows a sharp decline for the Magnificent 7 (-2.54%) yesterday. The tech mega cap index moved deeper into correction territory … in response to demand surges for memory and storage, [and] the news played into broader concerns that AI data centres were generating inflationary pressures.” 

Just a thought: If chip shortages are forcing tech companies to raise prices, that will feed through into their Q2 and Q3 revenues. So it is not entirely clear that this selloff is warranted. 

S&P 500 futures were down 0.54% this morning. The index closed flat yesterday. 

S&P 500 futures were down 0.54% this morning. The index closed flat yesterday. 

In Europe, the Stoxx 600 was down 0.83% in early trading, and the U.K.’s FTSE 100 was down 0.75% before lunch.

In Europe, the Stoxx 600 was down 0.83% in early trading, and the U.K.’s FTSE 100 was down 0.75% before lunch.

Asia: South Korea’s KOSPI was down 5.81%. Japan’s Nikkei 225 was down 4.15%. India’s Nifty 50 was up 0.14%. China’s CSI 300 was down 3.03%. 

Asia: South Korea’s KOSPI was down 5.81%. Japan’s Nikkei 225 was down 4.15%. India’s Nifty 50 was up 0.14%. China’s CSI 300 was down 3.03%. 

Brent crude was $72 per barrel this morning, down from a high of $75 yesterday.

Brent crude was $72 per barrel this morning, down from a high of $75 yesterday.

Chipmakers are cashing in on a “memory supply crisis,” Deutsche Bank says

One reason Micron’s blowout earnings can move the entire market is because the company’s fortunes reflect the entire industry. In this mammoth AI investment cycle, the demand for chips of all kinds has sent prices through the roof for all suppliers of devices, as this chart (below) shows. It’s a “memory supply crisis” according to Marion Laboure and her colleagues at Deutsche Bank. 

“The AI squeeze is crowding out the economy's ability to serve the day-to-day needs of ordinary people. Qualcomm and AMD have both flagged memory constraints actively hitting consumer-device demand.........

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