An article from Bloomberg explaining why Bu'rry shorted Micron? Bu'rry disclosed on Su'b-s-t-ack that he shorted Micron, stating, "This company has taken the three words cyclicality to the extreme. When it's good, it's blown higher than it should be, and when it's bad, it's smashed lower than it should be Micron released an explosive financial report at the end of June, what was the result? The market became excited and started running away in less than two days. SK Hynix has fallen 25% from its peak last month. Micron's own forward P/E ratio has been shrinking from 11 times to 7 times. one ️⃣ Korean gambling The first signal that Bu'rry is targeting is South Korea's capital expenditure. Last week, South Korean President Lee Jae myung announced a semiconductor mega project worth at least 1.35 trillion Korean won, equivalent to approximately 880 billion US dollars. Samsung and Hynix are simultaneously building new wafer fabs in southwestern South Korea. What concept? Barclays Bank has calculated that this investment, spread across the country, is equivalent to 2.6% of South Korea's GDP. A country invests nearly 3% of its economic output in expanding storage chip production. Bu'rry's original statement is that capital expenditures of this scale are the beginning of the end. Every time the storage chip industry has experienced such a level of expansion in history, it has been followed by the same script: concentrated release of production capacity, sudden oversupply, cliff like price drops, and evaporation of corporate profits. (See Figure 1) The 2018 round was like this, after Samsung and Hynix aggressively expanded production, the price of DR AM fell by nearly 50% in 2019, and Micron's profit shrank by more than 70% in one quarter. two ️⃣ CXMT (ChangXin Memory Technologies) Changxin Storage (CX-MT) is preparing for an IPO, with plans to raise at least 29.5 billion yuan, approximately 4.3 billion US dollars, which could be the largest IPO in China since 2022. This company has been blacklisted by the US Department of Defense, but it has not affected its expansion pace at all. Years of investment have finally begun to recoup, with profits exceeding 20 billion RMB in the first quarter of this year. According to Morgan Stanley data, by 2028, China will account for 30% of the global net new DR AM production capacity, ranking second only to South Korea. If Apple really becomes a customer of Changxin and has been lobbying the Trump administration to reduce political intervention, Changxin's expansion will only be faster. three ️⃣ Fragile monopoly Currently, Samsung, Hynix, and Micron control approximately 90% of the global DR AM market, with HBM (high bandwidth storage) being 100% dominated by these three companies. But this monopoly pattern is much more fragile than it seems. Storage chips are becoming a strategic asset. Beijing invests in it as national security, while Seoul invests in it as an economic engine. When political will intervenes in supply-demand balance, traditional market analysis frameworks become less effective. Bloomberg's data shows that the peak of global DR AM shortage is likely to occur in the second quarter of 2026. The easing will begin in the second half of the year, with further easing in 2027 and the possibility of a direct reversal into oversupply by 2028. (See Figure 2) four ️⃣ The Paradox of Supercycle Semiconductor analysts have been telling the story of the supercycle: record profits, five-year long-term contracts, and structural demand brought about by AI. The management of Micron is also working hard, repeatedly emphasizing long-term contracts, prepayments, and at least half of the revenue in the financial report. But the market is not buying it at all. The financial report exceeded expectations, and the stock price still fell from 11 times to 7 times. This is the fundamental contradiction in the storage chip industry. When things are good, everyone calculates using forward P/E ratios and finds it incredibly cheap. When it's bad, immediately switch to the price to book ratio and use the method of assessing bankrupt companies to give a valuation. (See Figure 1) Switching between two valuation frameworks for the same company indicates that the market is well aware that the profitability of this industry is fundamentally unpredictable. Firstly, Bu'rry's direction is most likely correct. Both South Korea and China are expanding production simultaneously, and the supply side is bound to experience a wave of release in 2027-2028. Secondly, Bu'rry's old problem is timing. In 2008, he shorted subprime mortgages two years in advance and almost got liquidated by adding margin. The entry price for shorting Micron this time is around $1051, and within Micron, it has already risen 241%. Short selling a ticket with such strong momentum incurs fatal time costs. How can the storage experts on X counterattack?