ME News report, October 19 (UTC+8): Semiconductor analyst Jukan shared an English-translated commentary authored by a sales professional from a local Chinese sell-side firm. The analyst stated: In mid-to-late September, hardware markets rapidly entered a Wave B decline, with China and South Korea leading the adjustment, experiencing deeper and longer-lasting drops, followed by weakening in Japan, Taiwan, and the semiconductor ETF SOXX. There is significant divergence in market sentiment regarding whether AI has entered a mid-cycle collapse, but broad agreement remains that the industry continues to advance. The analyst summarized investor perspectives: elevated long-term U.S. interest rates, increasing reliance on external financing for capital expenditures competing with markets for capital, layered leverage, and tight liquidity are the primary drivers of this downturn, with companies like CoreWeave showing clear deterioration in financing structures and cost burdens. Although model invocation prices have declined, capital expenditures and supply chain costs remain difficult to reduce swiftly, making near-term investment returns unlikely. ASML and TSMC delivered strong guidance for this quarter, yet near-term pressures cannot be ruled out; the bullwhip effect and disparities across the value chain may result in volatility exceeding expectations. The analyst also noted that non-coding enterprise use cases are emerging in areas such as SaaS and AI-driven drug discovery, potentially gradually alleviating concerns over investment returns and expanding demand. Their personal assessment: before more evidence emerges, the current phase resembles heightened volatility rather than an outright collapse having begun; the downturn may not yet be over, and hardware leadership could shift toward applications. Even if control of both congressional chambers changes in the midterm elections, the impact may be largely confined to constraints on certain data center projects; upcoming U.S. earnings season will need to validate the performance of major tech companies. (Source: ChainCatcher)
Chinese Sell-Side Analyst: AI Hardware in High Volatility, Not Confirmed Collapse
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Summary
A Chinese sell-side analyst at MetaEra highlighted volatility indicators in the AI hardware sector, noting a sharp B-wave decline in late September. China and South Korea experienced deeper and longer corrections, followed by Japan, Taiwan, and the SOXX ETF. Views remain divided on a mid-cycle collapse, but most agree the market remains active. High U.S. interest rates, capital dependency, leverage, and liquidity constraints are driving the downturn. CoreWeave’s financing burden has intensified. While model pricing declines, capital and supply costs remain rigid. ASML and TSMC’s guidance suggest support and resistance levels may shift. Enterprise applications—including SaaS and drug R&D—could expand demand. The analyst views the decline as high volatility rather than a collapse, with hardware leadership potentially shifting toward applications. U.S. midterm elections may constrain data center expansions, but earnings season will test big tech performance.
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