Short Selling Controversy Hits South Korean Semiconductor Sector as Morgan Stanley Faces Pressure in Korean Investment Banking Business

In a report published on July 21st, Shawn Kim stated that the AI-driven storage chip industry's prosperity cycle is approaching a turning point, and memory contract prices may peak in the fourth quarter, with the upward revision of profit forecasts decreasing from 92% to 77%. The report also mentioned that NAND module manufacturers' inventory has risen to about 13 weeks, close to the peak of about 15 weeks during the pandemic, and proposed a trading logic of "selling DRAM when NAND is trending downward."

Meanwhile, Morgan Stanley failed to enter the list of joint lead underwriters for SK Hynix's approximately $26.5 billion American Depositary Receipt listing project. JPMorgan Chase, Bank of America, Citigroup, and Goldman Sachs were selected, with Morgan Stanley being the only top investment bank left out. Based on an estimated 0.5% underwriting fee, the total commission for this project is approximately $130 million. Several investment banking sources stated that Morgan Stanley's Seoul office has begun to introspect on whether the continuous release of negative semiconductor reports has impacted its investment banking business.

In addition to the SK Hynix project, Morgan Stanley has recently been involved in controversies related to the SpaceX private placement and the sale of IGIS Asset Management company in South Korea. These events further highlight the conflict between the research department's independence and the business interests of the investment banking division, increasing the reputation and business pressure it faces in the South Korean market.