The Roundhill Memory ETF (DRAM), a $24.3 billion fund tracking major memory chip makers, has experienced a sharp decline, falling to $62.45 in pre-market trading—a 22.75% drop from its 2025 peak. The sell-off reflects growing concerns about the sustainability of the memory industry's recent rally, driven by AI-related demand.
Meta's Cloud Ambitions Signal Potential Capex Shift
A key catalyst for the downturn is a report that Meta Platforms is considering launching a cloud business to sell its spare data center capacity. The term "spare" has alarmed investors, as Meta has been one of the largest spenders in the AI infrastructure space, with planned capital expenditure of $125 billion to $145 billion this year. The company recently announced a $27 billion deal with Nebius, a neocloud provider. Analysts at DA Davidson noted that if Meta slows its capex and begins monetizing spare capacity, it could boost revenue and cash flow while potentially reducing demand for memory chips used in AI servers.
Apple's Potential Shift to Chinese Memory Suppliers
Adding to the pressure, reports indicate that Apple is lobbying the Trump administration for permission to purchase memory chips from large Chinese suppliers. If approved, such a move could increase global chip supply, putting downward pressure on prices. This would directly impact DRAM ETF holdings like Micron, SK Hynix, and SanDisk, which have benefited from tight supply conditions.
Leveraged Product Risks in South Korea
The ETF is also feeling the effects of a Bloomberg report on the CSOP SK Hynix Daily (2x) Leveraged Product, which has accumulated over $13 billion in assets. Concerns are mounting that the growing leverage in South Korean equities could trigger a retreat as traders unwind positions. South Korean household loans rose by KRW 9.3 trillion in May, up from KRW 3.5 trillion in April—the fastest growth since August 2024. Citi attributed this surge largely to demand for equities, raising fears of a potential unwind.
Technical Indicators Flash Bearish Divergence
On the technical side, the DRAM ETF has formed a bearish divergence pattern on the four-hour chart. The Percentage Price Oscillator (PPO) has been declining since peaking at 10.4% on May 11, while the Relative Strength Index (RSI) has fallen from an overbought 89 to 43. Such divergences often precede further price weakness, suggesting the current sell-off may have more room to run.
Profit-Taking Across Memory Stocks
The broader decline is also attributed to profit-taking after a strong run in memory stocks across the U.S., Japan, and South Korea. The ETF's top holdings—Samsung Electronics, SK Hynix, Micron, SanDisk, and Kioxia—account for about 73.4% of the fund, making it highly concentrated and vulnerable to sector-wide reversals. For more on recent moves, see our coverage of SanDisk's 14% plunge and Nasdaq futures dip amid chip stock retreat.
Outlook for the Memory Sector
While the memory industry has been a standout performer in the AI boom, these developments suggest the cycle may be peaking. Investors are now weighing the risks of oversupply, shifting demand from major tech firms, and leveraged positions in South Korea. The DRAM ETF's sharp decline underscores the fragility of concentrated sector bets. For further context, read our analysis on Asia tech rout and Micron options pricing volatility.
This article is for informational purposes only and does not constitute financial advice.
