Memory chip structural demand shift (with Ed Ludlow)

Demand for memory chips exceeds supply; historically an enviable position. How do you see investor appetite for the memory trade?

Ed Ludlow

Selene Woo

Memory stocks still offer a compelling investment case driven by structural factors, not just temporary supply bottlenecks. Memory's strategic value is rising as a primary driver for performance.

Cloud service providers are adding more memory despite price inflation because it's the most cost-efficient way to maximize system-level performance. Token demand is rising on the back of inference and agentic AI, making capacity and bandwidth bottlenecks more challenging.

Does the opportunity for US-listed ADRs of SK Hynix change the mechanics of the market?

Ed Ludlow

Selene Woo

More exposure to a diverse shareholder base is a very positive indication, especially when fundamentals are improving.

Historically memory is cyclical boom and bust, but in the context of HBM going into data centers it doesn't behave the same way. What is your thesis?

Ed Ludlow

Selene Woo

There is something structural going on. On the supply side, three factors point to supply-demand balance staying in favor of memory stocks: rising manufacturing complexity, increasing capital intensity to open new fabs, and difficulty of technology migration.

Your actively managed ETF has both capex deployers and capex recipients in the same basket. Is that a conscious decision?

Ed Ludlow

Selene Woo

That composition comes from bottom-up stock selection. Big spenders are building competitive positioning in the AI arms race, while we also find exciting opportunities in companies that receive this capital, like the AI hardware supply chain.

We recently came from Asia where companies in the supply chain report extended order visibility and more conversations about LTAs, highlighting that demand continues to substantially exceed supply.

How do you see the world changing in the next 6-12 months?

Ed Ludlow

Selene Woo

We focus on the AI tech stack. At the top we have the application layer where we expect large opportunities from physical AI - a multi-trillion dollar long-term opportunity. AI is a primary driver for productivity gains, which historically translate to massive economic expansions.

Innovation will open new end markets in physical AI such as autonomous transportation and humanoid robots, but it will take a couple of years to turn into corporate earnings. We focus on companies with vertically integrated manufacturing excellence, open source platforms, and noble technology companies that benefit from mass adoption.

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