US midterm 'blue wave' puts pressure on memory chip demand
Summary
Democrats took control of Congress in the U.S. midterm elections, raising concerns that tighter rules and delays for data center projects could slow memory chip demand. Democratic governors-elect in Texas, Ohio and Georgia had proposed halts or restrictions on data center development. A slower buildout could postpone purchases of AI accelerators, server DRAM and enterprise solid-state drives, potentially easing supply shortages that have boosted Samsung Electronics and SK hynix earnings. Analysts said a slowdown was possible, but a nationwide halt was unlikely.
Key Facts
- Texas is expected to account for 25 to 30 percent of U.S. data center capacity scheduled to come online by 2030.
- Dan Ives of Yorkville Ives estimated that 10 percent of data centers would not proceed and said the results could slow plans for 800 to 1,000 facilities across the United States.
- Amy Acton proposed requiring Ohio data center developers to cover all electricity and water costs, use union labor exclusively and ensure operational transparency.
- Democrats won majorities in both chambers of Congress but fell short of the two-thirds majority needed to override a presidential veto.
- Kiwoom Securities analyst Han Ji-young said nationwide regulations would face hurdles, while measures under discussion included requiring companies to pay more toward power-grid expansion and restricting approvals in some regions.
Potential data center curbs threaten AI investment, chipmakers' earnings outlook
Texas Sen.-elect James Talarico, left, and Gov.-elect Gina Hinojosa cheer with drinks while being surrounded by supporters at Whataburger in Austin, Texas, Wednesday. Reuters-Yonhap
With the U.S. Democrats taking control of Congress in the midterm elections, the "blue wave" is expected to cool memory chip prices and demand, casting doubt on whether Samsung Electronics and SK hynix can sustain their record-breaking earnings streaks.
In the New York trading session that ended Wednesday (local time), shares of CoreWeave and Nebius fell 9.9 percent and 6.7 percent, respectively. Both are neo cloud providers that rent out artificial intelligence (AI) computing capacity.
Data center operators IREN and Hut 8 also plunged 11.2 percent and 23.2 percent, respectively.
Memory chip and storage companies also suffered steep losses. SK hynix’s American depositary receipts declined 5.1 percent, while Sandisk fell 7.9 percent, Micron Technology 7 percent and Western Digital 6.8 percent. Chip designers Nvidia and Broadcom also dropped.
The drops appear to reflect investors’ concerns that the election of Democratic governors in states such as Texas, Ohio and Georgia could turn growing local opposition to data center construction into tighter regulations and delays in project approvals.
In Texas, Gina Hinojosa was elected governor after pledging an immediate halt to data center construction until the state legislature establishes safeguards. Texas is reportedly expected to account for 25 to 30 percent of U.S. data center capacity scheduled to come online by 2030.
James Talarico, Texas senator-elect, also claimed victory after pledging to eliminate preferential tax breaks for Big Tech companies and introduce tighter regulations on data center development.
In Ohio, Amy Acton was elected governor after proposing a conditional moratorium on data center construction, requiring developers to cover 100 percent of electricity and water costs, use union labor exclusively and ensure operational transparency.
In Georgia, Keisha Lance Bottoms won the gubernatorial election after pledging to suspend data center development statewide until its environmental impact and effects on electricity rates could be assessed.
“We estimate 10 percent of data centers will not happen now,” Yorkville Ives Partner Dan Ives wrote in a post on X, adding that the election results “will slow the pace of the planned 800 to 1,000 data centers across the U.S. fueling the AI Revolution.”
A technician works at an Amazon Web Services AI data center in New Carlisle, Ind., Oct. 2, 2025. Reuters-Yonhap
A slowdown in data center construction could affect memory chip purchases by major tech companies.
AI data centers require AI accelerators equipped with high-bandwidth memory, server DRAMs and enterprise solid-state drives. If data center projects are delayed, the deployment of servers and AI accelerators would also be pushed back, potentially delaying memory chip demand.
Samsung Electronics and SK hynix are currently enjoying a boom in earnings driven by rising memory prices amid supply bottlenecks. Though the overall direction of U.S. investment in AI is unlikely to change, a slowdown in the pace of investment could delay memory chip orders, potentially helping ease the supply shortages that have fueled the current boom.
On Thursday, Samsung Electronics closed at 201,500 won, down 7.57 percent from the previous session, while SK hynix shares dropped 9.46 percent to 1,264,000 won.
Analysts said the election results suggest a potential slowdown in AI investment, but a full-scale suspension or abrupt halt is unlikely.
“Nationwide regulations would face significant hurdles given President Donald Trump's possible veto and concerns over U.S. competitiveness in AI,” Kiwoom Securities analyst Han Ji-young said.
“Instead, alternative measures under discussion include requiring companies to shoulder a greater share of power grid expansion costs and restricting project approvals in certain regions.”
Democrats secured majorities in both chambers of Congress, but they fell short of the two-thirds majority needed to override a presidential veto.
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