Overseas memory manufacturers are seeing sustained profitability growth, while some domestic memory module firms have swiftly turned losses into profits, with accelerated earnings expected in H2 2025. Niche memory chips and supporting supply chain companies are also benefiting from the ongoing memory price surge.
The AI era has triggered explosive demand for multimodal applications and enterprise storage, accelerating innovation among memory manufacturers. On the supply side, manufacturers are focusing expansion on high-margin products like HBM, with limited NAND Flash capacity additions and a faster exit from niche DRAM markets. This has led to a supply-demand imbalance, driving prices upward. Looking ahead to 2026, the supply gap may widen further, extending the industry's upward cycle.
Key insights from CMSC: 1. **Demand-Driven Cycle**: Unlike short-term price hikes driven by supply cuts or manufacturer adjustments, strong memory upturns are typically demand-led. The current surge stems from AI servers, multimodal applications, and technological advancements. After inventory adjustments and controlled capacity, prices entered an accelerated uptrend in Q3 2025, with NAND Flash and DDR5 seeing significant increases.
2. **AI-Driven Demand Growth**: - Data volumes are expanding rapidly, shifting demand drivers from smartphones to generative AI. Data center storage needs could grow from 600EB in 2020 to 2.4ZB by 2028. - Models like Sora2 consume vastly more storage—100MB for a 10-second 4K video versus KB-sized text files. - NAND Flash demand may rise over 200EB by 2026, with AI boosting hot, warm, and cold data storage needs and accelerating SSD adoption in data centers.
3. **Technological Advances**: - HBM4 mass production is set for 2026, with sold-out capacity at firms like Micron. - Innovations include 3D DRAM solutions and memory-CMOS bonding to enhance performance. - New architectures like HBF aim to address memory bottlenecks in AI applications.
4. **Supply Constraints**: - Manufacturers are prioritizing high-end products like HBM, with no major NAND Flash capacity expansions planned. Low capital expenditure and production delays suggest 2026 output will lag demand.
5. **Price Trends**: - October saw memory prices jump 40–100% month-on-month. AI server demand has prompted widespread price hikes, with module suppliers in China and Taiwan following suit.
6. **Profitability Outlook**: - Overseas leaders like Samsung, Micron, and SK Hynix posted record earnings in Q3 2025. - Domestic module makers improved margins, turning profitable sequentially. Firms like Gigadevice and Macronix are raising prices, with narrowing losses expected in H2.
**Risks**: Intensified competition, macroeconomic shifts, slower domestic substitution, and U.S. export controls on firms like YMTC.