"The special thing about this price increase is that I have been in this industry for so many years and I have never seen a price increase cycle last for such a long time before." An employee of a domestic storage module factory recently lamented to a reporter from the Associated Press. At present, the memory chip market is experiencing an unprecedented wave of comprehensive shortages and price increases driven by AI. The rise that started in the first half of the year, instead of slowing down in the fourth quarter, showed signs of further intensification.
Someone in the storage industry chain told reporters from Cailian News that some storage original manufacturers have adopted a quota suspension strategy for some DRAM and Flash production lines; the pressure of price increases has also been transmitted to the end market. Lei Jun, founder of Xiaomi Group, said bluntly on Weibo on the 24th that "the recent memory price increases have been too much."
The reason is that the core driving force of this round of price increases is not simple cyclical fluctuations, but the explosion of AI demand represented by HBM, which is completely breaking the traditional supply and demand balance in the storage industry.
TrendForce analyst Xu Jiayuan pointed out to reporters from China Financial News Agency that original factory production capacity is being allocated to high-end server DRAM and HBM first, thus squeezing the supply of old process products such as DDR4 and LPDDR4X required for traditional consumer electronics. The shortage of DDR4 may last until H1 in 2026. For domestic manufacturers, Xu Jiayuan believes that module factories have actively stocked up particle and wafer (wafer) inventories, and the domestic storage industry chain is trying to welcome this new era of structural prosperity by actively stocking up and raising prices.
Fourth-quarter growth exceeded expectations: AI-driven “planned sacrifices” caused imbalances in the supply structure
As we all know, the storage industry is highly cyclical, and surges are often followed by downturns. This year, memory chip prices have been rising for more than half a year. Entering the fourth quarter, the rise has not slowed down, but has been further intensified due to the superposition of multiple factors.
The latest quotations in the CFM flash memory market show that the upstream costs of the industry are rising rapidly. The spot quotation of DDR4 16Gb 3200 has reached US$13.00 this week, a 30% increase from last week. At the same time, the price of 512Gb Flash Wafer has also increased by more than 20% since October.
A person in the storage industry chain revealed to a reporter from Cailian News that some Dram and Flash products from original manufacturers have stopped quoting. Even if they are quoted, the price validity period is very short. "One price per day," she said.
Xu Jiayuan predicted to reporters that the overall price of DRAM (including HBM) will increase by 13%-18% in the fourth quarter.
Many storage industry practitioners told reporters that this kind of "super cycle" in which the industry chain has comprehensively increased for such a long time has never been seen before.
The capital market has also responded enthusiastically to this "super cycle". On October 24, the concept of A-share memory chips exploded again. Puran (688076.SH) and Shannon Xinchuang (300475.SZ) surged by 20%, while Baiwei Storage (688525.SH) and Longsys (301308.SZ) rose by more than 10%.
The structural imbalance in product supply caused by AI-driven production capacity transfer is the core logic of this round of price increases.
The development of large AI models is driving the industry chain's demand for infrastructure such as GPUs. Morgan Stanley recently predicted that investment by technology giants in AI infrastructure will reach US$400 billion this year. This creates massive demand for memory chips. Yole Group predicts that the revenue of HBM products, mainly used for GPU production, is expected to nearly double to approximately US$34 billion in 2025; the HBM market will maintain a compound annual growth rate of 33% until 2030, when its revenue will exceed 50% of the total DRAM market revenue.
Since HBM consumes more than three times the wafer capacity of standard DRAM, the total production capacity is limited, forcing storage giants to shift their production focus to more profitable HBM and DDR5. Xu Jiayuan told reporters from Cailian News that the original factory has prioritized production capacity to ensure the production of Server DRAM and HBM.
Therefore, as original manufacturers prioritize production capacity to hot high-value products, old process products such as DDR4 and LPDDR4X begin to face "planned sacrifices" and are in short supply. The scope of product price increases has also expanded from HBM, where demand has surged, to the entire storage market.
Several module factory personnel told reporters that starting from the first quarter of this year, the original price of DDR4 has continued to rise. According to the Manmanbuying App, the price of a Kingston DDR4 desktop memory module has risen rapidly since March this year, and the current price has doubled over the same period last year.
Terminal markets such as mobile phones are also responding to storage price increases. The price of some versions of the Redmi K90 series mobile phones released on the 23rd has increased by 100-400 yuan compared with the previous generation. Xiaomi Group President Lu Weibing publicly stated that the cost pressure from upstream has been truly transmitted to the pricing of its new products. He admitted that it cannot change the trend of the global supply chain, and storage costs have risen much higher than expected and will continue to intensify, but Xiaomi hopes that this sincerity can be understood by everyone.
Xu Jiayuan pointed out that in the future, DDR4 supply is expected to continue to be in short supply, at least until 1H26. Chen Libai, chairman of ADATA, also publicly stated a few days ago that he is optimistic that the fourth quarter will be the starting point for storage bullishness and the beginning of serious storage shortages. Next year, the industry can be expected to prosper.
Regarding this situation, Xu Jiayuan told reporters that many downstream manufacturers are already thinking of ways to deal with it. Among them, PC OEMs are accelerating the introduction of DDR5 models to cope with the situation, while consumer fields such as TV and Netcom are slowing down the process of switching from DDR3 to DDR4.
Domestic module manufacturers are actively hoarding goods for future increases
In this new industry cycle started by AI, all links in the domestic storage industry chain are actively adjusting strategies in an attempt to expand profitability and enhance market position.
There are obvious differences in the impact of this "super cycle" on various production links. First of all, for module manufacturers, stocking up has become the key to coping with price increases and ensuring profitability. A person from the Longsys Securities Department told reporters from the Financial Associated Press that upstream price increases have made a positive contribution to the company's gross profit margin because the company has inventory in advance. Xu Jiayuan also said that since August, module manufacturers have been actively stockpiling particles and wafers (wafer) inventory, and have increased module product pricing.
However, not all module manufacturers adopt a large-scale stockpiling policy. A person from the Securities Department of Netac Technology said that the company adopts a "clearing inventory" operating model, and the inventory is smaller than that of its peers, so the performance volatility will be smaller.
Chip design companies and distributors rely more on price transmission in the industry chain.
A person from the securities department of Puran Shares (688076.SH) told a reporter from the Financial Associated Press that the company is negotiating with downstream customers to increase prices. "There will be some supply shortages in the fourth quarter, and then we will definitely negotiate with downstream customers to see if there can be an increase."
A person from the securities department of Shannon Xinchuang (300475.SZ), a distributor, said that as far as the company's distribution business is concerned, the gross profit level is basically stable, but as the upstream purchase price increases, the price of distribution to downstream will also increase. "The impact of the storage market will affect us more due to changes in volume, and the change in gross profit will not be particularly large."
It is worth noting that the price increase demand from international original manufacturers has been transmitted to domestic wafer fabs. A person from a major domestic storage manufacturer told a reporter from the Financial Associated Press that the price increase of foreign original manufacturers has caused some domestic manufacturers to turn to domestic wafer factories. In this context, it is an industry consensus that original manufacturers’ profits have significantly expanded.
Finally, amid this structural change, domestic manufacturers are also accelerating to embrace the new AI cycle.
In addition to actively expanding the supply of enterprise-level SSD and other products, domestic companies are focusing on high value-added areas such as HBM, advanced packaging and server DDR5, trying to seize opportunities as major international manufacturers strategically adjust production capacity.
At present, the more mature links in the domestic HBM industry chain include testing equipment and advanced packaging. Saiteng Holdings (603283.SH) recently stated on the investor platform that the company's HBM testing equipment has been recognized by major overseas customers and has been shipped in batches, and the domestic market is being actively developed. Microelectronics Corporation (688012.SH) has also publicly stated before that it has a comprehensive layout in the advanced packaging field (including high-bandwidth memory HBM process), including etching, CVD, PVD, wafer volume testing equipment, etc., and has released CCP etching and TSV deep through silicon via equipment.
In addition, Baiwei Storage recently stated that the company's wafer-level advanced packaging and testing manufacturing project is in the process of preparation for production. After the project is completed, it will provide customers with a one-stop comprehensive solution of "storage + wafer-level advanced packaging and testing" to further enhance the company's core competitiveness in the field of storage and computing integration.
Xu Jiayuan predicts that with the release of HBM production capacity from major original manufacturers, although it is expected that HBM3e may face oversupply pressure in 2026, the new generation HBM4 has a technical threshold and is still in short supply.