Memory prices have been rising in the past year. It is no longer news that the three major memory giants, Samsung, SK Hynix and Micron, are making money. It is not new to see profits 10 times last year in one year. Samsung's profit of US$200 billion this year is equivalent to its profits in the past 40 years. When will the money earned by memory manufacturers end? You can really do the math. UBS UBS estimated the revenue and profits of Samsung and SK Hynix from 26 to 29, as follows:
Let's look at the optimistic scenario first. Samsung's operating profit this year is about 441 trillion won, 837 trillion won in 27, and 902 trillion won in 28. In 2029, due to the decline in gross profit, operating profit will be reduced to 632 trillion won.
The total of these four years is approximately 2,813 trillion won, but UBS does not include the first half of 2025, nor does it include 2030, because memory manufacturers predict that price increases will continue until at least 2030.
Considering that memory prices will peak in 27-28, profits in 30 years will continue to decline. The profit of 25 is considered to be half of that in 26 years, and the profits in 30 years will return to the level of 26 years.Calculated in this way, the five-year profit is about 3.5 trillion won, which is about 15 trillion yuan.
Under the same setting, SK Hynix's profits over the next five years will reach about 2,500 trillion won, or about 11 trillion yuan. Micron is not included. The memory shares of the three major manufacturers are about 35%:30%:25%. It is estimated that Micron can earn about 8 trillion yuan in profits in five years.
UBS’s calculations include optimistic and pessimistic scenarios.Under optimistic conditions, the three major manufacturers are estimated to earn 35 trillion from the market in five years., in the pessimistic case, even if the achievement rate is only 70%, there will be a profit of about 25 trillion yuan.
A compromise means that these three giants can earn 30 trillion U.S. dollars in profits from the market during the price increase cycle from 2025 to 2030, which is almost 4 trillion U.S. dollars in U.S. dollars, with an average annual profit of 800 billion U.S. dollars, and each of the three companies has an average annual profit of 250 billion U.S. dollars.
This is still the case when memory profit margins remain high in 2030. If the AI market has not collapsed by then and demand can continue, there will still be several years to go.
The three major memory manufacturers can earn US$800 billion in annual profits, which is equivalent to about US$6 trillion of the global electronics industry working for memory manufacturers (AI calculates that the annual profit of the global electronics industry is less than US$400 billion), because memory manufacturers will maintain a gross profit margin of 70-90% in the past few years, and the gross profit margins of many electronic industries are less than single digits. In the future, memory costs will account for 30-50% of the overall BOM cost. Who can survive?
For such a situation, the more it is considered, the more outrageous it becomes. Such an industrial situation is obviously unsustainable. Not to mention that ordinary products cannot survive, can the AI industry withstand such a deformed industrial situation?
Then we have to go back to the origin. If such an outrageous situation occurs, it can only mean that it is beyond the scope of rationality. It will only be a huge bubble, and it depends on how long it can last until it bursts.