After finishing a two-week research trip, Wedbush analyst Matt Bryson released a report stating that feedback from the California supply chain is just as broadly positive as what was heard in Asia, with "green flags" appearing across six key areas: memory, hard disk drives (HDD), CCL/substrates, accelerators, computing, and optics. Here are the main takeaways from this survey.
Regarding memory (NAND and DRAM), the fourth quarter appears set to bring another round of double-digit price increases, with NAND and DRAM contract prices potentially rising 10% to 20%. NAND gains are expected to land at the lower end of that range, while DRAM could see increases in the mid-to-high double digits. Wedbush expects tight conditions to persist through 2027 and emphasized that it finds it difficult to understand some industry analysts' forecasts of downward pricing next year. Additionally, this landscape creates opportunities for emerging solutions such as P-type CSP architectures, Liquid's CXL, and ScaleFlux. Looking beyond 2028, there are more questions about the supply-demand dynamic, given both new capacity additions (starting with DRAM) and anticipated HBM optimization. Memory makers continue to believe this shift is driven by supply constraints rather than optimal design. Large buyers, like investors, are grappling with how numerous variables will affect the supply-demand balance and future pricing.
On HDDs, meetings with Seagate Technology (STX.US) and Western Digital (WDC.US) were highly consistent with their public commentary: both want to control capacity and work with customers to ensure fair supply and reasonable prices. Wedbush continues to believe that with contract resets in 2027 and 2028, the industry is poised for more robust pricing, and buyers beyond the large cloud providers and original equipment manufacturers (OEMs) will see significant price increases.
For CCL/substrates, CCL supply (from Elite, ITEQ, and others) appears to be tightening further. Intel (INTC.US) again emphasized that substrates remain a major bottleneck, which could limit shipments even if the company successfully increases its own capacity. Wedbush noted that insufficient supply of E-glass and T-glass remains a constraint on boosting shipments of both product types.
On accelerators, when leaving Asia, Wedbush noted that the supply chain expects a significant increase in construction spending over the coming months. The U.S. leg of the trip did not change this view: Nvidia (NVDA.US) reiterated its belief that industry capital expenditures will rise to $3 trillion to $4 trillion by 2027; Cerebras (CBRS.US) is making strong progress on the prerequisites needed to meet or even exceed its targets; and returns on investment for new cloud providers appear faster than the 2-3 years mentioned during summer discussions.
In computing, Intel still believes its products are not fully meeting end-user demand, while numerous Taiwan-based manufacturers discussed that AMD (AMD.US) is raising its component and material supply requirements for 2027 to satisfy strong computing demand.
For optics, Lightmatter provided a strong outlook, with highlights including NPO and Guide expected to ship in initial production volumes next year, followed by CPO and its plug-in solutions shipping in 2028. This roadmap is broadly in line with Wedbush's view that optical module adoption will continue to remain strong as the technology matures.
Comments