China Merchants Securities (CMSC) released a research report stating that since the global memory price recovery began in the first half of 2025, spot and contract prices accelerated their rise in Q3-Q4 2025. Recent observations indicate that the quarter-on-quarter price increases for various memory categories in Q1 2026 have surpassed expectations. It is projected that the global memory supply will remain generally tight throughout 2026, with AI demand growth consistently outpacing capacity expansion. Meanwhile, other consumer memory and niche memory segments are experiencing price surges far exceeding normal levels due to capacity squeeze and downstream panic stockpiling. This year, multiple segments of the domestic memory industry chain are expected to benefit from this wave of shortages and price hikes. The core recommendation is to focus on memory original manufacturers, memory module/chip companies, and memory packaging/testing and foundry segments. The main views of CMSC are as follows:
AI storage is generating additional demand increments, with a multi-level storage system optimizing and supplementing the rapidly increasing KV cache space. At CES 2026, NVIDIA unveiled its latest Inference Context Memory Storage Platform in a keynote speech. Utilizing BlueField-4 DPUs, it constructs a dedicated context memory layer operating at the Pod level. At the compute node level, the KV hierarchy encompasses GPU HBM, host memory, local SSDs, ICMS, and network storage. The ICMS fills the missing KV cache capacity gap between G1-G3 and G4. Subsequently, if a standard configuration involves one storage rack for every eight compute racks, each GPU will gain an additional 16TB of NAND space. DeepSeek's latest paper introduces the Engram module, which embeds the most frequently accessed knowledge vectors in the fastest GPU memory (HBM), places moderately accessed data in higher-capacity host memory (DRAM), and stores massive, low-frequency long-tail knowledge on inexpensive NVMe SSDs. This hierarchical design enables models to possess vast "memory capacity" without sacrificing speed, leveraging more DRAM/SSD to alleviate HBM computational pressure.
On the supply side, DRAM capacity growth may lag behind demand increases, and NAND supply is becoming more concentrated in enterprise-grade products. DIGITIMES reports that in 2026, Samsung and SK Hynix's DRAM output is expected to increase by +5% and +8% year-on-year respectively, with Samsung's annual output potentially reaching 7.93 million wafers and SK Hynix's reaching 6.48 million wafers. Micron expects its 2026 DRAM production to be close to its 2025 level of 3.6 million wafers. However, the capacity increases from these three major manufacturers in 2026 may still fall significantly short of market demand, with an estimated fulfillment rate for client DRAM demand of only 60%, and even less than 50% for server DRAM. Regarding NAND, Omdia anticipates Samsung's annual capacity might be revised down from 4.9 million to 4.68 million wafers in 2026, and SK Hynix's from 1.9 million to 1.7 million wafers. If Samsung and SK Hynix reduce NAND production, it is likely because DRAM offers the highest profit certainty, pushing NAND-related investments down the priority list. Furthermore, the sustained expansion of demand for high-capacity SSDs from AI data centers, coupled with the transition to QLC, is bound to impact output. The increasing proportion of server and enterprise SSDs may affect the supply ratio of consumer-grade NAND.
The Q1 2026 memory contract and spot price increases have exceeded expectations, with price hikes gradually spreading to foundry and packaging/testing segments. TrendForce forecasts a 55%-60% quarter-on-quarter price increase for conventional DRAM in Q1 2026, primarily due to large-scale capacity shifts by original manufacturers towards server and HBM applications, leading to tight supply in other markets. NAND is expected to see a 33%-38% quarter-on-quarter increase, as original manufacturers control overall capacity and are similarly affected by the crowding-out effect from servers. The overseas NAND giant SanDisk previously proposed long-term volume-lock schemes to several clients requiring 100% cash prepayment, potentially involving contracts up to 3 years. Concurrently, SanDisk's Q1 2026 contract prices could see near-doubling increases, surpassing market expectations of 30%-40%. Within the memory industry chain, using Taiwanese companies as an example, demand from major clients like Micron continues to grow, leading to an increasing proportion of outsourced orders. Companies like Powertech Technology and ChipMOS have recently seen sustained improvements in their capacity utilization rates. Combined with rising costs, there are reports of price increases being passed on to customers throughout 2026. Channels within domestic memory foundry and packaging/testing indicate widespread phenomena of tight capacity and price adjustments.
Global memory giants are gradually releasing strong earnings forecasts, drawing attention to the intensive financial report disclosures expected in late January and early February. Samsung released its Q4 2025 earnings preview, forecasting revenue of approximately 93 trillion KRW, up 23% year-on-year and 8% quarter-on-quarter; operating profit is estimated at about 20 trillion KRW, surging 208% year-on-year and 64% quarter-on-quarter. BIWIN Storage released its 2025 annual earnings preview, with Q4 2025 revenue estimated between 3.4 and 5.4 billion yuan (midpoint up 165% year-on-year and 86.8% quarter-on-quarter); net profit attributable to shareholders is forecast between 820 and 970 million yuan (midpoint up 249.6% quarter-on-quarter); and adjusted net profit between 780 and 920 million yuan (midpoint up 299.1% quarter-on-quarter). Nanya Technology reported record Q4 2025 revenue of 30.1 billion NTD, up 60% quarter-on-quarter, with a net profit after tax of 11.1 billion NTD, surging 608% quarter-on-quarter. Gross margin reached 49%, up 30.5 percentage points quarter-on-quarter, and net profit margin was 36.8%. Full-year 2025 revenue was 66.6 billion NTD, up 95% year-on-year. The market expects Nanya's shipment prices to rise over 20% quarter-on-quarter in Q1 2026, with potential for slight increases in subsequent quarters. The upcoming period from late January to early February marks a dense earnings season for global memory giants, with companies like SK Hynix, Samsung, SanDisk, and Western Digital set to disclose their latest results and outlook, suggesting a wave of concentrated positive catalysts is imminent.
Investment advice: Since January, the stronger-than-expected Q1 2026 memory chip price increases have driven market performance in the first half of the month. The latter half will see numerous earnings previews from domestic memory companies and quarterly reports from overseas memory manufacturers. Additionally, the observed spread of price hikes in memory packaging and testing warrants attention. Subsequently, it will be important to monitor whether supporting chips closely related to memory will experience synchronous price increases. If such a scenario occurs, following the initial wave of spread to packaging/testing, the broader memory sector's positive momentum could potentially extend to wider areas. For now, the core recommendation remains focused on memory original manufacturers, memory module/chip companies, and memory packaging/testing/foundry segments. Future opportunities should be watched in areas like memory controller chips and interface chips. In terms of specific targets: 1) Overseas memory: SanDisk (SNDK.US), Micron (MU.US), SK Hynix, Western Digital (WDC.US), Kioxia, Samsung, Seagate (STX.US), etc.; 2) Modules: Jiangbolong (301308.SZ), Demingli (001309.SZ), BIWIN Storage (688525.SH), Netac Technology (300042.SZ), etc.; 3) Niche memory: GigaDevice (603986.SH), Puramatrix (688766.SH), Giantec Semiconductor (688123.SH), Ingenic Semiconductor (300223.SZ), Dosin (688110.SH), Hensym (688416.SH), etc.; 4) Foundry and packaging/testing: SMIC (00981.HK), Hua Hong Semiconductor (01347.HK), JCET (600584.SH), Huicheng (688403.SH), Tongfu Microelectronics (002156.SZ), Huatian Technology (002185.SZ), Shenzhen S.C. (000021.SZ), etc.; 5) Equipment: NAURA (002371.SZ), AMEC (688012.SH), Piotech (688072.SH), Hwatsing (688120.SH), ACM Research (688082.SH), Leadmicro (688147.SH), Kingsemi (688037.SH), Jingce Electron (300567.SZ), Skyverse (688361.SH), etc.; 6) Supporting chips: Montage Technology (688008.SH), Union Memory (688099.SH), etc.
Risk warnings include downstream demand falling short of expectations, potential risks associated with industry price trends, macroeconomic environment risks, supply chain instability risks, and intensifying industry competition.
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