Huaxi Securities released a research report stating that the global AI boom is driving the storage industry into a "super cycle" characterized by a widening supply-demand gap. High-end products such as DDR5 and HBM are experiencing surging demand, while supply remains constrained due to lengthy capacity expansion cycles, leading to sustained price increases. Meanwhile, China's domestic storage industry faces urgent expansion needs amid the dual catalysts of self-sufficiency and a favorable industry cycle, with long-term capacity growth potential exceeding tenfold. Key insights from Huaxi Securities include:
**Supply-Demand Gap to Widen Further, Global Storage Enters Super Cycle** AI-driven demand for DRAM/NAND is skyrocketing, while major manufacturers reduced output in H1 2025 to clear inventory and shifted focus to high-end products like DDR5 and HBM, squeezing legacy DDR4 capacity. As of November 10, 2025, DDR4/DDR5 prices surged 901%/372% year-to-date, while NAND 64GB MLC/32GB MLC rose 56%/70%. The supply-demand imbalance is expected to intensify: 1) **Demand Side**: GPT-5 alone is projected to require 9EB DRAM/200EB NAND in 2025, doubling conservatively to 18EB/400EB in 2026—consuming 43%/39% of global DRAM/NAND capacity. Concurrently, consumer electronics and automotive sectors show moderate recovery. 2) **Supply Side**: With wafer fab construction cycles lasting 2–3 years and overseas leaders maintaining disciplined expansion, new capacity will lag demand growth.
**Self-Sufficiency Meets Boom Cycle: China’s Storage Expansion Potential Exceeds 10x** 1) Self-sufficiency has been the core driver of China’s storage capacity expansion in recent years. Near-term catalysts include the anticipated IPOs of CXMT and YMTC, with combined capacity expansion projected at 100K–120K wafers/month by 2026 and capital expenditures surpassing $16 billion. With overseas capacity fully booked/locked, China’s domestic storage chip shortage is more acute, accelerating expansion urgency. 2) AI-driven demand could double global storage capacity to 6.6 million wafers/month mid-term. China’s advanced storage competitiveness and limited overseas expansion appetite position it as the primary global capacity contributor. Assuming a 50% long-term market share and value-add from advanced node upgrades, China’s expansion potential exceeds 10x.
**Valuation and Upside: A-Share Storage Equipment Undervalued** Storage equipment, wafer fabs, and modules—the three core segments—are poised to benefit from the global super cycle: 1) Overseas markets show these segments outperforming SOX indices. Storage equipment trades at 30–40x TTM P/E, well above fabs/modules. Lam Research’s market cap alone exceeds the combined value of SanDisk, Seagate, and Western Digital. 2) A-share storage equipment lags in gains and valuation: As of November 7, 2025, Piotech/AMEC/Jingyi Equipment rose 128%/71%/97% YTD, trailing module stocks. Their combined market cap of ¥311B remains below the module segment’s ¥500B.
**Investment Recommendations** Huaxi Securities recommends overweighting A-share semiconductor equipment amid the global storage super cycle: 1) **High Storage Exposure**: Top picks include Piotech, Jingyi Equipment, and AMEC; beneficiaries include Wavetron. 2) **Breakthrough Plays**: Highlighted are Skyverse, Jetsonic, Changchuan Tech, and Wuhan Jingce; beneficiaries include JCET. 3) **Others**: NAURA, Hwatsing, Leadcore, and Kingsemi.
**Risks**: Slower-than-expected fab capex, escalating overseas sanctions, heightened competition, and technology delays.
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