Bernstein analysts forecast that by the third quarter of 2026, contract price increases for both DRAM and NAND will narrow to around 20% quarter-on-quarter. Sluggish demand from PC and smartphone markets, combined with price caps embedded in long-term agreements (LTAs), are compressing the upside for memory pricing. While a supply shortage is expected to persist into 2027, the room for further price increases is becoming limited, signalling that the current upcycle may be approaching its end.
The momentum behind memory chip price hikes is clearly decelerating. According to Bernstein's latest data, contract prices for DRAM and NAND in the third quarter of 2026 are expected to rise by roughly 20% quarter-on-quarter. This marks a significant slowdown from the second quarter and could fall short of the market's most recent expectations. Although the supply deficit is projected to extend into 2027, upward price movement is being squeezed by demand-side resistance and price ceilings in LTAs.
Bernstein's July memory pricing report, based on contract price data, shows that traditional DRAM prices are expected to increase by approximately 17% quarter-on-quarter in the third quarter. This is slightly above the firm's own model forecast but may be lower than some of the latest market predictions. For NAND, when including SSDs, the overall increase is near 20%, aligning closely with the model but also potentially missing the most optimistic scenarios.
Analyst Mark Li at Bernstein noted that memory is becoming a growing cost burden for both AI and non-AI applications. Price caps embedded in some LTAs are also limiting further price gains. He believes the recent stock price correction creates an opportunity for short-term technical rebounds, but the potential for further price increases is now limited.
DRAM: Server Demand Strong, But PC and Mobile Headwinds Intensify
The DRAM market is showing clear internal divergence. Server demand remains robust, with customers anticipating tighter supply in 2027 and actively building inventory. According to TrendForce, server DRAM contract prices rose by 8% to 15% month-on-month in July, with the third quarter expected to see a sequential increase of 13% to 18%. However, for clients who have signed LTAs with price caps, July prices are already nearing the agreement ceiling, creating a noticeable gap in pricing compared to non-LTA customers.
The PC and mobile segments present a starkly different picture. PC DRAM contract prices increased by 13% to 16% month-on-month in July, with a forecast sequential rise of about 17% in the third quarter. However, OEMs are raising end-product prices due to higher memory costs, leading to expectations of a more than 10% sequential decline in PC shipments for the third quarter. This has significantly reduced OEMs' willingness to purchase memory at higher prices.
For mobile DRAM, TrendForce predicts a sequential contract price increase of roughly 10% in the third quarter, a notable narrowing from the second quarter. As smartphone OEMs cut their production plans, their resistance to price hikes has grown substantially. Looking ahead to the fourth quarter, TrendForce expects mobile DRAM price increases to narrow further to single-digit percentages.
Consumer DRAM has performed relatively better, with contract prices rising 12% to 16% month-on-month in July and a forecast sequential increase of 24% to 30% in the third quarter. However, TrendForce observes that spot prices are beginning to lag behind contract prices, suggesting that demand may be peaking.
NAND: Wafer Price Rally Stalls as SSDs Provide Main Support
The divergence in the NAND market is even more pronounced. NAND wafer contract prices were largely flat in July, as module makers, facing weak consumer demand, refused to accept further price increases. Trading volumes have shrunk dramatically. TrendForce notes that with consumer demand sluggish, module makers find NAND wafer prices already high and prefer to consume their own inventories.
Mobile NAND (eMMC/UFS) has performed relatively better, with TrendForce forecasting a sequential price increase of about 20% in the third quarter. This is primarily driven by a catch-up logic aimed at aligning profitability with enterprise SSDs. Notably, Chinese suppliers, with lower pricing during this upcycle, have gained a larger share of shipment volumes.
SSDs remain the core support for the NAND segment. Bernstein estimates that client and enterprise SSD contract prices will increase by roughly 20% sequentially in the third quarter, lifting the overall NAND increase to near 20%. However, the firm also points out that the rate of NAND price increases will continue to slow, with a peak possibly occurring at some point in 2027. Increasing competition from China adds a structural pressure.
Short-Term Rebound Window Exists, But Upside Potential Is Limited
Bernstein maintains "Outperform" ratings on Samsung Electronics, SK Hynix, Micron, and SanDisk, with target prices of KRW 440,000, KRW 3,300,000, USD 1,300, and USD 3,000, respectively. The firm rates KIOXIA as "Underperform" with a target price of JPY 40,000.
The firm believes the memory supply shortage will persist into 2027, keeping prices elevated. However, the potential for further increases is now significantly compressed. On one hand, PC and mobile customers have stable or even rising inventories and, after drastically cutting shipment plans, have much lower acceptance of price hikes. On the other hand, price caps embedded in some LTAs are limiting the pace of server DRAM price increases. Furthermore, the rising cost of memory is starting to burden both AI and non-AI applications, with signs of demand-side pressure that cannot be ignored.
Bernstein notes that the recent correction in memory stocks offers an entry point for short-term technical bounces. However, investors should be cautious about the risks of the pricing cycle entering its final stages. The price ceiling may now be visible, rather than a distant prospect.
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