The technology of storage allows data to be "remembered." Your work software and game applications become stable and smooth thanks to DRAM (memory), while the photos and short videos you take can be read anytime from NAND (flash memory) and HDDs (hard disk drives). HBM (high-bandwidth memory) is currently breaking through computational bottlenecks for the various AI tools you use, providing ultra-fast throughput for massive data.
Storage is also the cornerstone of the digital world, playing a pivotal role as the wave of digitalization sweeps across the globe. From everyday consumer electronics like mobile phones to professional fields such as industry, automotive, and cloud computing, and from autonomous driving and big data to AI large models and cloud services, all technologies rely on storage. It can be said that without robust storage capabilities, data cannot be effectively accumulated, and computation and analysis would lose their source.
Huashang Fund researcher Kang Yidan stated that, looking across the PC era, the smartphone era, and the current AI era, the storage industry has historically exhibited significant cyclical volatility. Currently, the storage industry is in a super-cycle driven by AI, characterized by a distinct pattern of "rising volume and prices alongside structural upheaval." The core driver is the structural supply-demand imbalance brought about by AI data center construction, as each AI server demands several times more DRAM and NAND than a standard server.
"The supply-demand gap is the fundamental reason for the market trend. According to TrendForce forecasts, DRAM demand is expected to grow by 26% year-on-year in 2026, while supply is projected to increase by only about 20%, indicating a significant gap," observed Huashang Fund researcher Kang Yidan. She believes the global storage market size is poised to approach $300 billion by 2027.
Oligopolistic Competitive Landscape
In the view of Huashang Fund researcher Kang Yidan, the storage industry exhibits typical oligopolistic market characteristics, and this current cycle is further strengthening the pricing power of leading manufacturers.
Data from Wind Information shows that, as of Q1 2026, the global DRAM market is currently dominated by large US and Korean manufacturers, with the top three players holding a combined share exceeding 90%. The NAND market is monopolized by the top five companies, with a combined share over 87%. The HDD market is also highly concentrated, essentially controlled by three manufacturers. These three companies have coincidentally adopted strategies of "controlling production to raise prices and optimizing product mix," prioritizing their limited capacity for higher-margin enterprise and data center products. The HBM market shows even higher concentration, with the top three manufacturers holding close to 100% of the market.
Breaking it down by product category, DRAM is the most watched segment in this cycle. Whether it's DDR5 for servers or LPDDR for end devices like mobile phones, contract prices are continuing to rise significantly. The price increases for NAND and SSDs (solid-state drives) are following closely. Additionally, the massive amounts of "cold data" generated by AI require low-cost, high-capacity storage. HDDs still hold a clear advantage in cost per GB compared to SSDs, making them almost the only economical solution for cold storage and archiving scenarios. The full-year HDD capacity of some manufacturers has been essentially fully booked by AI data center clients, with some order lock-in periods even extending several years into the future.
Significant Room for Domestic Substitution
"Storage is one of the semiconductor sub-sectors with the most urgent need for domestic substitution," stated Huashang Fund researcher Kang Yidan. She noted that China is the world's largest consumer of storage chips, but the domestic self-sufficiency rate is relatively low, indicating vast potential for future localization.
Currently, China's economy has transitioned from a phase of high-speed growth to one of high-quality development. Against this macroeconomic backdrop, "domestic substitution" has become a core engine for building new quality productive forces and achieving autonomous control over industrial and supply chains. As China continues to increase its support for the development of the storage industry, communication and collaboration among upstream and downstream enterprises in the industrial chain are strengthening. Coupled with the explosion in AI computing power, the proliferation of AI-capable edge devices, and the development of intelligent connected vehicles, which continue to drive up domestic structural demand for high-density storage, Chinese manufacturers are facing a historic window of opportunity. A group of domestic suppliers with core competitiveness is rising, achieving parity or even leadership in specific areas such as technology, performance, market share, and cost advantages. The pace of domestic substitution is accelerating comprehensively.
Potential for Cyclical Correction Warrants Attention
Huashang Fund researcher Kang Yidan believes that the storage industry is currently in a golden period of prosperity, with AI reshaping the industrial landscape. However, its inherently strong cyclical nature means that beneath this prosperity lies the potential for a correction driven by planned capacity releases and a potential ebb in demand. Simultaneously, geopolitical risks require close attention, as US export controls on China may further tighten. Additionally, if the commercialization of AI takes longer than expected or yields lower returns, data center projects might be canceled or delayed, which also necessitates ongoing observation.
The views expressed above do not constitute any investment advice. The market carries risks, and fund investment requires caution.
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