A new research report from BofA Securities indicates that the global memory chip industry's business model is increasingly converging with that of the chip foundry sector, exhibiting "foundry-like" characteristics such as significantly reduced cyclicality, more stable prices, and continuously improving profit margins. This transformation is supported by multiple factors: DRAM and NAND spot prices continued to surge significantly in early 2026, with DDR4 prices soaring over 2000% in a single month; the strong earnings guidance released by Taiwan Semiconductor Manufacturing also confirms the high prosperity of the industry chain, particularly benefiting memory leaders like SK Hynix.
According to Hard AI, during recent roadshows on the US East and West Coasts, the BofA team observed that most investors acknowledge the current memory cycle's strength far exceeds previous ones and have already reaped substantial returns, but market sentiment is clearly divided: there are both optimists who firmly believe in AI-driven long-term industry prosperity and cautious investors concerned about high valuations and the sustainability of future momentum.
Investors are primarily focused on the following risks: after 2-3 years of price increases, the industry's price-to-book ratio is at a historical high; capital expenditures continue to rise, with leading companies like Samsung Electronics significantly expanding production; the momentum for Average Selling Price (ASP) increases may slow after the second half of 2026; the market remains freshly aware of the demand correction following the 2019 cloud computing hardware cycle; and there is a structural contradiction between IT production rhythms and DRAM supply.
Despite these concerns, the report's core thesis that the memory industry is shifting towards a "high-profit, stable-price, weak-cycle" operational model has gained broad acceptance. Even if ASP increase momentum weakens after Q2 2026, the industry is still expected to maintain a high prosperity range, forming a "super cycle" centered on profit margins. Furthermore, traditional DRAM capacity is accelerating its shift towards HBM or upgrades to premium products like LPDDR5/GDDR7, and sales of multi-chip integration solutions continue their growth trend.
Notably, some aggressive investors believe that if SK Hynix's profitability can be benchmarked against Taiwan Semiconductor Manufacturing, its market capitalization could potentially reach the trillion-dollar scale. However, the report also cautions that the NAND market may face new supply-demand balance pressures by the end of 2026 due to capacity releases and the process migration to 200-300 layers.
Taiwan Semiconductor Manufacturing's growth guidance benefits Hynix, while Samsung faces clear pressure. Taiwan Semiconductor Manufacturing's recently announced earnings guidance is seen as a key industry bellwether: the company expects a compound annual revenue growth rate of 30% by 2026 and will maintain an average annual growth rate of over 20% until 2029, with annual capital expenditures remaining above $50 billion. This optimistic outlook is closely linked to SK Hynix's leading position in the HBM market, where it currently holds over 60% of the global HBM supply share. These dynamics are reshaping the competitive landscape. Taiwan Semiconductor Manufacturing, with its sustained leadership in 2nm process technology and CoWoS advanced packaging, continues to solidify its technological moat, limiting Samsung Electronics' ability to catch up in the foundry space. A financial comparison also highlights the gap: Samsung's foundry business remains loss-making, while Taiwan Semiconductor Manufacturing's operating profit margin has long been above 50%.
Under this industry linkage, SK Hynix's strategic position as a core HBM supplier to Taiwan Semiconductor Manufacturing is further strengthened, not only consolidating its competitive advantage in the memory chip field but also promoting the formation of a closed-loop ecosystem spanning advanced processes, high-end packaging, and high-performance memory.
Spot prices skyrocket, supply remains tight. The report points out that the DRAM spot market is exhibiting extreme tightness. In the first half of January, DDR4 and DDR5 spot prices continued their strong momentum, with weekly increases of about 10%, extending the cumulative 100%-200% upward trend since Q4 2025.
Specifically: the spot price for 16Gb DDR5 has risen to $35.0, up 10% for the week, 238% for the quarter, and a staggering 647% year-on-year; the spot price for 16Gb DDR4 reached $75.8, up 7% for the week, 323% for the quarter, and an even more dramatic 2315% year-on-year; the spot price for 8Gb DDR4 also climbed to $29.1, with a year-on-year increase of 1886%.
Notably, a structural "inversion" has appeared in DDR4 spot prices: since June 2025, the price of 16Gb DDR4 ($75) has been significantly higher than that of the same specification DDR5 ($35), creating a rare price inversion phenomenon. This is primarily due to the three major memory chip manufacturers continuously shifting traditional DDR4 capacity to more advanced processes, leading to persistent tightness on the DDR4 supply side. Currently, manufacturers and OEMs still have concerns about the supply security of traditional DRAM modules. The report anticipates that spot prices still have further upward potential, although the current surge is partly driven by speculative trading rather than being entirely supported by actual demand. Additionally, NAND spot prices also maintained an upward trend, with weekly gains ranging between 5%-10%.
Trade data confirms strong industry momentum. South Korea's semiconductor export data continues to confirm the industry's high prosperity. In the first 10 days of January 2026, semiconductor exports reached $4.6 billion, a substantial 46% increase year-on-year, and although down 12% month-on-month, they remain at historically high levels. This marks the 25th consecutive month of year-on-year growth for South Korean semiconductor exports, with the growth rate consistent with the high levels seen in November 2025 (+18%) and December 2025 (+46%).
Looking ahead, the report suggests investors focus on potential supply-demand opportunities in the NAND market in the second half of 2026, while closely monitoring the impact of capital expenditure expansion on the industry's long-term profit structure. Overall, the structural transformation of the memory chip industry towards a "foundry-like" model is driving the sector to break through traditional cyclical valuation logic and embark on a sustainable value re-rating process.
Comments