Ge Long Hui·2025-10-27 00:16Core Viewpoint - The storage chip sector in the A-share market has experienced a significant surge, with the index rising over 60% this year, indicating a historic turnaround in the industry [2][4]. Market Performance - The storage market is described as "booming," with a notable increase in prices across all storage products, including DRAM and NAND Flash [4]. - In September, the spot price of DRAM surged nearly 100% year-on-year, with some DDR4 models increasing over 300% since April [5]. - Samsung Electronics has notified major clients of price increases for DRAM by 15%-30% and NAND by 5%-10% in the fourth quarter [6]. Supply and Demand Dynamics - The demand for storage chips has skyrocketed due to the expansion of AI-driven High Bandwidth Memory (HBM), which requires 8-10 times more storage capacity than traditional servers [6][7]. - HBM's gross profit margin is estimated to be 50%-60%, significantly higher than the 30%-40% for traditional DRAM, prompting manufacturers to shift production towards HBM and DDR5 [8]. - Major manufacturers are reducing production of older DDR4 memory, with Samsung planning to stop accepting DDR4 orders by June 2025 and Micron halting DDR4 supply in the fourth quarter [10][11]. Inventory and Market Conditions - The average inventory of DRAM has dropped to just 8 weeks, significantly below the healthy level of 10-12 weeks, indicating a tightening supply [12][13]. - Companies are entering a "panic buying" mode, securing long-term supply agreements for 2-3 years instead of the usual quarterly contracts [13]. Future Outlook - The current price increases are seen as a structural supply shortage rather than a sudden demand surge, with manufacturers strategically focusing on higher-margin products [14][16]. - New capacity takes 1.5 to 2 years to establish, making it difficult to quickly address the current supply gap [18]. - The ongoing shift in the storage industry is irreversible, with AI demand and capacity constraints driving the market dynamics, making it unlikely for prices to decrease in the short term [19].