Core Viewpoint - The storage chip market is experiencing a significant price surge, driven by the demand from AI applications, leading to a "storage super cycle" as predicted by Morgan Stanley [3][5][34]. Group 1: Market Dynamics - As of October 21, 2023, the average spot price of DRAM:DDR4 has increased by 484%, reaching $18.63 [1]. - The last cycle ended in September 2023, and a new upward cycle has begun due to strong demand for large model training [5][6]. - The storage chip industry is characterized by cyclical demand and supply, typically alternating every 3-4 years [3][6]. Group 2: Beneficiaries of the Cycle - The primary beneficiaries of the current cycle are HBM (High Bandwidth Memory) and DRAM, as they are crucial for AI performance [7][10]. - HBM is a high-end variant of DRAM, offering significantly higher performance and price, with projections indicating a market size of $50-60 billion by 2026 and $100 billion by 2030 [8][9]. - Major players in the DRAM market, including Micron, Samsung, and SK Hynix, control over 90% of the market share [10]. Group 3: Geopolitical Implications - The rising prices of storage chips are beneficial for the U.S. and South Korea but pose challenges for China, which relies on these technologies for AI development [9][10]. - U.S. pressure on South Korea to restrict HBM exports to China could hinder China's progress in AI model training [10][12]. Group 4: Domestic Market Developments - China is accelerating efforts to develop domestic storage chip capabilities, with policies favoring local manufacturers [13][14]. - Companies like Shannon Semiconductor and GigaDevice are making strides in the enterprise DRAM sector, while consumer-grade DRAM remains competitive [16][17]. Group 5: Valuation Insights - A comparison of valuations shows that A-share storage companies have significantly higher P/E ratios than their U.S. counterparts, indicating a premium that may not be justified by performance [21][22]. - Despite rising prices, many domestic firms have not yet seen corresponding profit increases, suggesting that current stock price increases are driven more by market sentiment than by actual performance [23][24]. Group 6: Future Outlook - Micron's strong performance and optimistic guidance for future earnings highlight the potential for continued growth in the storage sector [28][30]. - The ongoing demand for AI infrastructure and the potential for a prolonged storage cycle could lead to further valuation adjustments for companies in this space [32][33].

Summary of Key Points from the Conference Call Industry Overview - The focus is on the U.S. semiconductor industry and semiconductor capital equipment, particularly in light of potential new tariffs announced by the Trump administration targeting imports from several countries including Japan, South Korea, Thailand, and Malaysia [1][3][13]. Key Insights and Arguments - **Tariff Announcement**: New tariffs on imports to the U.S. are set to begin on August 1, with rates generally aligning with previous reciprocal rates [1][3][14]. - **Import Statistics**: In 2024, the U.S. imported $148 billion from Japan and $132 billion from South Korea, with vehicles, machinery, and electrical equipment making up approximately 70% of these imports [2][16][21]. - **Semiconductor Imports**: The U.S. imported around $45 billion in semiconductors in 2024, which could rise to $82 billion when including NAND/SSDs and photovoltaics [3][47][51]. - **Potential Impact of Tariffs**: The actual impact of the new tariffs remains uncertain, as it is unclear if they will be implemented or how long they will last. This uncertainty may lead to increased market volatility [4][3]. Additional Important Information - **Sectoral Tariffs**: The new tariffs are separate from potential sectoral tariffs under Section 232, which is currently under investigation for semiconductor imports [3][4]. - **Investor Sentiment**: There is a belief that investors may have become desensitized to tariff discussions, but the upcoming headlines regarding tariffs could reignite interest and concern [3][4]. - **Market Performance Ratings**: Various semiconductor companies have been rated based on their expected performance, with AMD, ADI, and INTC rated as Market-Perform, while AVGO and NVDA are rated as Outperform due to strong growth prospects [6][8][10][9]. Conclusion - The U.S. semiconductor industry is facing potential new tariffs that could impact import dynamics and market volatility. The import statistics highlight the significant role of Japan and South Korea in the U.S. semiconductor supply chain, while the uncertainty surrounding the tariffs may affect investor sentiment and market performance in the sector [1][3][4][6].