V i e w p o i n t | 22 Sep 2025 06:17:00 ET │ 10 pages Global Semiconductors Memory Pricing Update: Raising 4Q25E & 2026E ASP Growth Estimates on Multiple Tailwinds from Commodity Memory CITI'S TAKE Digitimes reported (17-Sep) that 4Q25E memory contract price increased +15~20% QoQ due to supply shortages and aggressive memory procurement by CSPs. However, while we see negotiations for 4Q contract pricing likely settling in late-Sep, we project 4Q25E DRAM/NAND ASP growth to register +12%/+6% QoQ (vs. +5%/3% ...

Core Insights - Nvidia has decided to cancel the promotion of the first-generation SOCAMM (System-on-Chip Add-on Memory Module) and shift its focus entirely to the next-generation SOCAMM2, aiming to optimize memory module performance for AI server applications [1][3] - The initial SOCAMM technology was designed as a high-bandwidth, low-power memory solution for AI servers, targeting performance close to HBM (High Bandwidth Memory) while effectively reducing costs [1] - The SOCAMM2 is expected to enhance data rates from 8533 MT/s in the first generation to 9600 MT/s, with improved computational efficiency [3] Technical Development - Nvidia has initiated sample testing for SOCAMM2, involving participation from the three major global memory suppliers, laying the groundwork for technical implementation and subsequent mass production [3] - The SOCAMM2 may support LPDDR6 memory specifications, although this feature has not yet been confirmed by relevant suppliers, with technical details pending further disclosure [3] Market Dynamics - Micron has already taken the lead by being the "only" memory manufacturer to ship SOCAMM products to the AI server market as early as March this year, gaining a first-mover advantage [3] - In contrast, Samsung and SK Hynix are progressing more slowly, with plans to achieve mass production of similar products by the third quarter of 2025 [3] - Nvidia's strategic shift towards SOCAMM2 development may provide Samsung and SK Hynix an opportunity to catch up, potentially narrowing the gap with Micron in the AI server memory market and stimulating industry competition [3]

Core Viewpoint - NVIDIA has revised its plans for the low-power DRAM (LPDDR) module SOCAMM, abandoning the SOCAM1 project in favor of SOCAM2, which is currently being tested with three memory manufacturers [1][2]. Group 1: SOCAMM Development - NVIDIA has started sample testing for SOCAMM2 with Samsung, SK Hynix, and Micron, shifting focus from SOCAM1 due to technical issues that prevented large-scale orders [1][2]. - SOCAMM aims to provide high-capacity memory at lower costs and power consumption compared to high bandwidth memory (HBM) [1]. Group 2: Technical Specifications - SOCAMM2 features the same 694 I/O ports as SOCAM1 but offers a data transfer speed of 9,600 MT/s, surpassing SOCAM1's 8,533 MT/s [2]. - The power consumption of SOCAMM is reported to be one-third lower than that of standard DRAM-based RDIMM server memory modules [2]. Group 3: Market Implications - The delay in SOCAMM1's launch has created opportunities for Samsung and SK Hynix, as they are now on equal footing with Micron in the development of SOCAMM2 [3]. - SOCAMM2 is expected to begin mass production in early next year, with increasing adoption anticipated as the demand for memory solutions to address data bottlenecks in AI computing rises [3].

Investment Rating - The industry investment rating is "Maintain Buy" [6] Core Viewpoints - The report highlights that the NAND market is experiencing a shift in production capacity towards new processes, leading to a reduction in supply of older process NAND, particularly the 256Gb TLC NAND, which is driving up spot prices [1] - The DRAM market saw a significant revenue increase in Q2 2025, reaching $31.63 billion, a 17.1% quarter-over-quarter growth, driven by rising contract prices and increased shipment volumes [2][26] - The HBM market is expected to grow significantly, with SK Hynix projecting the custom HBM market to reach hundreds of billions by 2030, driven by advancements in technology and increased demand from high-performance computing [3][27] Summary by Sections NAND Market - The spot prices for 22 types of NAND particles fluctuated between -5.97% and 6.14%, with an average change of -0.03% last week [1] - The transition to new NAND production processes is reducing the output of older processes, particularly affecting the supply of 256Gb TLC NAND [1] DRAM Market - The overall revenue for the DRAM industry in Q2 2025 was $31.63 billion, marking a 17.1% increase from the previous quarter [2] - The average selling price (ASP) of DRAM is increasing due to heightened purchasing activity from PC OEMs, smartphones, and CSPs, leading to a reduction in inventory levels [2][26] HBM Market - The HBM industry is expected to benefit from the rapid development of advanced computing chips, with companies like SK Hynix and Samsung adopting different technologies for next-generation HBM4 products [3] - The report suggests monitoring companies such as Saiteng Co., Yishitong, Lianrui New Materials, and Huahai Chengke for potential investment opportunities in the HBM sector [4] Investment Recommendations - The report maintains a positive outlook on the HBM industry chain and the semiconductor cycle recovery, recommending stocks like Dongxin Co. and suggesting attention to Zhaoyi Innovation, Hengshuo Co., and others in the storage chip sector [4]

Group 1: Market Position and Product Development - The company ranks third in the total capacity of enterprise-grade SATA SSDs in China for 2024, and first among domestic brands according to IDC data [3] - The company has successfully introduced SOCAMM products, which are designed for AI servers, achieving over 2.5 times the bandwidth and approximately 20% lower latency compared to traditional RDIMM [3] - The company has deployed over 80 million units of its main control chips by the end of July, with rapid growth in deployment scale [4] Group 2: Strategic Partnerships and Business Models - The company has established a TCM (Technology Contract Manufacturing) model, which connects wafer manufacturers directly with core downstream customers, reducing the complexity of traditional storage module business models [4] - A strategic partnership with SanDisk has been formed to launch customized high-quality UFS products and solutions for the mobile and IoT markets [6] - The TCM model has shown good demonstration effects and is expected to achieve breakthroughs in cooperation with more manufacturers and Tier 1 customers [4] Group 3: Product Performance and Future Plans - The UFS4.1 products equipped with self-developed main control chips achieve sequential read/write speeds of 4350MB/s and 4200MB/s, and random read/write performance of 630K IOPS and 750K IOPS, significantly outperforming mainstream market products [5] - The company is preparing for the development of the next generation of main control chips to meet the increasing performance demands of AI terminals [5] - The company has launched new embedded products such as UFS4.1, eMMC Ultra, and QLC eMMC, leveraging its self-developed technologies to meet market demands [6]

Core Viewpoint - Jiangbolong (301308) has successfully developed SOCAMM, a high-performance memory product designed specifically for AI data centers, which offers significantly higher bandwidth compared to traditional RDIMM [1] Group 1: Product Development - SOCAMM provides several times the bandwidth of traditional RDIMM while achieving a smaller physical size and superior power efficiency [1] - The technology has a broad market potential, particularly in the context of AI applications [1] Group 2: Market Considerations - The transition from technological breakthrough to large-scale application will be influenced by factors such as ecosystem adaptation and customer onboarding [1]

Core Viewpoint - Jiangbolong (301308.SZ) has successfully developed SOCAMM, a high-performance memory product designed specifically for AI data centers, which offers significantly higher bandwidth compared to traditional RDIMM [1] Group 1: Product Development - SOCAMM technology provides several times the bandwidth of traditional RDIMM while achieving a smaller physical size and excellent power efficiency [1] - The successful lighting of SOCAMM indicates a significant technological breakthrough for the company [1] Group 2: Market Potential and Challenges - Despite the promising market prospects for SOCAMM technology, large-scale application will be influenced by factors such as ecosystem compatibility and customer adoption [1]

Summary of Shenzhen Longsys Electronics Co Ltd Conference Call Company Overview - **Company**: Shenzhen Longsys Electronics Co Ltd - **Ticker**: 301308.SZ - **Industry**: Technology Semiconductors - **Region**: Greater China Key Financial Highlights - **2Q25 Revenue**: Rmb5.94 billion, up 30% YoY and up 40% QoQ, driven by favorable pricing trends and new business expansion [6] - **Net Profit**: Rmb166 million in 2Q25, a turnaround from a net loss of Rmb152 million in 1Q25, attributed to favorable memory pricing [6] - **Market Capitalization**: Rmb39,882.7 million [4] - **Current Share Price**: Rmb96.60 as of August 22, 2025 [4] - **12-month Forward P/B Ratio**: 4.9x, close to historical average of 5.1x since listing [3] Market and Pricing Trends - **NAND Pricing**: Expected to settle at a 0-5% increase QoQ for 3Q, with a potential 0-5% reduction in 4Q due to lukewarm consumer demand [2] - **Enterprise Business Demand**: Robust demand anticipated for eSSD+RDIMM products, driven by domestic AI capital expenditure and localization trends in China [6] Strategic Initiatives - **Product Development**: New enterprise products such as SOCAMM and Gen5 PCIe eSSD are on track for launch and mass production [6] - **Business Expansion**: Effective execution of enterprise business expansion and new product developments amid the growth of AI infrastructure [2] Valuation and Ratings - **Price Target**: Rmb100.00, indicating a 4% upside from the current price [4] - **Stock Rating**: Overweight, reflecting a positive outlook on the company's performance relative to its industry [4] Risks and Considerations - **Upside Risks**: Better-than-expected consumer demand recovery in 2H25 and eSSD market expansion could support revenue and margin improvement [10] - **Downside Risks**: Prolonged commodity down-cycle affecting memory prices and potential share loss to new entrants in the Chinese memory market [10] Conclusion Shenzhen Longsys Electronics Co Ltd is positioned favorably within the semiconductor industry, with strong financial performance and strategic initiatives in place to capitalize on market trends. The company's focus on enterprise business and product innovation, coupled with a positive market outlook, supports its Overweight rating. However, investors should remain cautious of potential market fluctuations and competitive pressures.

Group 1: Business Strategy and Product Development - The company focuses on enterprise-level storage products, emphasizing high-end technology, long R&D cycles, and strong customer loyalty, which tests the comprehensive strength of storage enterprises [2] - The SOCAMM product, designed for AI data centers, offers over 2.5 times the bandwidth and approximately 20% lower latency compared to traditional RDIMM, with a size one-third that of standard RDIMM [3] - The company has achieved a cumulative deployment of over 80 million self-developed main control chips by the end of July, with rapid growth expected [5] Group 2: Market Position and Competitive Advantage - The company ranks second in domestic market share for eSSD, following Solidigm and Samsung, with PCIe products starting to be adopted by leading domestic enterprises [2] - The TCM (Technology Contract Manufacturing) model is being developed to connect wafer manufacturers with core downstream customers, aiming to reduce industry cycle fluctuations and enhance market responsiveness [4] - The company has established strategic partnerships with major clients like SanDisk to launch customized high-quality UFS products for the mobile and IoT markets [6] Group 3: Financial Performance and Future Outlook - The company anticipates significant growth opportunities through its TCM model, which has already shown positive effects in collaboration with industry participants [4] - The self-developed UFS4.1 product achieves sequential read/write speeds of 4350MB/s and 4200MB/s, with random read/write performance reaching 630K IOPS and 750K IOPS, outperforming mainstream market products [5] - The company is preparing for the development of the next generation of main control chips to meet the increasing performance demands of AI terminals [5] Group 4: Risk Management and Market Challenges - Investors are advised to be cautious regarding the SOCAMM product, which has not yet generated revenue despite its potential applications in AI servers [3] - The company is leveraging its self-developed technologies to navigate market challenges and capitalize on growth opportunities in embedded business sectors [5]

Investment Rating - The investment rating for the company is "Buy" with a target price of 115.2 CNY, maintaining the rating for the next six months [7][18]. Core Views - The company achieved a record high revenue of 10.196 billion CNY in H1 2025, representing a year-on-year growth of 12.80%. The net profit attributable to the parent company was 14.766 million CNY, with a significant improvement in both revenue and profit in Q2 2025 [1][2]. - The growth in revenue is driven by the recovery in key downstream markets such as mobile phones and PCs, along with increased demand for servers due to AI, leading to sustained growth in the storage market [2][3]. - The company is positioned as a leader in domestic substitution, with its enterprise storage business revenue reaching 693 million CNY in H1 2025, a year-on-year increase of 138.66% [3]. - The self-developed controller chips have accelerated application deployment, with over 80 million units deployed by the end of July 2025 [4]. Summary by Sections Financial Performance - In H1 2025, the company reported a revenue of 10.196 billion CNY, a year-on-year increase of 12.80%. Q2 2025 revenue reached 5.939 billion CNY, a quarter-on-quarter increase of 39.53% [1][2]. - The net profit attributable to the parent company for H1 2025 was 14.766 million CNY, with a non-recurring net profit of 320.69 million CNY [1]. Business Growth - The enterprise storage business saw significant growth, with revenue of 693 million CNY in H1 2025, up 138.66% year-on-year. The company has established a comprehensive product system for enterprise-level products [3]. - The TCM business model enhances the company's supply chain integration and operational efficiency, contributing to a stronger profit margin [4]. Global Expansion - The company has strengthened its overseas market presence, with sales in Brazil and Latin America reaching 1.388 billion CNY in H1 2025, a growth of 40.01% [5]. - The global brand Lexar achieved sales of 2.145 billion CNY in H1 2025, reflecting a year-on-year growth of 31.61% [5]. Future Outlook - The company is expected to benefit from a dual logic of "cycle + growth," with projected revenues of 23.05 billion CNY, 26.05 billion CNY, and 30.09 billion CNY for 2025, 2026, and 2027 respectively [6][5]. - The net profit attributable to the parent company is forecasted to be 4.82 billion CNY, 16.09 billion CNY, and 20.76 billion CNY for the same years [6].