February 4, 2026 10:00 PM GMT Global Economic Briefing AI Imports in Overdrive, Macro and Micro Perspectives US AI-linked imports help show the scale of AI capex to date as well as the drive for investment going forward. At a fundamental level, the pace of technological change requires continued investment to keep pace for AI to reach its full potential. Key Takeaways Morgan Stanley & Co. LLC Seth B Carpenter Chief Global Economist Seth.Carpenter@morganstanley.com +1 212 761-0370 Stephen C Byrd Equity Analy ...

Core Viewpoint - The demand for AI and data centers is intensifying, leading to a significant imbalance in the global memory supply and demand, resulting in increased pricing power for manufacturers [3][4]. Price Adjustments - The price forecast for Conventional DRAM contracts has been revised from a quarterly increase of 55-60% to 90-95%, while NAND Flash contract prices have been adjusted from 33-38% to 55-60% for Q1 2026 [3][4]. - Specific price increases for various DRAM types are as follows: - PC DRAM: Expected to increase by 105-110% [6]. - Server DRAM: Anticipated to rise by 88-93% [6]. - Mobile DRAM (LPDDR4X): Projected to increase by 88-93% [6]. - Total DRAM: Conventional DRAM expected to rise by 90-95% [6]. - Total NAND Flash: Expected to increase by 55-60% [6]. Market Insights - The PC DRAM market is experiencing a supply shortage, with prices expected to rise over 100% in Q1 2026, marking a historical high [8]. - The Server DRAM market is seeing significant price increases, with expectations of a 90% rise due to strong demand from North American and Chinese cloud service providers [8]. - The Mobile DRAM market is also facing a supply-demand gap, leading to anticipated price increases of around 90% for both LPDDR4X and LPDDR5X [9]. NAND Flash Market Dynamics - Despite high demand for NAND Flash, manufacturers are prioritizing DRAM production due to better profit prospects, which is constraining new NAND Flash capacity [9]. - Short-term capacity bottlenecks are expected to persist, limiting the ability to meet demand [9]. Enterprise SSD Demand - The demand for high-performance storage devices is surging, particularly from North American cloud service providers, leading to a forecasted price increase of 53-58% for Enterprise SSDs in Q1 2026, the highest quarterly increase on record [10].

Group 1: DRAM Market Insights - The first quarter of 2026 is expected to see a significant increase in PC DRAM prices due to tightened supply from manufacturers, despite a slowdown in overall demand for PC units [2] - Server DRAM demand is projected to grow substantially as cloud service providers (CSPs) increase their purchases, with a forecasted price increase of over 60% in the first quarter [3] - Mobile DRAM supply remains tight, leading to strong purchasing power from brands, with expectations of rising contract prices for LPDDR4X and LPDDR5X [3] - Graphics DRAM prices are expected to rise due to supply constraints, despite a conservative demand outlook influenced by NVIDIA's sales target adjustments [3] - Consumer DRAM customers are willing to pay higher prices for prioritized supply in the first quarter, as supply continues to lag behind demand [3] Group 2: NAND Flash Market Insights - The NAND Flash market is anticipated to grow significantly, driven by AI applications, with Enterprise SSD demand expected to surpass mobile applications for the first time by 2026 [4] - Client SSD demand is projected to decline in the first quarter due to reduced laptop shipments and capacity downgrades in lower-end models, yet contract prices are expected to increase by at least 40% [4] - The supply of NAND Flash products is tightening as manufacturers prioritize high-margin products, leading to increased prices for Enterprise SSDs [4] - eMMC/UFS demand is showing signs of weakness due to inventory adjustments, although Chromebook shipments are benefiting from government projects [5] - NAND Flash wafer supply is constrained as manufacturers focus on high-margin product lines, resulting in continued price increases despite weak demand in consumer markets [5]

Group 1 - Semiconductor foundries are set to initiate a new round of price increases, with SMIC notifying downstream customers of a price hike of approximately 10% focused on the 8-inch BCD process platform [1][3] - The storage price surge is spreading, with major suppliers like Samsung and SK Hynix raising HBM3E prices by nearly 20% for the upcoming year [1] - The semiconductor equipment ETF (561980) has recorded four consecutive days of gains, although it experienced mixed performance among constituent stocks, with some companies like Kema Technology and Yiyuan Silicon rising over 2% [1] Group 2 - Open Source Securities highlights that the supply-side capacity gap, combined with growing demand from AI and other sectors, signals an upward price cycle for semiconductors, with foundry prices and storage chips beginning to rise [3] - The high capacity utilization rates of foundries like SMIC and Hua Hong are driven by strong demand from industries such as 5G, AI, and new energy [3] - According to Galaxy Securities, the contract prices for Server DRAM are expected to rise by 18-23% in Q4 2025, driven by global cloud service providers expanding data center capacities [5] Group 3 - The semiconductor equipment ETF (561980) tracks the China Securities Semiconductor Index, with over 54% of its components related to equipment, and more than 72% focused on semiconductor equipment, materials, and integrated circuit design [4] - The top ten companies in the index, including key players like Zhongwei Company and North Huachuang, account for nearly 80% of the index's concentration [4] - The semiconductor equipment sector is considered the cornerstone of the semiconductor industry, with significant growth opportunities anticipated due to the expansion of storage and domestic production capabilities [5]

Group 1 - The storage sector in the U.S. stock market has seen significant gains, with SanDisk rising over 16%, Western Digital over 13%, Seagate Technology over 19%, and Micron Technology over 2% [1] - SK Hynix reported a 62% increase in profits, indicating a substantial rise in demand for storage chips driven by the construction of global AI infrastructure [1] - In Q3, SK Hynix achieved a record operating profit of 11.4 trillion KRW (approximately 8 billion USD), slightly exceeding analyst expectations, with sales reaching 24.5 trillion KRW [1] Group 2 - SK Hynix's stock rose by up to 5% in Seoul, reflecting positive market sentiment [2] - According to TrendForce, the contract prices for Server DRAM are expected to strengthen due to the expansion of data centers by global cloud service providers, leading to an overall increase in DRAM prices [2] - The demand for servers is projected to remain strong into 2026, with DDR5 contract prices expected to rise throughout the year, potentially outperforming HBM3e starting in Q1 2026 [2] Group 3 - Morgan Stanley predicts that the storage chip industry is likely to enter a "super cycle" driven by the AI boom [3] Group 4 - Relevant Hong Kong-listed companies in the storage chip sector include Bawen Storage (IPO application submitted), Jingshun Technology (IPO application), SMIC (00981), Hua Hong Semiconductor (01347), and Shanghai Fudan (01385) [4]

Group 1 - The storage sector in the US stock market has seen significant gains, with SanDisk rising over 16%, Western Digital over 13%, Seagate Technology over 19%, and Micron Technology over 2% [1] - SK Hynix reported a 62% increase in profits, indicating a substantial rise in demand for storage chips driven by the construction of global AI infrastructure [1] - In Q3, SK Hynix achieved a record operating profit of 11.4 trillion KRW (approximately 8 billion USD), slightly exceeding analyst expectations, with sales reaching 24.5 trillion KRW [1] Group 2 - SK Hynix's stock rose by up to 5% following the announcement of its profit growth [2] - According to TrendForce, the contract prices for Server DRAM are expected to strengthen due to the expansion of data centers by global cloud service providers, leading to an overall increase in DRAM prices [2] - The demand for servers is projected to remain strong into 2026, with DDR5 contract prices expected to rise throughout the year, potentially outperforming HBM3e starting in Q1 2026 [2] Group 3 - Morgan Stanley predicts that the storage chip industry is likely to enter a "super cycle" due to the AI boom [3] Group 4 - Relevant Hong Kong stocks in the storage chip sector include Bawen Storage (IPO application submitted), Jingshun Technology (IPO application), SMIC (00981), Hua Hong Semiconductor (01347), and Shanghai Fudan (01385) [4]

Group 1 - The core viewpoint of the reports indicates that the Server DRAM contract prices are expected to rise significantly due to the expansion of data centers by global cloud service providers (CSPs) [1] - TrendForce has revised its forecast for the fourth quarter Conventional DRAM price increase from 8%-13% to 18%-23%, with potential for further upward adjustments [1] - The report anticipates a 4% year-over-year increase in Server shipments in 2026, driven by CSPs adopting high-performance computing architectures, which will increase DRAM capacity per server [1] Group 2 - The price gap between HBM3e and DDR5 is projected to narrow significantly by 2026, with DDR5 expected to outperform HBM3e in profitability starting in the first quarter of 2026 [2] - Due to competitive capacity between HBM3e and DDR5, suppliers may increase Server DDR5 supply to strengthen their profit base [2] - The pricing strategies and capacity allocation between DDR5 and HBM will be critical variables influencing the market direction in the near future [2]

Core Insights - The Server DRAM contract prices are expected to rise significantly in Q4 2025 due to increased demand from global cloud service providers (CSPs) expanding their data center capacities [1] - The DDR5 contract prices are projected to maintain an upward trend throughout 2026, with a notable increase in the first half of the year [4] - The price gap between DDR5 and HBM3e is expected to narrow, leading to better profitability for DDR5 starting in Q1 2026 [4][5] Price Adjustments - The revised forecast for Conventional DRAM prices has been adjusted from an original increase of 8-13% to a new range of 18-23% [2] - HBM blended prices are also expected to rise, with the new forecast indicating an increase of 23-28% [2] Market Demand and Supply Dynamics - The shipment volume of servers is anticipated to grow by approximately 4% year-on-year in 2026, driven by CSPs adopting high-performance computing architectures [4] - The demand for DRAM is expected to exceed initial forecasts, leading to a continued supply shortage [4] Competitive Landscape - The competition among major suppliers in the HBM3e market is intensifying, which may lead to a decrease in contract prices for HBM3e due to existing inventory levels among buyers [4] - Suppliers may increase the supply of Server DDR5 to strengthen their profit margins as the profitability structure shifts [5] - Future capacity allocation and pricing strategies between DDR5 and HBM will be critical variables influencing market trends [5]

Core Insights - The global semiconductor equipment sales are projected to reach a record high of $125.5 billion by 2025, driven by capacity expansion for advanced logic and memory to support AI applications and technological iterations across various market segments [1][2] Group 1: Semiconductor Equipment Market - The demand for semiconductor equipment continues to grow, with advanced logic and memory technology iterations leading to upgraded equipment requirements [2] - China is expected to maintain its lead in global 300mm equipment spending, with total investments projected to reach $94 billion from 2026 to 2028 [1][2] - The evolution towards more advanced processes in logic will further drive demand for etching, thin film deposition, bonding, and coating equipment [2] Group 2: AI and Semiconductor Demand - AI demand is significantly boosting the growth of the logic and memory markets, with data center investments expected to rise from $17 billion in 2020 to $45.3 billion by 2028 [3] - OpenAI plans to deploy a total of 6 GW of AMD GPU computing power, estimating that $50 billion will be needed to bring 1 GW of AI computing online, with two-thirds allocated for chips and supporting data center infrastructure [3] - The overall revenue for AI semiconductors is projected to grow from $8.2 billion in 2020 to $41.3 billion by 2030, with a compound annual growth rate of 24.4% [3] Group 3: Supply Chain and Domestic Production - There are ongoing supply chain challenges, with limitations on acquiring key semiconductor equipment, particularly for advanced chip manufacturing [4] - The U.S. Congress is proposing broader bans on the sale of chip manufacturing tools to China, which could impact the availability of advanced technology [4] - Domestic demand for AI chips is expected to increase as China progresses with its computing infrastructure, following NVIDIA's complete exit from the Chinese market [5]

Group 1 - The core viewpoint of the articles indicates a significant price increase in DRAM and NAND flash memory, with Samsung and SK Hynix raising prices by up to 30% in Q4, signaling the start of a price upcycle in response to supply-demand imbalances [1] - Analysts predict that the shortage of memory products may persist for three to four years, driven by substantial investments in AI servers, ongoing memory upgrades in general servers, and the rising demand for edge AI devices [1] - The current cycle is expected to be stronger and longer than previous ones, influenced by large investments in AI server fields, memory upgrades for general servers to support AI applications, and the proliferation of edge AI functionalities in smartphones and PCs [1] Group 2 - The demand for Server DRAM is increasing due to the recovery of cloud service provider (CSP) construction momentum, with sustained demand for DDR5 products and expanding HBM demand [2] - YoleGroup forecasts that the HBM market will maintain a compound annual growth rate of 33% until 2030, with its revenue expected to exceed 50% of the total revenue of the DRAM market by that time [2] - Companies mentioned in relation to this growth include Zhaoyi Innovation, Baiwei Storage, and Purun Co., Ltd. [3]