Storage giant quarterly report "Five key points": Current cycle strength surpasses the 2017-18 "cloud boom cycle"

Storage giant quarterly report "Five key points": Current cycle strength surpasses the 2017-18 "cloud boom cycle"

With the release of fourth-quarter financial reports by storage giants, a clear signal is emerging: not only has the storage industry emerged from its trough, but it has also begun an unusually strong "super cycle" driven by the AI wave.

According to Chase Trading Desk, this week the Bank of America Merrill Lynch team summarized highlights from storage giants' earnings calls, combining insights from the Semicon Korea semiconductor exhibition, and pointed out that the market is currently entering a strong upward phase with inventories extremely low, prices soaring, and capital expenditure expanding significantly.

Five Key Signals of Earnings Season

The Bank of America Merrill Lynch analyst Simon Woo’s team distilled five core signals from storage companies' fourth-quarter financial reports, directly indicating a fundamental reversal in supply and demand.

First, inventory levels have dropped below the "warning line." Take SK Hynix as an example: its inventory turnover days fell sharply from a peak of 233 days in Q1 2023 to only 127 days. Even more striking, finished memory module inventory now lasts only 2–3 weeks, vs. a normal level above 10 weeks. This means any fluctuation in demand could cause severe shortages in the supply chain.

Second, Average Selling Prices (ASP) are undergoing “violent” corrections. Samsung Electronics’ DRAM ASP jumped 40% quarter-on-quarter, SK Hynix’s NAND ASP rose 32%. Such increases are rare in mature semiconductor cycles.

Third, giants are “burning cash” to expand production. Responding to surging demand for HBM (High Bandwidth Memory) driven by AI, manufacturers have begun aggressive capital expenditure plans. SK Hynix’s capital spending is expected to soar from 7 trillion won in Q4 2024 to 12 trillion won in Q3 2025.

Fourth, HBM4 mass production is outpacing expectations. Samsung and SK Hynix have made smooth progress in mass production and shipment of next-generation HBM4, which directly determines their future share in the AI computing power market.

Lastly, guidance for the future is extremely optimistic. This optimism is not only for Q1 2026, but points to a long-term “storage super cycle.” Nanya Tech’s president bluntly stated:

“Driven by AI, the current cycle is much better than the 2017–18 cloud server boom cycle.”

He further explained that, unlike highly customized wafer foundries, memory is still treated as a commodity (following JEDEC standards), which means if shortages persist until 2027, prices still have room to rise further.

Bank of America’s “Memory Indicator” also supports this view. The indicator rebounded to the “upcycle” level of 124 in December, while the average for the first half of 2025 was only 103.

Spot Market: High Prices, Strong Export Data

While recent DRAM spot prices have remained stable, they are already at sharply elevated levels.

Currently, the mainstream 16Gb DDR5 spot price remains at the historical high of $38—a year-on-year increase of a stunning 709%. The 16Gb DDR4 price has reached $78, a year-on-year surge of 2445%. Bank of America Merrill Lynch notes DRAM prices have hit their highest levels in the past 25 years, well above the $10 range seen at the peak of the last cycle in October 2017.

Although some OEM manufacturers indicate that skyrocketing memory costs or shortages have led to temporary stoppages of assembly lines for low-end smartphones, tablets, and PCs, the overall momentum in shipments remains strong.

Data does not lie. Taiwan’s January sales data was robust: monthly sales at Nanya Tech, ADATA, Transcend, and Phison grew more than 20% month-on-month, and doubled year-on-year. South Korea’s semiconductor exports in the first ten days of February surged 138% year-on-year.

Notably, SSD (solid-state drive) prices jumped sharply this week—up 40% week-on-week, and 60% month-on-month—reflecting the market's fears of potential shortages later this year.

Korean Semiconductor Exhibition: Equipment Vendors’ “Feast”

The Bank of America Merrill Lynch team visited the Semicon Korea exhibition in Seoul, and the bustling atmosphere confirmed the industry's high prosperity.

Exhibiting equipment suppliers disclosed several key points:

  1. Giants are not only customers, but also “patrons”: Record capital spending by Samsung and SK Hynix has made equipment suppliers’ profits soar.
  2. HBM production is extremely time-consuming: The manufacturing process for HBM is lengthy, especially the Thermal Compression Bonding (TCB) stage. A single machine can process only a few wafers per day; to maintain monthly capacity of 50,000–100,000 wafers, over 100 TCB machines are needed.
  3. Technology roadmap contest: Adoption of Hybrid Bonding technology for HBM may be delayed; even with 16 or 20 layers of HBM, vendors prefer to use NCF (Non-Conductive Film) or MR-MUF (Mass Reflow Mold Underfill) technology.
  4. Back-end equipment orders are volatile but promising: While back-end equipment orders are currently weak, as HBM4 capacity ramps and HBM4e is introduced, a recovery is expected later this year or in 2027.

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The above highlights are from Chase Trading Desk.

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