All sectors surge! Major positive news for chips! Chip giant: Prices will continue to rise

The surge in storage chip prices is intensifying.

According to the latest news, SK Hynix, a major storage chip manufacturer, stated that driven by strong demand from AI customers and limited supply growth, storage chip prices are expected to continue rising throughout the year. The company also revealed that no customer has fully met their demand this year.

Buoyed by the price increase, storage chip concept stocks surged across the board on Friday, with SanDisk jumping over 4%, Micron Technology rising more than 2%; SK Hynix soared over 6%, hitting a record high. Earlier reports indicated that Samsung Electronics is negotiating pricing for its latest generation AI storage chips, with prices up to 30% higher than the previous generation.

Chip Giants: Prices Will Continue to Rise

At the latest virtual investor meeting, SK Hynix sent a strong signal: the storage chip industry has fully entered a seller’s market.

SK Hynix provided a very clear outlook for this year’s price trends: driven by strong demand from AI customers and limited supply growth, storage chip prices are expected to keep rising throughout the year.

The current supply-demand tension has reached a high point in recent years. SK Hynix told Goldman Sachs, “No customer this year will be able to fully meet their storage needs.”

Regarding supply, SK Hynix pointed out that the entire industry is constrained by a lack of clean room space, with physical limitations on supply growth. Customers are well aware that short-term storage capacity cannot be significantly increased. Therefore, they realize that placing repeat orders will not lead to more allocations but will instead push prices higher.

From an inventory perspective, server customers’ inventories have reached healthy levels, while inventories for PC and mobile customers are declining.

More critically, SK Hynix’s own inventory on the supply side is extremely thin.

The company stated, “Our inventories of DRAM and NAND are at normal levels, about four weeks’ worth, and this level is expected to continue decreasing throughout the year.”

Additionally, regarding the highly watched HBM (High Bandwidth Memory), SK Hynix clearly stated that capacity allocation for 2026 has been finalized. All 2026 HBM has been sold out, and production plans to meet customer demand have been allocated.

SK Hynix admitted that, given the current production schedule, it is difficult to make meaningful adjustments to the HBM and standard DRAM production lines in 2026.

Due to the extreme tightness in supply and demand for standard DRAM, SK Hynix has gained more leverage in negotiations, with more stable pricing power.

Against this backdrop, SK Hynix revealed that it is “discussing multi-year long-term contracts with major customers.”

The company believes this tight situation “may lead to more favorable terms for HBM business in 2027.”

Furthermore, SK Hynix remains cautious about capital expenditures (Capex).

The company confirmed that this year’s Capex will exceed last year’s but emphasized that it will “continue to adhere to Capex discipline.” Investment priorities are very clear: focusing on HBM and standard DRAM. For NAND, although some investments have resumed (mainly transitioning to 321-layer 3D NAND), its share of total Capex will remain stable (expected to stay in the low double digits percentage), avoiding blind expansion.

Storage Chip Concept Stocks Surge Across the Board

On February 20, Eastern Time, U.S. stock storage concept stocks surged across the board, with SanDisk up 4.65% and Micron Technology up over 2%. During the Asian trading session, SK Hynix rose 6.15%, hitting a new all-time high; Samsung Electronics also reached a record closing high. Hong Kong-listed storage chip concept stocks also saw modest gains, with Lianhe Technology surging over 8% at one point and GigaDevice rising nearly 4%.

That day, reports indicated that Samsung Electronics is negotiating pricing for its latest AI storage chips, with prices up to 30% higher than the previous generation.

Saxo Bank’s Chief Investment Strategist, Charu Chanana, said that the reports about Samsung HBM4 highlight the industry’s “pricing power,” “indicating that supply remains tight for AI storage chips, and Samsung believes it has regained some pricing leverage in the high-end market.”

Market research firm TrendForce forecasts that in Q1 2026 alone, prices for DRAM and NAND flash are expected to increase by 90-95% and 55-60%, respectively.

Google DeepMind CEO Demis Hassabis recently discussed the global “memory shortage” in an interview. He said that the entire supply chain of memory chips is constrained, and hardware challenges are “limiting large-scale AI deployments.”

Intel CEO Pat Gelsinger also warned that the bottleneck in AI development has shifted from “computing power” to “memory” and broader infrastructure systems. He bluntly stated that memory shortages will not ease before 2028.

Bernstein semiconductor analyst Mark Li warned that memory prices are rising in a “parabolic” manner. While this will bring substantial profits to Samsung, Micron, and SK Hynix, other sectors of the electronics industry will pay a heavy price in the coming months.

Counterpoint Research noted that rising memory costs could make low-end devices economically unsustainable for electronics companies. As profit margins decline, some low-cost smartphones may exit the market entirely.

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(Source: China Securities Journal)