Memory module prices plummeting, memory stock prices falling across the board, has the memory super cycle peaked?

Recently, the memory prices that had been rising for months suddenly reversed downward, raising concerns in the market about the peak of the memory cycle.

According to market tracking data, several retailers in the United States have seen widespread price reductions for DDR5 memory, with the highest single set price drop reaching $100. For example, Corsair’s VENGEANCE series has a 32GB model with a maximum frequency of 6400MHz currently priced at approximately $379.99, a substantial decline from a recent peak of $490, with a price drop of over $110 per set.

The domestic market has also been impacted, with wholesalers telling the “China Business Journal” that the price of mainstream 16GB memory modules has “dropped more than a hundred yuan in a day,” leading large stockpilers to sell off their inventory frantically.

“It started crashing directly last Saturday.” Wang, a wholesaler who has been in the storage equipment business for many years, admitted to the media. He showcased an extreme price curve for a mainstream 16GB 3200MHz memory module: “It was just over 130 yuan last May, then skyrocketed to a peak of 980 yuan in December, but after months of high fluctuations, the current spot price has dropped back to around 700 yuan.”

Wang helplessly stated that due to the price increase exhausting consumer expectations, “if it’s not a necessity, people won’t buy; compared to before November last year, our sales have dropped by more than 60%.”

At the same time, Google released a paper on a new compression algorithm called “TurboQuant.” The study pointed out that this technology can reduce the key-value cache (KV Cache) memory consumption during large language model operations by at least 60%. Investors quickly priced this in: the AI hardware shortage problem would fundamentally ease, and memory demand would be significantly reduced.

The chill in the spot market quickly transmitted to the capital market. Micron Technology’s stock price has retreated over 24% from recent highs, while Western Digital has also fallen nearly 21% from a high of $777.60. Meanwhile, last week, the market capitalization of the U.S. memory chip sector evaporated by nearly $100 billion.

Faced with plunging prices and stock price crashes, market participants have developed severe disagreements about the future of the memory industry. Some investors believe that the traditional memory “pig cycle” has peaked, while HSBC believes that “market concerns are overstated, and we are currently in the middle of an AI-driven memory super cycle, with strong demand for high-end products like HBM, and memory shortages may last for one to two years.”

Buyers Say “No”: Is the Traditional “Pig Cycle” Repeating?

For traders who follow traditional cycles, the market crash is not that simple. Former journalist and well-known semiconductor analyst Dan Nystedt pointed out that many bulls attribute the recent crash to Google’s paper, but that’s just the surface. Dan believes the real reason is that “the prices of some smartphone memory chips have stopped rising.”

“The real reason is much simpler: the prices of certain smartphone memory chips have stopped rising. Buyers ultimately said ‘no’ — this is the first peak signal that experienced memory cycle investors look for before selling.”

Dan Nystedt stated. Due to high DRAM and NAND prices, some smartphone manufacturers plan to reduce or even cancel the production of mid-range and low-end phones by 2026. He revealed that two weeks ago, a buyer refused a higher DDR4 price.

Dan Nystedt compared the memory industry to the “pig cycle” in agriculture: high prices incentivize companies to expand production, but building factories takes time; when new capacity is released simultaneously, prices will plummet. He believes that investors following this script have quickly exited, causing significant stock price corrections for Micron and SanDisk.

Over the past 50 years, memory chips have experienced over a dozen significant boom/bust cycles. Since 2010 alone, there have been three: the 3G/4G and cloud computing boom from 2012 to 2015; the 5G and cloud service expansion from 2016 to 2019; and the pandemic-driven surge in PCs/servers from 2020 to 2023. The cycle that began in 2024 is driven by AI servers (HBM and SRAM).

“Whenever someone writes ‘this time is different,’ it is usually a classic sign that bullish sentiment has gone mad.” Nystedt quoted legendary trader Jesse Livermore: “The market is always right, while opinions are often wrong.” He warns investors that when chip buyers no longer panic-buy and rebounds face continuous selling, seasoned funds will quickly retreat according to the script.

Structural Transformation: Are Memory Companies No Longer “Cyclical Stocks”?

However, independent analyst Jukan has a different view on Dan Nystedt’s analysis.

He pointed out that buyers’ resistance to rising prices is mainly focused on traditional memory like DDR4, not the entire memory market. The previous abnormal surge in DDR4 prices was partly attributed to stockpiling in the Chinese market, which gave smartphone manufacturers the space to adjust low-end device specifications.

“But DDR5 is a completely different story.” Jukan pointed out. Smartphone and PC manufacturers have honestly accepted substantial price increases for DDR5 in the first and even second quarters of this year. In the current AI and high-end device ecosystem, DDR5 is not a bargaining chip that can be negotiated; it is a core input that buyers must ensure even if they have to pay a premium. Flagship products built around DDR5 cannot lower their specifications.

Secondly, the market has completely overlooked the fundamental transformation of the business models of memory giants. Jukan scoffed at the so-called “seasoned investors” who blindly sell off based on falling spot prices.

“The way memory companies operate is no longer the blind expansion model of the past.” Jukan sharply pointed out that the three giants, Samsung, SK Hynix, and Micron, are aligning more with TSMC’s business model — only building capacity after securing advance payments from core customers and ensuring long-term demand visibility.

Recently, South Korean media reported that Samsung is in discussions with giants like Microsoft about cooperation agreements based on advance payments. Memory giants are more aware than anyone of the pain caused by overcapacity destroying cycles. Therefore, they are now pursuing extremely restrained capacity expansion rather than reflexive overbuilding.

Investment Banks Support: The Memory Super Cycle is Only at the Midpoint, Market’s Five Major Concerns are Overstated

In contrast to the panic in the spot market, investment banks remain confident about the long-term prospects of the memory industry. HSBC’s research report released on March 30 clearly states, “In our view, current concerns are exaggerated; we are at the midpoint of an AI-driven super cycle.”

The current market concerns are all overreactions, and the bank listed five specific worries:

1. Negative impacts on raw material and electricity price increases due to the Middle East conflict;
2. Slowing memory price growth in the second half of 2026;
3. Industry technologies like Google’s “TurboQuant” and Nvidia’s “KVTC” that reduce AI system memory usage;
4. Gradually increasing capital expenditure plans from major memory manufacturers;
5. Intensifying competition from Chinese memory manufacturers.

The report pointed out that the Middle East conflict has not had a substantive impact on memory manufacturers’ procurement of raw materials. Moreover, the absolute growth in profits will have a far greater impact on stock prices than the slowing slope of DRAM price increases. At the same time, memory manufacturers remain highly aware and restrained in executing capital expenditures.

Regarding the Google TurboQuant technology that triggered market sell-offs, the bank believes it is still too early to worry. The commercialization of this technology will take about another year, and its reference parameter scale is smaller than the current AI environment. More importantly, the bank pointed out that TurboQuant alleviates memory bandwidth bottlenecks, which will improve system efficiency and lower token costs, thereby accelerating the commercialization and adoption of AI. The report states:

“The net effect is that we believe efficiency improvements will accelerate the development of AI — this is a positive event that should lead to a sharp increase in AI adoption rates.”

At the same time, the bank expects that AI server shipments will increase by 28% year-on-year in 2026. From 2026 to 2027, the average DRAM content per server will achieve a strong growth of 17%. With the explosion of AI inference demand, enterprise solid-state drives (eSSD) are entering a golden age. The report predicts that by 2027, the proportion of eSSD in total NAND demand will soar from 18% in 2023 to 40%, with AI servers consuming 62% of that.

The bank believes that the current market is in the middle of an AI-driven super cycle, the scale of which is comparable to the sustained six-year DRAM shortage triggered by office automation from 1990 to 1995. Historically, from 1990 to 1995, alongside the popularization of Windows 3.0 and subsequent operating systems, office automation triggered a structural DRAM shortage lasting six years, driving the DRAM market size from $7 billion in 1990 to a staggering $41 billion in 1995.

The bank believes that the current infrastructure construction driven by large models, agentic AI, and physical AI (such as autonomous driving) will lead to a memory shortage that lasts at least one to two years.

Based on these judgments, the report remains optimistic about their certainty of benefiting from the memory super cycle. Regarding the recent crash, the report stated: “We believe that any pullback provides an additional buying opportunity.”

Risk Disclaimer

Market risks exist; please invest cautiously. This article does not constitute personal investment advice and does not take into account individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article align with their specific situations. Invest at your own risk.