Economic Information Daily: How Far Can the Storage Chip Industry's "Super Cycle" Go?

Glonghui, June 1st — According to Economic Information Daily, recently, Samsung Electronics of South Korea, Micron Technology of the United States, and SK Hynix of South Korea, three of the world's leading memory chip manufacturers, have each surpassed the $1 trillion market capitalization threshold. Industry insiders believe that this phenomenon indicates that the artificial intelligence (AI) boom is expanding from computing power chips to memory chips. As the fundamental resource for AI systems, data storage is becoming a key pillar industry in the AI era. However, how far the memory chip sector's current "super cycle" can go is also constrained by various factors.The core reason for the recent surge in memory chip companies’ stock prices is the skyrocketing demand for High Bandwidth Memory (HBM). SK Hynix, Samsung, and Micron are the main manufacturers of HBM, and their products have become crucial in supporting data center expansion. In the past, memory chips were long regarded as highly cyclical products, with prices fluctuating sharply based on inventory and demand cycles. This round of price increases stems from long-term structural demand brought by AI infrastructure construction. The market no longer views the current surge as just a typical cyclical rebound, but believes the memory industry is poised to enter a structural boom that is longer and stronger than before. However,The structural changes driven by AI demand do not mean the memory chip industry has completely rid itself of cyclical volatility. The memory chip industry often undergoes cycles of shortage, price increases, capacity expansion, oversupply, and price drops. Currently, AI demand has prolonged and enhanced the industry's upward cycle, and firms, incentivized by high profits, are expanding production on a large scale. However, if future demand growth slows, oversupply is likely to reemerge. Although the share prices of Micron, SK Hynix, and Samsung have soared in the short term, the head of US investment management firm VanEck has pointed out that memory stocks already show signs of a "bubble," and the company is reducing its exposure to these holdings. In addition, memory chip companies are also vulnerable to export controls, tariffs, industrial policies, investment reviews, and supply chain changes. All these factors will affect how long the current "super cycle" of the memory chip sector can last.