SK Hynix: This round of DRAM price increases may last longer than before

SK Hynix stated in the latest quarter earnings call that the current memory price increase is not driven by temporary supply-demand imbalances, and it is expected that the trend will be different from past cycles. The company believes that the favorable pricing environment will continue in the short term.

The company's logic is synchronized pressure on both the demand and supply sides. On the demand side, the accelerated development of AI technology has greatly increased the importance of memory, with technology companies competing to increase purchases to secure supplies, and have prioritized "ensuring supply quantity" over price considerations. On the supply side, after the industry significantly reduced investments following the last downcycle, supply has contracted; although suppliers have restarted the construction of new wafer fabs, it will still take time for new cleanroom space and capacity to come online, making it difficult to fill the supply-demand gap in the short term.

Regarding the recent price drop in the spot market, SK Hynix made it clear that this should not be interpreted as a signal of the industry peaking, but rather as a temporary phenomenon caused by the return of some channel inventory to the market after steep price increases. The company emphasized that the spot market only accounts for a very small part of the overall DRAM market, with significant differences in product structure and transaction volume compared to actual business, and it is not appropriate to consider spot price changes as an accurate reflection of overall market conditions.

On the NAND front, SK Hynix stated that NAND is no longer just a simple storage device but will achieve long-term growth as a key component. As AI models become more advanced, KV cache and intermediate data processing volumes are rising sharply, which is expected to lead to widespread adoption of high-capacity, high-performance NAND. The company completed the development of 321-layer QLC globally and obtained customer certification in April this year, establishing a clear technological leadership advantage. In terms of capacity, the company plans to convert 50% of domestic capacity to 321-layer NAND, and the two-step migration from 176 layers to 321 layers will have a significant impact on yield.

For investors, SK Hynix's stance provides significant endorsement for the pricing prospects of the entire storage industry, highly consistent with market expectations reflected in SanDisk's stock price surge of over 300%. The current core variables lie in whether AI capital expenditures can continue and when new capacity will be realized on a large scale - these two factors will determine the duration of this super cycle.