Written by: Rita

The super cycle of memory chips continues. In the global memory technology weekly released on August 7, Bank of America raised its forecast for global DRAM industry sales in 2026 to $57.3 billion, further increasing to $84.7 billion in 2027 and reaching $91.7 billion in 2028. Although SK Hynix's DRAM ASP increased only 30% quarter-on-quarter in the second quarter, which is lower than the increases of 45% to 70% seen in its peers, a rapid rebound of 25% is expected in the third quarter, with HBM4 shipments also becoming more significant. The spot price of NAND unexpectedly rebounded strongly this week, with 512Gb to 1Tb products rising by 5% to 6%, and 256Gb products rising more than 10%, far exceeding seasonal patterns. Bank of America believes that Samsung is about to announce a significant cash return to shareholders in the form of buybacks and special dividends, expecting the size of the special dividend to exceed 30 trillion won and the buyback size to exceed 40 trillion won.

The storage super cycle continues until 2027, and ASP will be revised upward again in the fourth quarter

Bank of America has updated its global memory industry forecast model. It is projected that the global DRAM industry sales will reach $57.3 billion in 2026, an increase of 328% year-on-year, $84.7 billion in 2027, an increase of 48%, and a slight decline to $91.7 billion in 2028, about an 8% decrease. For the NAND industry, sales are expected to reach $35.75 billion in 2026, up 341% year-on-year, $46.75 billion in 2027, up 31%, and a decline of about 14% in 2028.

In terms of price trajectory, Bank of America expects the average industry DRAM ASP in the fourth quarter to increase by 8% quarter-on-quarter, with NAND rising by 3%, and then remaining stable or experiencing mild corrections in 2027. However, the average ASP for the entire year of 2027 is still higher than in 2026, due to a low base in the first half of the year. The decline in ASP in 2028 will be a mild correction rather than a hard landing, and the industry will still maintain high profit margins. DRAM bit growth is expected to be 25% in 2026, 19% in 2027, and 19% in 2028; NAND bit growth is expected to be 20%, 19%, and 19%, respectively.

The demand for HBM is the core supporting the super cycle. Bank of America forecasts that the HBM market size will reach $77.4 billion in 2026, a year-on-year increase of 124%, further increasing to $152.8 billion in 2027, a growth of 98%. The share of HBM in total DRAM shipments is expected to rise from 8.5% in 2025 to 11.7% in 2026, reaching 14.1% in 2027. The HBM ASP is expected to rise by 30% in 2026 to $14.6 per GB, and by 38% to $20.2 in 2027. Bank of America expects SK Hynix to maintain its lead in HBM shipments, but Samsung's share of HBM wafer production capacity is expected to catch up to or even surpass that of SK Hynix between 2026 and 2027.

NAND spot prices unexpectedly rebound strongly, DRAM rises simultaneously

This week, NAND spot prices exceeded expectations. 512Gb to 1Tb products rose by 5% to 6%, and 256Gb products rose more than 10%. Bank of America believes this is related to secondary and tertiary OEM manufacturers stocking new models for the September and fourth quarter peak seasons. DRAM spot prices have also further rebounded, increasing by 1% to 2% quarter-on-quarter, corresponding to a quarterly increase of about 20% to 40%. Overall, spot prices are performing better than seasonal patterns, and the supply of traditional DRAM and NAND remains tight.

Nanya Technology's revenue in July reached 44 billion New Taiwan dollars, a 49% quarter-on-quarter increase and a 720% year-on-year increase. South Korea's semiconductor exports in July amounted to $42 billion, a 9% quarterly decline, but still a strong year-on-year growth of 179%. Bank of America's storage index reading for June was 183, still near historical highs, far above the levels of mid-cycle (100) and previous cycles (130).

Samsung initiates large-scale capital returns, HBM capacity continues to expand

Samsung Electronics is expected to announce more details about buybacks and cash dividends soon. According to the CFO's remarks during the earnings call on July 30, Samsung will use 50% of its free cash flow from 2024 to 2026 (excluding the 10 trillion won dividend paid each year) for shareholder returns. Bank of America believes that the execution plan may include: distributing a special dividend of over 30 trillion won in the third or fourth quarter, initiating a buyback of over 40 trillion won in the first half of 2027, and paying about 30 trillion won in year-end dividends in April 2027. In addition, Samsung will need more than 30 trillion won in treasury stock for special employee rewards. Bank of America expects SK Hynix to also use 50% of its free cash flow for shareholder returns, with buybacks likely to be greater than cash dividends.

Regarding HBM capacity, Bank of America forecasts that HBM wafer capacity will reach 476,000 wafers/month in 2026 (accounting for 22.6% of total DRAM capacity), reaching 741,000 wafers/month in 2027 (accounting for 26.6%). Samsung's share of HBM wafer capacity is expected to increase from 37% in 2025 to 39% in 2027, close to SK Hynix's 40%. HBM4 and HBM4e will be the main products from 2026 to 2027, while HBM5 and higher products will gradually penetrate starting in 2027.

The storage super cycle is shifting from a price-driven model to a dual-driven model of volume and price. The slight decline in the industry ASP in 2028 should not be viewed as the end of the cycle; the continued increase in HBM supply and the structural demand from AI servers are reshaping the profit models of the memory industry. Samsung's large-scale buybacks and special dividends will provide support for valuations, and Bank America's high storage index indicates that industry enthusiasm has not dissipated. The supply-demand imbalance for DRAM and NAND is unlikely to reverse before 2027, and the end of the super cycle may be further away than the market expects.

Disclaimer

This article is a compilation and interpretation of third-party brokerage research reports (Bank of America Securities, August 7, 2026) by Chao Xiang Research, combined with information from the public market. The ratings, target prices, earnings forecasts, and related judgments quoted in this article are solely the views of the analysts at this brokerage and represent the stance of their affiliated institution, not the views of Chao Xiang Research, and do not constitute any investment advice.

The market carries risks, and decisions should be made independently. This article should not be used as the basis for buying or selling any securities.