Recently, memory prices, which had been rising for months, suddenly reversed course, triggering market concerns about the peak of the memory cycle.
According to market tracking data, DDR5 memory prices have seen widespread reductions across multiple US retailers, with discounts of up to $100 per module. For instance, Corsair's Vengeance series, a 32GB capacity model with a maximum frequency of 6400MHz, is now priced at around $379.99, a significant drop from its recent peak of $490, with a per-module decrease exceeding $110.
The domestic market has also been impacted. Wholesalers have told &#34;China Business News&#34; that prices for mainstream 16GB memory modules &#34;dropped by over a hundred yuan in one day,&#34; and large holders who previously stocked up are now frantically selling.
&#34;Starting last Saturday, the price just collapsed,&#34; said Boss Wang, a wholesaler who has been operating in memory devices in Buynah for many years, to the same media outlet. He displayed an extreme price curve for a mainstream 16GB 3200MHz memory module: it was just over 130 yuan in May last year, then surged to a peak of 980 yuan in December, but after fluctuating at high levels for several months, the current spot price has fallen back to around 700 yuan.
Boss Wang reluctantly stated that due to the price surge pre-empting consumer expectations, &#34;unless it's a necessity, people won't buy it. Compared to before last November, our sales have fallen by more than 60%.&#34;
Concurrently, Google published a paper on a new compression algorithm called &#34;TurboQuant.&#34; The research indicates that this technology can reduce the memory footprint of large language models during runtime by at least 60%. Investors quickly priced this in as: the problem of AI hardware shortages will be fundamentally resolved, and memory demand will be significantly reduced.
The chill in the spot market quickly spread to the capital markets. Micron Technology's stock price has retreated over 24% from its recent high, and Western Digital has fallen nearly 21% from its peak of $777.60. Meanwhile, the US memory chip sector lost nearly $100 billion in market value last week.
Faced with plunging prices and stock crashes, market participants have serious disagreements about the future prospects of the memory industry. Some investors believe the traditional memory &#34;pig cycle&#34; has peaked, while HSBC institutions believe market concerns are overstated, and we are currently in the middle of an AI-driven memory supercycle, with strong demand for high-end products like HBM, and memory shortages potentially lasting one to two years.
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<h2>Buyers Say &#34;No&#34;: Is the Traditional &#34;Pig Cycle&#34; Repeating?</h2>
For traders who follow traditional cycles, the market downturn is not that simple. Dan Nystedt, a former journalist and well-known semiconductor analyst based in Taiwan, points out that many optimists attribute the recent plunge to Google's paper, but this is merely a superficial reason. Dan believes the real cause is that prices for certain smartphone memory chips have stopped rising.
<blockquote>
&#34;The real reason is much simpler: the prices of certain smartphone memory chips have stopped rising. Buyers have finally said 'no' – this is the first peak signal that experienced memory cycle investors look for before selling.&#34;
Dan Nystedt stated. Due to the excessively high prices of DRAM and NAND, some smartphone manufacturers plan to reduce or even cancel production of low-to-mid-range phones in 2026. He revealed that buyers had refused higher DDR4 prices two weeks ago.
Dan Nystedt likens the memory industry to the &#34;pig cycle&#34; in agriculture: high prices encourage companies to expand production, but building factories takes time, and when new capacity is released simultaneously, prices plummet.* He believes investors following this script have quickly exited, leading to significant pullbacks in the stock prices of Micron and SanDisk.
</blockquote>
Over the past 50 years, memory chips have experienced more than a dozen major boom/bust cycles. Since 2010 alone, there have been three: the boom of 3G/4G and cloud computing from 2012-2015; the expansion of 5G and cloud services from 2016-2019; and the COVID-driven surge in PCs/servers from 2020-2023. The upward cycle that began in 2024 is driven by AI servers (HBM and SRAM).
&#34;Whenever someone writes 'this time it's different,' it's usually a classic sign of speculative frenzy,&#34; Nystedt quoted the legendary speculator Jesse Livermore: &#34;The market is always right, and opinions are often wrong.&#34; He reminds investors that when chip buyers are no longer panic buying, and when rallies are repeatedly met with sustained selling, seasoned capital will quickly retreat according to the script.
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<h2>Structural Transformation: Are Memory Companies No Longer &#34;Cyclical Stocks&#34;?</h2>
However, independent analyst Jukan offers a different perspective on Dan Nystedt's analysis.
He points out that buyers' resistance to price increases is mainly concentrated in traditional memory like DDR4, not the entire memory market. The previous surge in DDR4 prices was partly due to inventory hoarding in the Chinese market, which gave smartphone manufacturers room to adjust specifications for low-end devices.
&#34;But DDR5 is a completely different story,&#34; Jukan stated. Smartphone and PC manufacturers have diligently accepted significant price increases for DDR5 in the first or even second quarter of this year. In the current AI and high-end device ecosystem, DDR5 is not a negotiable item but a core input that buyers must secure even at a premium. Flagship products built around DDR5 cannot be downgraded.
Secondly, the market is completely overlooking the fundamental transformation in the business models of memory giants. Jukan scoffs at &#34;seasoned investors&#34; who &#34;blindly sell off based on spot price drops.&#34;
&#34;Memory companies' operations are no longer the blind production expansion model of the past,&#34; Jukan keenly observes. Samsung, SK Hynix, and Micron, the top three giants, are converging towards TSMC's business model – that is, building capacity only after securing core customers' advance payments and long-term demand visibility.
Recently, Korean media reported that Samsung is discussing advance payment-based cooperation agreements with giants like Microsoft. Memory giants are more aware than anyone of the pain of overcapacity destroying cycles. Therefore, they are now pursuing extremely restrained capacity expansion, rather than reflexively excessive construction.
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<h2>Investment Banks Show Support: The Memory Supercycle is Only Mid-Way, Five Major Market Concerns Are Overstated</h2>
Unlike the panic in the spot market, investment banks remain confident in the long-term prospects of the memory industry. In a research report released on March 30th, HSBC clearly stated, &#34;In our view, current concerns are being amplified; we are in the middle of an AI-driven supercycle.&#34;
The report outlines five specific concerns that are considered overreactions by the market:
<blockquote>
<ol>
<li>The negative impact of the Middle East conflict on raw material and electricity price hikes;</li>
<li>The slowdown in memory price growth in the second half of 2026;</li>
<li>Industry technologies like Google's &#34;TurboQuant&#34; and Nvidia's &#34;KVTC&#34; that reduce memory usage in AI systems;</li>
<li>The gradually increasing capital expenditure plans of major memory manufacturers;</li>
<li>Intensifying competition from Chinese memory manufacturers.</li>
</ol>
</blockquote>
The report states that the Middle East conflict has no substantial impact on memory manufacturers' procurement of raw materials. Furthermore, absolute profit growth will have a far greater impact on stock prices than a slowdown in the rate of DRAM price increases. At the same time, memory manufacturers remain highly prudent and restrained in their capital expenditure execution.
Regarding Google's TurboQuant technology, which has triggered market sell-offs, the bank believes it is too early to worry. The commercialization of this technology will take about another year, and its reference parameters are smaller than the current AI environment. More importantly, the bank points out that TurboQuant alleviates memory bandwidth bottlenecks, improves system efficiency, and reduces token costs, thereby accelerating the commercialization and adoption of AI. The report reads:
<blockquote>
&#34;The net effect is that we believe efficiency improvements will accelerate AI development – a positive event that should lead to a sharp increase in AI adoption rates.&#34;
</blockquote>
Concurrently, the bank predicts that AI server shipments will surge by 28% year-on-year in 2026. From 2026 to 2027, the average DRAM content per server will see strong growth of 17%. With the explosion of AI inference demand, enterprise-grade solid-state drives (eSSDs) are entering a golden age. The report predicts that by 2027, the proportion of eSSDs in total NAND demand will soar from 18% in 2023 to 40%. AI servers will consume 62% of this.
The bank believes that the market is currently in the middle of an AI-driven supercycle, comparable in scale to the six-year DRAM shortage triggered by office automation from 1990-1995. Historically, from 1990 to 1995, with the popularization of Windows 3.0 and subsequent operating systems, office automation led to a structural shortage of DRAM for six years, driving the DRAM market size from $7 billion in 1990 to a 6-fold surge to $41 billion in 1995.
The bank believes that the infrastructure construction driven by large models, agentic AI, and physical AI (such as autonomous driving) will lead to a memory shortage situation that will last at least one to two years.
Based on these judgments, the report firmly believes in their certainty of benefiting from the memory supercycle. Regarding the recent plunge, the report states: &#34;We believe any pullback presents an additional buying opportunity.&#34;

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Recently, spot prices for memory modules have plunged, with stocks like Micron experiencing heavy losses. Analyst Dan Nystedt believes this signals the peak of a traditional cycle, as mobile phone manufacturers refuse to accept high DDR4 prices. However, analyst Jukan counters that price resistance is limited to traditional memory, while demand for DDR5 and HBM remains strong, suggesting memory companies are no longer merely "cyclical stocks." HSBC, on the other hand, believes market concerns are overstated and that the AI-driven memory supercycle is only in its middle stages, with shortages potentially lasting one to two years

- Memory prices in the US and China have sharply declined, raising concerns over a peak in the memory cycle, with retailers offering significant discounts on DDR5 products.  
- Google’s new compression algorithm has reduced memory requirements for AI models by at least 60%, leading investors to believe that demands for memory may decrease amid fears of a supply surplus.  
- While some stakeholders worry about a traditional downcycle, others argue we are in the midst of an AI-driven supercycle, with financial analysts showing continued confidence in long-term growth in the memory sector.

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Memory Module Prices Plummet, Memory Stocks Fall Collectively, Has the Memory Supercycle Peaked?