--- title: "Bank of America Interpretation: Has the memory price increase cycle peaked? Bank of America states that three major bearish factors have not yet rewritten supply and demand" type: "News" locale: "en" url: "https://longbridge.com/en/news/291759903.md" description: "Bank of America pointed out that despite negative news such as Meta's plan to lease AI computing power, Changxin Storage possibly entering Apple's supply chain, and South Korea increasing semiconductor investments leading to a pullback in the memory sector, supply chain feedback indicates that Meta is still expanding its AI infrastructure, with no evidence of order reductions. Currently, the demand for high-end memory from AI data centers is strong, and short-term prices and export data support an upward trend in the economy. The three negative factors are still insufficient to prove a reversal in the AI memory cycle" datetime: "2026-07-06T06:00:40.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/291759903.md) - [en](https://longbridge.com/en/news/291759903.md) - [zh-HK](https://longbridge.com/zh-HK/news/291759903.md) --- # Bank of America Interpretation: Has the memory price increase cycle peaked? Bank of America states that three major bearish factors have not yet rewritten supply and demand On July 2, AI and semiconductor stocks faced a concentrated sell-off, with the memory sector also caught up in it. Stocks such as SK Hynix, Samsung, Micron, Kingston, and Western Digital saw significant pullbacks that day. The market's concerns were triggered not by a single financial report number, but by three simultaneously emerging negative clues: Meta was reported to be planning to lease AI computing power externally, ChangXin Storage (CXMT) might enter Apple's iPhone supply chain, and South Korea announced a semiconductor and storage investment plan of about 800 trillion KRW. Bank of America’s latest report on the memory industry suggests that these messages are worth tracking, but currently, they are not sufficient to prove that the AI memory cycle has reversed. The main line of this round of memory market is not the traditional PC and mobile inventory replenishment, but the continuous demand for high-end memory such as HBM, LPDDR5, and enterprise SSDs driven by AI data centers. For the market, the issue behind the stock price pullback is straightforward: Is AI demand starting to be falsified, and will supply suddenly expand? Bank of America’s answer is cautiously optimistic. Short-term prices and export data still support an upward trend in memory prosperity, but investors are no longer just looking at price increases; they are beginning to question how long the price increases can be sustained. ## Meta's Computing Power Leasing Does Not Mean AI Orders Have Been Cut The most direct concern from the market comes from Meta. According to Bloomberg Law, Meta is planning a cloud infrastructure business to sell AI computing power and model access to external customers. Media outlets like Tom's Hardware subsequently interpreted this as a source of "excess computing power" concerns. If Meta indeed reduces long-term chip and component orders due to excess AI servers, the demand for HBM, LPDDR5, and enterprise SSDs would be impacted. Feedback from the chip supply chain does not support this inference. The report states that Meta's AI data centers are still actively adopting advanced memory, with long-term chip and component orders strengthening, and there is no evidence of "server excess leading to order cuts." At least from the current supply chain perspective, Meta appears to be continuing to expand its AI infrastructure rather than contracting in advance. This is also why memory stocks are so sensitive to rumors about a single customer. AI servers consume memory far more than traditional servers, with HBM used for GPU acceleration, and LPDDR5 and enterprise SSDs also bearing higher bandwidth, lower power consumption, and higher storage performance demands. Once large cloud providers cut capital expenditures, high-end memory prices and order expectations will quickly come under pressure. Conversely, as long as hyperscale cloud providers continue to increase their investments, short-term supply-demand tension will be difficult to alleviate quickly. ## ChangXin Entering iPhone Supply Chain Seems More Like Apple's Negotiation Chip in the Short Term The second concern is that ChangXin Storage may enter Apple's iPhone supply chain. If Apple widely adopts ChangXin DRAM, the pricing power of major Korean and American memory manufacturers in mobile DRAM may be weakened, which would also strengthen expectations for accelerated local Chinese alternatives However, this impact still has obvious limitations in the short term. Public reports mainly cite Bank of America’s viewpoint, stating that if Changxin wants to enter the iPhone supply chain, it needs to overcome the U.S. semiconductor restrictions on China, Apple’s quality and specification certifications, and potential intellectual property litigation risks. The related low-power DRAM must also meet requirements for speed, power consumption, and ECC, while the technological and patent barriers of major South Korean and American manufacturers in advanced mobile DRAM remain high. Even if Apple attempts to use Changxin chips in small quantities for low-end models like the iPhone 18e, the actual order volume may still be limited. Bank of America believes that demand for low-end models in the Chinese market is relatively limited, and the contribution to procurement scale is not significant. A more realistic impact is that Apple can use this to strengthen its bargaining position with South Korean and American manufacturers for contract prices in the second half of 2026 or 2027, rather than immediately changing the global mobile DRAM supply-demand structure. The long-term impact of Changxin cannot be ignored. China's localization efforts will continue to change some customers' procurement choices. However, in the current cycle, it is not evidence of a "sudden influx of supply." What the market is really concerned about is whether Changxin can consistently pass Apple’s quality certification, how U.S. restrictions will be enforced, and whether its production capacity can expand from low-end models to higher-spec products. ## South Korea's 800 trillion Korean Won plan is not new supply for the next two years The third concern comes from the large-scale semiconductor and storage investment plan announced by the South Korean government. According to information released by South Korea in late June, the plan is approximately 800 trillion Korean Won, equivalent to about $520 billion, involving Samsung, SK Hynix, new wafer fabs, and HBM capacity expansion. Such a figure can easily be interpreted by the market as a new round of large-scale production expansion. However, Bank of America believes that this is not a direct supply signal for the current cycle. The report states that the related new clusters and supporting infrastructure are more aligned with long-term industrial planning, and some projects are still a long way from substantial mass production, meaning they will not suddenly release a large amount of new capacity in the next two to three years. The memory industry has previously experienced instances where "capital expenditure peaks correspond to cycle peaks," so any large-scale factory plans will trigger caution. However, current corporate demand is concentrated on AI-related products such as HBM, SOCAMM, and enterprise-grade SSDs, with constraints on advanced processes, packaging, yield, and customer certification being stronger than traditional DRAM. Long-term investment plans do not equate to short-term effective supply, especially when high-end memory capacity remains constrained. ## Exports and prices are still rising, and the market is starting to question how long it can last Short-term data still favors the bulls. Official South Korean data shows that semiconductor exports in June were approximately $44.8 billion, with a year-on-year growth rate of 199.5%, and total exports were about $102.25 billion, with a year-on-year growth rate of 70.9%. This data corroborates the continued rise in memory prices Price forecasts are also relatively strong. TrendForce updated its average selling price forecast for DRAM in the third quarter of 2026 to a quarter-on-quarter increase of 13%-18%, up from the previous expectation of 3%-8%. Bank of America estimates the DRAM prices for the second to fourth quarters of 2026 to increase by 53%, 17%, and 7% respectively, while NAND is expected to grow by 65%, 13%, and 1% during the same period. The two sets of forecasts are generally consistent in the direction for the third and fourth quarters, with differences mainly in the rhythm for the second quarter and some assumptions regarding NAND prices. In June, semiconductor exports were approximately $44.8 billion, with a year-on-year growth rate of 199.5%. The expected DRAM price for the third quarter of 2026 has been raised to a quarter-on-quarter increase of 13%-18%. The spot market also shows that supply remains tight. According to the Bank of America report, the spot price for 16Gb DDR5 reached a new high of $47 in early July, while 16Gb DDR4 was around $75, and 512Gb NAND wafers were near $20. Prices had a pullback from April to May but rebounded in June. DRAM manufacturers are prioritizing the production of HBM, further compressing the supply of traditional DRAM. The higher the prices, the more the market worries about a cycle reversal. The current divergence is not whether memory is strong in the short term, but whether this strength has been fully reflected in stock prices, and whether AI demand can continue to absorb high prices. ## Samsung's second-quarter forecast is a close test of memory market conditions Samsung is expected to release preliminary results for the second quarter on July 7, which will serve as a short-term window for the market to assess the memory market conditions. According to Moneycontrol citing Bloomberg, the market is concerned whether its operating profit can alleviate the pressure brought by the cooling of AI transactions. Overall profits may be affected by the inclusion of special bonuses from the first quarter, and the profit margins of the smartphone business, which may be lower than some optimistic expectations. However, Bank of America believes that the operating profit of the memory sector is likely to exceed market consensus, mainly benefiting from the upward trend in average selling prices. This is also the subtlety of memory stocks at present. The overall profit of the company may be disturbed by factors such as smartphones and bonuses, but the memory business itself is still in a price-upward phase. If Samsung's memory sector performs significantly better than expected, it will reinforce the judgment that "the pullback on July 2 was more about emotional and concentrated release of concerns." If price transmission or profit margins do not meet expectations, worries about the cycle peaking will continue to escalate. Valuation cannot completely eliminate risks. After a significant expansion in earnings, memory stocks still have a relatively low price-to-earnings ratio, and ROE has also improved significantly. However, the sector has already seen substantial gains since 2026, and the pullback on July 2 indicates that investors are becoming more sensitive to every potential negative factor. ## Controversy ultimately falls on AI capital expenditures after 2027 The larger backdrop supporting memory demand is that cloud giants' capital expenditures are still expanding. According to media summaries and analyst estimates, major cloud companies such as Amazon, Microsoft, Alphabet, and Meta may reach approximately $700 billion in AI-related capital expenditures in 2026, a significant increase from the previous year, and may maintain high levels in 2027 and 2028 The caliber is not a unified official guideline from the four companies, and different statistics may lead to differences depending on whether companies like Oracle are included. Trends in capital expenditure, cloud revenue, and profit margins of large cloud vendors. Capital expenditure is expected to be around USD 700 billion in 2026, which is an important support for whether high-end memory demand can continue. Therefore, this pullback in memory stocks seems more like the market is preemptively testing three questions: whether Meta is really cutting back on AI infrastructure investment, whether Changxin can transition from a symbolic entry into Apple's supply chain to a scaled replacement, and whether South Korea's forward investment plans will ultimately bring about a new round of supply pressure. Currently, these questions have not provided answers sufficient to overturn the cycle. Exports, spot prices, price forecasts, and capital expenditure of cloud vendors still point to strong demand. However, risks have not disappeared. AI capital expenditure needs to continue to materialize after 2027, geopolitical restrictions may change supply chain choices, and the localization process in China will continue to affect the negotiation relationships between major South Korean and American companies and their clients. Whether the memory cycle has peaked is not yet a conclusion confirmed by data. More accurately, the market has shifted from "only looking at price increases" to "verifying how long price increases can last." Source: Golden Finance The publisher assumes full responsibility for the content of this article. Before investing in cryptocurrency, be sure to conduct thorough research, understand the associated risks, and carefully assess your risk tolerance. 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