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PostsThe "Oil Revolution" of Chips: After Micron's 240% Surge, How Much More Room for Imagination is There for Memory Chips?
When oil prices surge, people ask: Is this the peak of the cycle or a new normal? Now, a similar question is facing global memory chip investors. Micron Technology (Micron) has soared more than 240% this year, leading a collective rally in the U.S. memory sector—this is not just a sign of industry recovery but may also mark a deep restructuring of the semiconductor industry landscape.
The "Supply-Side Reform" of Memory Chips
Similar to the oil industry, the memory chip industry is undergoing an active "supply-side reform." Over the past two years, the industry downturn forced the three giants—Samsung, SK Hynix, and Micron—to significantly cut capital expenditures. In the first quarter of this year, the capital expenditures of these three manufacturers fell by a staggering 40% year-on-year. This rare collective discipline has created a remarkable reversal of supply and demand: while AI demand is exploding, the supply side is shrinking.
The result is obvious: DRAM and NAND Flash contract prices have been rising continuously since the fourth quarter of last year, with the increases expanding quarter by quarter. This is not a simple cyclical rebound but a supply-side-driven price reshuffle. Micron CEO Sanjay Mehrotra recently stated that "supply will tighten in 2025," almost putting an official stamp of approval on this wave of price hikes.
Micron: At the Intersection of HBM and DDR5
Micron's surge is no accident. In the AI wave, high-bandwidth memory (HBM) has become the most scarce resource. Training a large language model may require thousands of HBM chips, and Micron has secured a favorable position in this race:
Technological breakthrough: Micron's latest HBM3E product performs excellently in power consumption and performance, has received NVIDIA certification, and will begin shipments in early 2024.
Capacity layout: The company's new plants in Taiwan and Japan will specialize in HBM production, with response speeds and capacity flexibility exceeding market expectations.
DDR5 upgrade wave: As Intel and AMD's new platforms fully transition to DDR5, the upgrade of memory interfaces is creating new value layers.
Valuation Reassessment: From "Cyclical Stock" to "Growth Stock"?
Traditionally, memory chips have been seen as typical cyclical stocks. But AI is rewriting this logic. When the ASP (average selling price) of Micron's HBM products reaches 5-8 times that of ordinary DRAM, its profit structure is undergoing a qualitative change. Morgan Stanley's latest report points out that the "value creation" model of the memory chip industry is shifting from "capacity expansion-driven" to "technological innovation-driven."
This explains why Micron's P/E ratio remains attractive to investors even at 40 times—the market is repricing it as an "AI beneficiary" rather than a pure memory cyclical stock.
Risk Signals: Undercurrents Behind the Boom
However, behind the noisy rally, several risk signals cannot be ignored:
High customer concentration: The top five customers account for nearly 50% of Micron's revenue, and reliance on a few large customers could be a double-edged sword.
Rebound in capital expenditures: Industry recovery may tempt manufacturers to restart capacity expansion, disrupting the current fragile supply-demand balance.
Overstretched valuations: Even considering the AI premium, the current stock price already reflects quite optimistic expectations.
Investment Implications: Finding the Next Blue Ocean
For investors, the memory chip story may be entering a new chapter:
Technology-tiered investment: The divergence between high-end products like HBM and DDR5 and ordinary memory chips will continue.
Supply chain extension opportunities: The upgrade of memory chips is driving changes in packaging, testing, and materials.
Value of regionalized supply chains: Under the U.S. CHIPS Act, localized capacity may receive valuation premiums.
Conclusion
The memory chip industry stands at a crossroads between "cycle" and "growth." Micron's 240% surge is both a testament to industry recovery and the beginning of AI reshaping the semiconductor value chain. For investors, the key is not to ask "Can we still chase?" but to think: In the new value map of memory chips, where is the next value anchor?
Like the oil industry's value restructuring after the shale revolution, the memory chip industry is undergoing a transformation from "commodity" to "technology product." This may be the most thought-provoking industrial signal behind Micron's rally.
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