Bank of America communicates with leading storage manufacturers: The impact of the Middle East is currently minimal, with exceptionally strong sales in February

Bank of America’s latest communications with more than 10 memory chip manufacturers and supply chain companies show that the impact of the Middle East conflict on the global memory chip supply chain is minimal. February sales data was surprising, indicating that industry profit margins will significantly improve. On March 7th, according to news from the Wind Trading Desk, Bank of America’s global research team clearly stated in its latest memory industry tracking report that the memory industry is in a super-cycle. The impact of the Middle East conflict on the memory supply chain is almost zero, due to the highly localized nature of the memory chip industry chain in Asia. The report states that demand for DRAM and NAND remains strong, far exceeding current production capacity. The average operating profit margin in the DRAM industry is expected to easily exceed 60%, while NAND will surpass 30%. South Korea's semiconductor exports in February surged 161% year-on-year, and NANYA Technology in Taiwan saw its February sales soar 587% year-on-year, both confirming this judgment. Minimal Impact from the Middle East Crisis, Demand Continues to Outstrip Supply This week, Bank of America discussed the impact of the Middle East conflict with more than 10 memory chip manufacturers and supply chain companies. All surveyed memory manufacturers indicated that the Middle East conflict currently has almost no substantive interference with their business. The reason is that the memory chip industry chain has a highly localized nature in Asia: Production side: Over 95% of memory chips are produced in Asia, with ample inventory of materials (such as helium from Japan) and a high degree of localization; Equipment side: Semiconductor equipment comes from Asia, the United States, and Europe, usually transported by air, without needing to pass through the Strait of Hormuz; Distribution side: Memory chip distribution is centered in Asia, especially for the HBM required by NVIDIA AI servers, which are produced in South Korea and then sent to packaging/ODM companies in Taiwan. The report states that although manufacturers are concerned that a prolonged Middle East situation may dampen macro demand, current demand for both DRAM and NAND is extremely strong, far exceeding current production levels. More importantly, manufacturers are actively negotiating long-term agreements (LTA) to lock in multi-year average selling prices (ASP), indicating a high level of confidence in the industry's future prosperity. From the price data, Bank of America indicates that DRAM spot prices remained stable overall this week but are still more than 50% higher than last quarter; NAND spot prices surged over 10% this week (week-on-week) driven by ongoing shortage expectations. Specifically, the spot price for 16Gb DDR5 is $39.3, up 698% year-on-year; the spot price for 16Gb DDR4 reached $77.2, with a year-on-year increase of 2530%. February Sales Data Shocks the Market: Super-Cycle Characteristics Fully Manifested The report states that the February sales data surprised the Bank of America team, with all indicators significantly exceeding expectations: South Korea's semiconductor exports: February exports reached $25.2 billion, a year-on-year increase of 161%, setting a new historical high, and a month-on-month increase of 22% compared to January; NANYA Technology from Taiwan, China: Monthly sales in February increased by 587% year-on-year, achieving triple-digit year-on-year growth for seven consecutive months, mainly driven by significant price increases in DDR4 and DDR5. The Bank of America team pointed out that such strong revenue growth is primarily driven by the rise in prices of traditional memory chips (DDR4, DDR5, NAND) and the optimization of product structure (increased proportion of HBM3e and enterprise-level SSDs). In this context: The average operating profit margin in the DRAM industry is expected to easily exceed 60%; The average operating profit margin in the NAND industry is expected to exceed 30%; With the continuous increase in new contract prices for DDR5, sales, export volume, and profit margins in March are expected to further exceed those in February. Considering that ASP is expected to continue rising (including new contract prices for DDR5), sales, exports, and profit margins in March should further increase compared to February. Bank of America clearly stated: "It is clearly a super-cycle." The above exciting content comes from the Wind Trading Platform. For more detailed interpretations, including real-time analysis and frontline research, please join the【 **Wind Trading Platform ▪ Annual Membership**】 ![](https://wpimg-wscn.awtmt.com/3c4a713c-7a38-4582-9850-d0eabaf0e7ad.png) Risk Warning and Disclaimer The market has risks, and investment requires caution. 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