CLSA published an industry report stating that the memory sector has recently undergone a correction amid macro headwinds. Rising bond yields and geopolitical factors have pressured the recovery of memory-related stocks, but the broker maintained a positive view on the sector outlook, believing the recent pullback presents a buying opportunity, supported by continued artificial intelligence capital expenditure, AI applications and improving monetization capabilities. The broker expects memory demand growth to outpace supply growth from 2027 to 2028.

Memory suppliers are striving to sustain current profitability for a longer period. Therefore, even though supply-demand conditions are expected to remain tight in the coming quarters, suppliers are unlikely to significantly raise average selling prices. In addition, the increasing adoption rate of long-term agreements (LTA) should support high profitability and drive further valuation re-rating. CLSA favors Samsung Electronics, SK Hynix and Micron Technology, Inc. (MU.US) .

CLSA forecast global DRAM wafer capacity to increase from 1.95 million wafers per month by the end of 2025 to 2.9 million in 2028, and further to 3.9 million in 2030. As new fabrication plants and yield improvements require several quarters to materialize, the broker estimated supply growth will continue to lag demand growth over the next three years. Meanwhile, the proportion of DRAM capacity allocated to HBM is expected to rise from 20% in 2025 to 28% in 2028. Since HBM requires three to four times the wafer capacity of traditional DRAM, coupled with lower yields for next-generation products, the overall DRAM market is expected to remain in short supply through 2028. However, gains in memory average selling prices may become more moderate, though the likelihood of a sharp decline remains very low.

The report also noted that despite market concerns over NAND demand prospects, demand for enterprise SSDs in data centers remains strong and now accounts for nearly half of NAND bit shipments. In addition, the proliferation of AI inference and AI agents is driving NAND demand higher. As suppliers prioritize expanding the more profitable DRAM/HBM segment, NAND supply discipline is being maintained, supporting resilient pricing. CLSA projected global memory industry revenue to rise 42% YoY to USD1.3 trillion in 2027, followed by another 14% increase to USD1.5 trillion in 2028, above USD927 billion in 2026.

CLSA believes long-term supply agreements (LTA) signed between memory suppliers and customers are becoming increasingly common, accounting for 60% to 70% of planned production, with prepayments and binding purchase commitments attached, reflecting suppliers' stronger bargaining power. (ad/da)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)