DDR4 Price Increase Expected to Continue into Q4, Maintaining 'Attractive' View on Greater China Semiconductor Industry

On August 18, the latest Greater China semiconductor report pointed out that the market is currently concerned about the lack of long-term agreements (LTA) from older memory manufacturers, which may weaken the sustainability of the cycle. However, the firm believes that this actually gives relevant manufacturers greater elasticity during the rapid rise in spot prices. As major storage manufacturers continue to exit the supply of mature products like DDR4, the supply-demand relationship for older memory is still improving, and the momentum for price increases is expected to continue into Q4 of this year, with some categories potentially lasting until 2027.

The report states that the price increase for DDR4 continues to exceed expectations. Previously, the market attributed the strength of DDR4 mainly to server demand, but it is now evident that demand from consumer electronics is also spreading. The firm expects DDR4 prices to rise by about 50% in Q3, with double-digit increases expected in Q4.

SLC NAND is the most favored price category. The firm anticipates that SLC NAND prices will rise by over 50% in both Q3 and Q4, due to ongoing capacity constraints and suppliers lacking the willingness to reallocate wafer capacity to lower generation products. The report suggests that the migration of MLC demand to SLC will also support price increases in the first half of 2027.

The fundamentals for NOR Flash are also improving. It is expected that after a recent round of price increases, NOR may see another price hike in Q4, with momentum continuing into the first half of 2027. Demand sources include industrial, automotive, networking, edge AI, and AI server-related applications.

At the individual stock level, profit forecasts for Winbond, Macronix, GigaDevice, and Powerchip have been raised. Winbond's EPS forecasts for 2026 to 2028 have been increased by 17%, 30%, and 34%, respectively; Macronix's increases are even larger, with three-year EPS forecasts raised by 139%, 144%, and 147%. Although GigaDevice's target price has been lowered from 888 yuan to 750 yuan due to rising valuation risk premiums, its EPS forecasts for 2026 to 2028 have still been raised by 108%, 49%, and 48%, respectively. Powerchip has also seen profit upgrades due to price increases in mature processes and opportunities in 3D AI foundry.

The view on the Greater China technology semiconductor industry remains 'attractive', with the preferred stock still being Aipu Technology, mainly due to its SiCap business, although the report did not elaborate further on the orders, financial contributions, or valuation assumptions of this business.

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