The trillion-dollar carnival that sells the memory, buys the profit of the memory. Kill
Author:Xiaoqing, Telecommunication Technology
Editor: Seo Cyangyang
Two simultaneous events took place on the evening of 26 May。
Mi published the first quarter of 2026. The total firm received $991 billion, a decrease of 10.9 per cent over the same period; the adjusted net profit was $6.07 billion, a sharp decline of 43.1 per cent over the same period. Income from mobile phone operations was 44.3 billion, a 12.5 per cent decline over the same period, and the Maori rate fell to 10.1 per cent, a 2.3 percentage point decrease from the same period last year。
AT THE PRESS CONFERENCE, THE PRESIDENT OF THE MI GROUP, LU WEI BING, SAID A NUMBER: THE COST OF MEMORY ALONE IS ABOUT $1,500 MORE THAN THE COST OF A MOBILE PHONE EQUIPPED WITH 12GB LPDDR5 + 512GB UFS, WHICH SOARED NEARLY FOUR TIMES THE COST OF THE SAME MEMORY OVER THE SAME PERIOD LAST YEAR. HE SAID THAT MI “WILL NOT TRANSFER THE COST OF THE MEMORY PRICE INCREASE TO THE CONSUMER”, BUT ALSO PREDICTED THAT THE PRICE INCREASE CYCLE WOULD CONTINUE UNTIL 2027 OR EVEN 2028. IN ORDER TO SURVIVE, MI TOOK THE INITIATIVE TO CUT OFF THE ENTRY-LEVEL AIRCRAFT, AND THE QUARTERLY VOLUME FELL TO 338 MILLION。
The second thing:Light technologyThe one-day boom exceeded 19 per cent and the market value exceeded $1 trillion. The Swiss Bank raised the price of US$ 535 directly to US$ 1625, with a one-time increase of about 204 per cent, which is the highest target price among the 46 coupons currently covering US$ 56。
A few days ago, Citicorp just increased the price of American light targets from $425 to $840 and HSBC from $750 to $1,100. Wall Street has not been in the same cycle for a long time, and there is such agreement. It was less than $110 12 months ago. In a year, it increased eightfold。
On the same day, hundreds of billions of carnivals sold the memory were sold for profit。
Goldman Sachs played an interesting role in the party. In December 2025, Goldman Sachs gave a US$ 205 neutral rating. In the first quarter of 2026, Goldman Sachs reduced its position by almost 20 per cent。
On 19 March, in the Guinée Press, Goldman Sachs lowered the target price from $360 to $400, but remained neutral, and the stock price was already well above $400. And then beauty goes up 40 percent a week, and Goldman Sachs is on his feet。
On 17 May, Goldman Sachs issued a storage industry report, which concluded that “the worst supply shortage in 15 years” had resulted in an upward adjustment of the overall storage industry rating. But it remains neutral for beautylight, and the target price remains $400. Goldman Sachs is either the last soberer or the worst。
But this strong division also deserves serious reflection。
WHY IS IT CRAZY, A NEW STORY CALLED LTA
The central argument is that the long-term supply agreement (Long-Term Agreement, LTA) is fundamentally eliminating the cyclical nature of the storage industry。
Storage chips are the most common type of large commodity in the semiconductor industry。DRAMTHE PRICES OF NAND AND NAND HAVE BEEN FOLLOWING A CRUEL PATTERN FOR 40 YEARS, RISING BY TWO YEARS AND FALLING BY TWO YEARS. THE PROFITS OF AMERICAN LIGHT, SAMSUNG, AND SK HERCULES WERE EKG, AND THE MARKET NEVER DARED TO VALUE THEM ON THE BASIS OF “STABLE PROFITS”. OVER THE PAST FOUR DECADES, THE APPROXIMATE FLUCTUATION IN THE VALUATION OF THE CYCLICAL SHARES HAS RANGED FROM 8 TO 15 TIMES THE MARKET MARGIN。
Figure: Treasures in the EKG pattern of financial data
THE SWISS STORY IS THAT THESE COMPANIES' “CYCLICAL CURSES” WILL BE BROKEN, AND THE MAIN ACTOR BEHIND THEM IS “AI”。
Microsoft, Google, Amazon, Meta, the cloud manufacturers, in order to lock HBM and DDR5 supplies in the AI arms race, began to sign fixed-price long-term contracts with advances for three to five years at their own initiative and storage plants. These contracts are not “intentional” agreements such as those in the traditional semiconductor industry, but are binding procurement commitments, locking volumes, lock prices and even locking crystal round capacity。
Figure: AI capital expenditure (2022-2026E) for large technology companies: The total of four is projected to reach $725 billion in 2026. Individually, the Amazon is $200 billion, Microsoft is $19 billion, Alphabet is $19 billion and Meta is $145 billion. Data 2026 represent the ceiling for the latest guidance by companies as at 29 April, and Microsoft calibre is the sum of calendar years based on quarterly data。
MICROSOFT, GOOGLE, WAS REPORTED IN APRIL TO BE IN CONTACT WITH SK HERCULES FOR A THREE-YEAR TERM OF DRAM, WHICH INCLUDED A DOWN PAYMENT. IT WAS THE MANUFACTURER WHO ASKED FOR A CLIENT'S ORDER, AND NOW IT'S THE CUSTOMER WHO PAYS THE MONEY TO LOCK UP. THE CHAIN OF POWER HAS BEEN REVERSED。
SBG ' s model calculations show that even with the incorporation of LTA into the U.S. Light profit forecast, DRAM ' s spot price fell by 50 per cent in 2029, US$ 100 per share of the profits would remain constant throughout the year. LTA can narrow down the DDR price by about 50 per cent from the top of the cycle to the bottom of the valley. By 2027, 20 to 30 per cent of the industry-wide total of DDR bits will be locked in by AFP. Sixty to 70 per cent of the DDR5 procurements for the head hyperscaler may have been in fixed contract status。
IN TERMS OF THE VALUATION SYSTEM, IF THE CYCLICALITY DISAPPEARS, THE STOCK SHOULD NOT BE VALUED ON A CYCLICAL BASIS, WHEREAS THE PE SHOULD BE VALUED ON AN INFRASTRUCTURE UTILITY BASIS FROM 8 TO 15 TIMES TO 20 TO 30 TIMES。
IN MID-MAY, MORGAN CHASE PUBLISHED A SIMILAR STUDY ENTITLED “LTA IS ELIMINATING THE CYCLICALITY OF THE STORAGE INDUSTRY”. THE LOGIC OF CITIGROUP PRODUCTION IS THAT HBM PRODUCTION CROWDS OUT ORDINARY DRAM CRYSTAL ROUND CAPACITY, LEADING TO CHRONIC SHORTAGES OF UNIVERSAL STORAGE。
The sharp rise in the price of luminous shares led to profits and a change in the valuation systemDavis double-clickI don't know。
02 This storage is not unique Storage
Wall StreetStorage Super CycleIt's a unified cow market narrative. But " storage " and " storage " are completely different。
The storage market in 2026 was divided into three layers。
The first level is AI storage: HBM, server DDR5, enterprise level SD. The price increases, the cut-off, and the lock-in are occurring simultaneously. TrendForce predicts that:In the second quarter of 2026, the ring price of the DRAM contract increased by 58 to 63 per cent and the price of the NAND Flash contract by 70 to 75 per cent. This floor is a story of trillions of dollars worth of light。
The second level is mobile phones and embedded storage: mobile DRAM and mobile phones NAND. The price rises here too. The Counterpoint data show that the DRAM price ratio increased by more than 50 per cent in the first quarter of 2026 and the NAND Flash price ratio by more than 90 per cent. According to TrendForce-related reports, memory, which used to account for about 10 to 15 per cent of mobile phone BOM, has now risen to 30 to 40 per cent, with lower-end type pressure more pronounced。
LEFT DRAM (RAM) TREND: LOW-END MACHINE SURGED THE MOST, CLIMBING FROM THE INITIAL LOW TO Q2 PROJECTED TO REACH 35 PER CENT IN 2026; HIGH-END TO 23 PER CENT; MEDIUM-END TO 20 PER CENT. THE DOTTED LINE SEGMENT (AFTER Q1 2026) IS PROJECTED。
RIGHT-HAND FIGURE NAND (FLASH) TREND: ALL PRICES WERE GENERALLY STABLE IN THE FIRST THREE QUARTERS OF 2025, BUT THEY ROSE SHARPLY FROM Q4,2025。
MI IS ON THIS LEVEL. ITS PAIN IS THAT “AI HAS TAKEN THE CAPACITY, LEAVING FEWER MOBILE PHONES, AND THE MOBILE PHONE MANUFACTURER HAS TO PAY HIGHER PRICES FOR THE REMAINING CAPACITY”。
THE ORIGINAL PLANT GAVE PRIORITY TO PRODUCTION CAPACITY TO THE AI CLIENT, AND THERE WERE FEW OPTIONS AVAILABLE TO MOBILE PHONE MANUFACTURERS FOR CONTRACT PROCUREMENT. IF YOU'RE GOING TO DELIVER, YOU'RE GOING TO HAVE TO BUY IT AT A NEW CONTRACT PRICE; IF YOU DON'T BUY IT, THE LINE AND THE NEW RHYTHM WILL BE COMPROMISED。
The third level is PC retail spot: DDR5 module, consumer level SD. There's been a reversal of direction here. TrendForce reports that at the end of March, the 32GB DDR5 module of the China channel fell from close to RMB 3,000 to RMB 500 to 1050 and that some of the clearing prices were lower to RMB 1950; Tom's Hardware also wrote that part of the DDR5 product in the Chinese and overseas retail markets fell from a high point of 25 to 30 per cent。
BUT THIS IS MAINLY A SPLIT BETWEEN RETAIL SPOT AND CONTRACT PURCHASES. THE PC CHANNEL HAS STOCKS THAT CAN BE SOLD; MOBILE PHONES ARE PURCHASED UNDER CONTRACT, WITH NO OPTIONS FOR SALE。
THE SAME “STORAGE” INDUSTRY, THREE DIRECTIONS ON THREE LEVELS. THE ESSENCE OF THIS DICHOTOMY IS THAT THREE GIANT STORAGE PLANTS ARE SHIFTING CRYSTAL ROUND CAPACITY FROM THE CONSUMER LEVEL TO AI. HBM PRODUCTION CROWDS THE ORDINARY DRAM CRYSTAL CIRCLE, ENTERPRISE-LEVEL SSD SQUEEZES THE CONSUMER-GRADE NAND SUPPLY, AND LEAVES LESS CAPACITY FOR MOBILE PHONES AND PCS. MOBILE PHONE MANUFACTURERS WERE FORCED TO ACCEPT PRICE INCREASES BECAUSE THEY HAD TO DELIVER; THE PC CHANNEL COULD BE SOLD AT REDUCED PRICES BECAUSE OF SUFFICIENT STOCK。
IMAGE GENERATED BY AI
THE BEAUTY OF THE LIGHT HAS CHOSEN TO GIVE ITS CAPACITY TO THOSE AI CLIENTS WHO ARE MORE WILLING TO PAY. IN THE SHORT TERM, THIS IS A BEAUTIFUL PRODUCT UPGRADE. BUT IT ALSO MEANS THAT MI-LIGHT IS BLOCKING THE RETREAT, AND ONCE THE DEMAND FOR AI SLOWS DOWN, CAPACITY DOES NOT ALWAYS GO BACK。
ACCORDING TO THE PRESS, DRAMBIT EXPORTS INCREASED BY ONLY A MEDIAN NUMBER, WHILE NANDBIT EXPORTS INCREASED BY ONLY A LOW NUMBER, MAINLY FROM THE ASP. THE STORY OF TODAY'S BEAUTY IS JUST ABOUT THE "EXTREME SHORTAGE OF AI TO STORE THIS BRANCH."。
Mi-guang's got it all in this branch。
Is the CBSA really going to eliminate the cycle
THE PCA LOGIC SEEMS STRONG. AT THE EXPENSE RATE OF AI, THE SUPPLY ELASTICITY OF STORED CHIPS IS EXTREMELY LOW, HBM CAPACITY IS 18 TO 24 MONTHS FROM PLANNING TO COMMISSIONING, AND PRODUCTION OF HBM WILL CROWD IN THE GENERAL DRAM CRYSTAL CIRCLE. THE CONSORTIUM WAS CONCERNED ABOUT THE EXTENSION OF THE AI PROJECT。
However, there is one premise of the cyclical nature of the elimination: the need remains intact。
The statistical calibration of AI CapEx varies from agency to agency, but in the same direction: AI infrastructure investments are moving from hundreds of billions of dollars to close to trillion dollars. Based on partial market models, this is an annualized capital expenditure curve of close to 40 to 50 per cent。
But the physical world does not always have more than 40 per cent growth. There is no need for a bursting of AI foam, only a reduction in the rate of increase from 45% to 20%, and the balance of supply and demand for the chips stored could be reversed within 18 months. The three storage plants are now experiencing a crazy expansion, with CapEx $25 billion for the 2026 fiscal year U.S. Light, plus $10 billion in 2027。
Another thing that has to be confronted is that the story is fragile when a company depends entirely on price rather than sales elasticity for its income growth. Mercantile's output increased by only 4 to 6 per cent, while the 196 per cent increase in revenue was mainly due to higher prices. Prices can rise or fall, and fall much faster. It's also cyclical in nature。
Let's do a simple arithmetic question。
The current market value is $1 trillion. Mi-sung has already put 2026 in itCapExIt has risen to over $25 billion, and capital expenditure is expected to continue to increase significantly during the 2027 fiscal year, with some market reports mentioning potential increases of over $10 billion。
IN THE SECOND QUARTER OF FISCAL YEAR 2026, NET PROFITS FROM SINGLE-SEASON NON-GAAPS AMOUNTED TO ABOUT $14 BILLION, OR $56 BILLION A YEAR, EQUIVALENT TO ABOUT 18 TIMES THE PE. IF THE SUBSEQUENT PRICE INCREASES AND THE ASSOCIATION CONTINUE TO BE EXTRAPOLATED, THE PE WILL BE COUNTED 15 TIMES OR LESS。
LOOKS LIKE IT'S CHEAP. HOWEVER, THE PE DENOMINATOR WAS A 15-MONTH 10-FOLD INCREASE IN THE DDR4 CONTRACT PRICE, HBM WAS SOLD OUT THROUGHOUT THE YEAR, AND THE MĀORI RATE JUMPED FROM 36 PER CENT TO 75 PER CENT AT THE TOP OF THE SUPER-CYCLE。
Multiply the profit at the top of the cycle by a number that appears to be “reasonable” to arrive at a valuation that appears “not expensive”, which is the most classic valuation trap at the peak of the cycle。
CISCO WAS ALSO “JUST OVER 60 TIMES” IN 2000, BASED ON A 50 PER CENT + GROWTH IN 15 CONSECUTIVE QUARTERS. WHEN THE RATE OF INCREASE DROPS FROM 50 PER CENT TO 20 PER CENT TO 0 PER CENT, THE EPS DROPS BY 80 PER CENT, AS MULTIPLES AND PROFITS CONTRACT SIMULTANEOUSLY。
Double-click from Davis to double-kill。
One thing history has taught us is that in commodity markets, the Association has never been a unilateral “floor”. It protects the buyer during the first cycle and the seller during the next, provided that both parties are capable and willing to perform. The moment when the Association is really needed is the moment when it is most likely to fail。
IT'S NOT THAT MIHO MUST BE FOAM. THE DEMAND FOR ALGORITHMS AND STORAGE BY AI MAY REALLY BE STRUCTURAL, AND THE LTA MAY REALLY HAVE REWRITTEN THE INDUSTRY RULES, AND THE MARKET VALUE OF TRILLIONS OF DOLLARS MAY BE THE STARTING POINT。
But when the whole Wall Street was saying “this is different”, it was worth stopping to ask: what happened when everyone was so sure
In a sense, a party with foam is the only way to make money。
HOWEVER, IT TOOK CISCO SOME 25 YEARS TO GET BACK TO THE HEIGHT OF THE INTERNET BUBBLE, WHICH HAS CHANGED EVERYTHING。
