Memory supercycle may extend into 2027, with NAND spot rebound stronger than DRAM
AI summary card
Memory supercycle may extend into 2027, with NAND spot rebound stronger than DRAM
BofA expects AI server, HBM, and enterprise SSD demand, combined with tight traditional memory supply, to drive nearly fourfold revenue growth in DRAM and NAND in 2026, with expansion continuing in 2027.
- Global DRAM revenue is expected to grow 328% year over year in 2026, and NAND revenue is expected to grow 341%, mainly driven by sharp increases in average selling prices.
- NAND spot prices strengthened notably this week, with 512Gb to 1Tb products rising 5% to 6% and legacy 256Gb products rising more than 10%.
- BofA's memory indicator recorded 183 in June, significantly above the mid-cycle and up-cycle reference levels of 100 and 130, and still close to historical highs.
- Servers, especially AI systems using HBM, have contributed more than half of DRAM demand, while data center and AI SSDs have also become core drivers of NAND demand.
- Samsung Electronics is expected to potentially implement large-scale shareholder returns through special dividends, share buybacks, and year-end dividends.
Report interpretation
Overview
The report updates forecasts for the global memory industry, concluding that despite a roughly fourfold revenue expansion likely in 2026, tight supply-demand conditions and AI infrastructure demand can still support the supercycle extending into 2027. The recent NAND spot rebound is stronger than DRAM, reflecting peak-season inventory stocking and tight legacy memory supply. The report also analyzes potential shareholder returns at Samsung Electronics and SK Hynix, and updates ratings and target prices for Korean semiconductor equipment and OLED materials companies.
Core views
The core view is that this cycle is driven not only by short-term inventory replenishment, but also by HBM usage in AI servers, enterprise SSD capacity growth, and limited wafer supply. BofA expects DRAM and NAND average selling prices to rise 242% and 267% year over year, respectively, in 2026, with industry revenue growing nearly fourfold; 2027 average selling prices are still expected to be above the full-year 2026 average. Price declines are not expected to emerge until 2028, assuming DRAM and NAND average selling prices decline 8% and 14%, respectively, representing a healthy correction from high profit levels rather than a hard landing.
Analysis framework
The report combines top-down global supply-demand forecasts, bottom-up validation from major manufacturers' quarterly results, tracking of spot and contract prices, Korean export and manufacturer sales data, BofA's memory indicator, and company valuations based on forward price-to-earnings ratios. The forecasts also incorporate bit shipments, average selling prices, wafer capacity, capital expenditures, and end-application mix.
Methodology notes
Project global DRAM and NAND revenue based on average selling prices, bit demand, wafer capacity, and capital expenditures.
The model forecasts prices, shipments, capacity, and capital expenditures on a quarterly and annual basis, and maps end demand from servers, smartphones, personal computers, SSDs, and other applications to industry sales.
Use sales, average selling prices, shipments, and margins of major DRAM and NAND manufacturers to validate industry assumptions.
The report compares quarterly results of major memory manufacturers and focuses on assessing the contribution of HBM, enterprise SSDs, and 3D NAND to product mix and margins.
Measure the strength of the memory cycle by integrating variables such as global sales, average selling prices, billings, and Korean exports.
The indicator was 183 in June, still close to historical highs; some historical periods are based on backtesting, and the indicator is used only for trend indication and does not constitute a benchmark for financial instruments or actual investment performance.
Derive target prices by multiplying target-year earnings forecasts by the applicable P/E ratio.
Wonik IPS's target price uses a 22x P/E multiple on expected 2027 EPS, while Duksan Neolux's target price uses a 21x P/E multiple on expected 2027 EPS.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Global DRAM industryDirect beneficiary
- Strengths
- Strong AI server and HBM demand, tight legacy DRAM supply, and average selling prices at historical highs.
- Weaknesses
- High prices may suppress smartphone and personal computer demand, and capital expenditures are expected to increase significantly in 2026.
- Comparison
- Short-term spot price gains are weaker than NAND, but 2026 revenue scale and structural HBM demand are stronger.
- Risks
- Average selling prices are expected to decline 8% in 2028, and the release of new capacity may accelerate the cycle downturn.
- Global NAND industryDirect beneficiary
- Strengths
- Strong rebound in spot prices, with rising demand share from data centers, AI, and enterprise SSDs.
- Weaknesses
- Some of the increase comes from urgent orders ahead of the peak season, and sustainability still needs to be verified.
- Comparison
- Price recovery in early August was stronger than DRAM, and the report raised 2026 to 2028 revenue forecasts by 10% to 15%.
- Risks
- Average selling prices are expected to decline 14% in 2028, and capital expenditures and capacity growth may ease supply tightness.
- Samsung ElectronicsDual beneficiary of the memory cycle and shareholder returns
- Strengths
- Strong potential for HBM growth and margin improvement in 2026, and the company may implement large-scale special dividends and share buybacks.
- Weaknesses
- Its HBM business has previously lagged SK Hynix, and execution progress remains key.
- Comparison
- SK Hynix has established a higher HBM base, while Samsung Electronics may have greater year-over-year growth and margin improvement potential in 2026.
- Risks
- HBM qualification and mass production may fall short of expectations, or the scale and timing of shareholder returns may be below expectations.
- SK HynixBeneficiary of HBM and rising memory prices
- Strengths
- Leading in mass production of 12-layer HBM, expected to increase HBM4 shipments, and may allocate about 50% of free cash flow to shareholder returns.
- Weaknesses
- A higher base limits 2026 year-over-year growth, and second-quarter DRAM average selling price growth was lower than peers.
- Comparison
- HBM execution leads Samsung Electronics, but Samsung Electronics may have greater improvement leverage in 2026.
- Risks
- Average selling price recovery may fall short of expectations, HBM competition may intensify, and capital expenditures may rise.
- KioxiaBeneficiary of rising NAND prices
- Strengths
- Third-quarter revenue guidance implies 35% quarter-over-quarter growth and nearly 20% NAND average selling price increases.
- Weaknesses
- The business has high dependence on the NAND cycle.
- Comparison
- Implied price increases are above the industry average of low-teens to mid-teens percentages.
- Risks
- The spot rebound may fail to transmit to contract prices, or end demand may weaken.
- Duksan NeoluxPositive
- Strengths
- OLED materials and turbomachinery businesses performed steadily, and the growth theme is supported by second-quarter results.
- Weaknesses
- Valuation depends on realization of 2027 earnings.
- Comparison
- Fundamental trends are better than Wonik IPS, which is affected by competition and earnings below expectations.
- Risks
- OLED demand, margins, or 2027 earnings may fall short of expectations.
- Wonik IPSNegative
- Strengths
- Has exposure to the Korean semiconductor capital expenditure cycle.
- Weaknesses
- Second-quarter CVD sales were weak, the company faces pressure from U.S. and Japanese competitors, and the 2027 EPS forecast was cut by 10%.
- Comparison
- Compared with Duksan Neolux, recent earnings momentum and growth visibility are weaker.
- Risks
- Market share may continue to decline, revenue growth may fall short of expectations, and valuation multiples may contract further.
Key data
- 2026 global DRAM revenue growthUp 328% year over yearMainly driven by a 242% year-over-year increase in average selling prices.
- 2026 global NAND revenue growthUp 341% year over yearMainly driven by a 267% year-over-year increase in average selling prices.
- Global DRAM revenue forecastUS$134bn/US$573bn/US$847bn/US$917bn in 2025/2026/2027/2028, respectivelyForecasts for 2027 to 2028 were raised slightly by about 2% versus prior estimates.
- HBM market size forecastUS$77bn/US$153bn in 2026/2027, respectivelyB300, Rubin, and Rubin Ultra are expected to drive significant growth in HBM content.
- BofA memory indicator183June reading; April and May were 189 and 186, respectively; mid-cycle and up-cycle reference levels are 100 and 130, respectively.
- NAND spot weekly performance1Tb up 6%, 512Gb up 5%, 256Gb up 16%The rebound may be related to urgent inventory stocking by second-tier and white-label manufacturers for the September and fourth-quarter peak season.
- DRAM spot prices16Gb DDR5 at US$51.3, 16Gb DDR4 at US$86.7Up 1% and 2% week over week, respectively, and up 733% and 911% year over year, respectively.
- Nanya Tech July salesNT$44bnUp 49% month over month and 720% year over year.
- Korean semiconductor exportsUS$42bnDown 9% month over month, but still up 179% year over year.
- Samsung Electronics potential shareholder returnsSpecial dividends of more than W30tn, share buybacks of more than W40tn, year-end dividends of W30tnPotentially to be implemented in the third or fourth quarter of 2026, the first half of 2027, and around April 2027, respectively.
Impact & implications
Memory producers can continue to benefit from price increases, product mix upgrades, and high margins, with particularly strong momentum in HBM, enterprise SSDs, and advanced process equipment supply chains. Large-scale capital returns by Samsung Electronics and SK Hynix may also improve shareholder returns. However, high memory costs will weigh on smartphone and personal computer production in 2026 to 2027, while industry capital expenditure expansion and supply improvements in 2028 may end the price upcycle. At the single-stock level, the OLED materials growth theme is more attractive than CVD equipment, where competition is intensifying and earnings are under pressure.
Risks
- The sharp price increases in 2026 may cause customers to delay purchases, reduce specifications, or cut smartphone and personal computer production.
- Manufacturers' capital expenditures and wafer capacity expansion may be faster than expected, potentially ending supply tightness ahead of schedule.
- Part of the NAND spot increase comes from urgent orders by second-tier and white-label manufacturers ahead of the peak season, creating a short-term pulse risk.
- DRAM and NAND average selling prices are expected to decline 8% and 14%, respectively, in 2028, and the cycle inflection point may arrive earlier than forecast.
- Changes in HBM qualification, yield, product iterations, or customer share may lead to significant divergence in manufacturer performance.
- Wonik IPS faces share and earnings pressure from U.S. and Japanese equipment competitors.
- The research institution may have potential business relationships with covered issuers, and investors should use this report as only one factor in their decision-making.
What to watch
- Whether DRAM and NAND contract prices in the third and fourth quarters of 2026 can continue to rise along with spot prices.
- Whether Kioxia's guidance for 35% third-quarter revenue growth and nearly 20% NAND average selling price increase can be achieved.
- SK Hynix's HBM4 shipments and Samsung Electronics' HBM growth, qualification, and margin improvement.
- The final scale and implementation timing of Samsung Electronics' special dividends, share buybacks, and year-end dividends.
- Whether Korean semiconductor exports, Nanya Tech monthly sales, and BofA's memory indicator continue to remain at high levels.
- Whether 2027 capital expenditures and wafer capacity expansion lead to an earlier price correction in 2028.
- The actual degree to which high memory costs suppress smartphone and personal computer shipments.
- Duksan Neolux's growth realization and Wonik IPS's CVD orders and competitive landscape.