Short-term trends in Greater China's legacy memory market are diverging, but DDR4 and traditional Flash price increases remain strong
AI summary card
Short-term trends in Greater China's legacy memory market are diverging, but DDR4 and traditional Flash price increases remain strong
Morgan Stanley believes that recent debate over the memory cycle, concerns about CSP free cash flow, and the unwinding of A-share positions have pressured legacy memory valuations, but DDR4, SLC/MLC NAND, and NOR flash still have strong support for price increases in 3Q26.
- Trendforce expects blended conventional DRAM prices to rise 13-18% QoQ in 3Q26, while NAND prices are expected to rise 10-15% QoQ.
- The report believes DDR4 could achieve monthly price increases of more than 20% in 3Q26, with quarterly QoQ gains of at least 30%.
- SLC/MLC NAND is expected to rise 50-60% QoQ in 3Q26, while NOR flash is expected to rise 30-40% QoQ.
- GigaDevice's announcement suggests niche memory could see significant price declines in the future, but the report views this as a longer-term risk, with short-term structural supply gaps still supporting price increases.
- GigaDevice's share price has already corrected 45.6% from the June 29 peak of Rmb840, providing some valuation support.
Report interpretation
Overview
This report focuses on the legacy memory segment within Greater China's semiconductor sector and discusses the recent divergence in price trends between mainstream memory and traditional memory. The report notes that concerns over the memory cycle, cloud service providers' free cash flow, and the unwinding of China memory positions have led to valuation derating in legacy memory stocks, but tight supply in mature-node memory still gives DDR4, SLC/MLC NAND, and NOR flash the ability to deliver better-than-expected price increases in 3Q26.
Core views
The core view is that price increases for mainstream DRAM and NAND may progress more slowly than some investors expect, but the supply-demand dynamics for legacy memory are tighter, giving it stronger short-term price elasticity. DDR4 is supported by stronger CSP procurement willingness and the potential signing of 1-2 year volume-only LTAs, with 3Q26 quarterly price gains potentially reaching at least 30%; SLC/MLC NAND and NOR flash also have strong pricing momentum due to structural supply gaps. For related A-share names such as GigaDevice, the report believes recent position unwinding may lead to stabilization, and part of the valuation downside risk has already been released.
Analysis framework
The report mainly uses industry price forecasts, product supply-demand gaps, quarterly QoQ price changes, company valuation multiples, and comparisons with historical valuation troughs. Price views reference Trendforce forecasts for DRAM and NAND, combined with Morgan Stanley's judgment on short-term supply-demand and customer procurement behavior for DDR4, SLC/MLC NAND, and NOR flash. Valuation support is assessed through GigaDevice's share price pullback, the 2028E BVPS multiples of Macronix, Nanya, and Winbond, and comparisons with the historical 1.0x BVPS support level for Greater China IDM companies.
Methodology notes
Industry conditions are assessed through quarterly price increases in DRAM, NAND, DDR4, and NOR flash.
The report evaluates mainstream memory and legacy memory separately, arguing that mainstream product price increases are moderate, while legacy memory has stronger short-term price elasticity due to supply gaps and tighter customer procurement demand.
The valuation floor of Greater China IDM memory companies is assessed using 2028E BVPS multiples.
The report notes that Macronix, Nanya, and Winbond are trading at 1.5x, 1.2x, and 1.2x 2028E BVPS, respectively, while historically 1.0x has typically been a strong downside support level for Greater China IDM companies.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- GigaDevice Semiconductor Beijing Inc (603986.SS)An A-share name related to legacy and niche memory; the report focuses on its announcement, valuation pullback, and the impact of the price cycle.
- Strengths
- Structural supply gaps in DDR4, SLC/MLC NAND, and NOR flash are expected to support short-term price increases; the stock has already corrected sharply, providing some valuation support.
- Weaknesses
- As a fabless company, the P/E floor is harder to judge; the company's announcement indicates niche memory products could face significant price declines in the future.
- Comparison
- The report compares it with Greater China memory companies such as Macronix, Nanya, and Winbond for valuation support; the latter trade at 1.5x/1.2x/1.2x 2028E BVPS.
- Risks
- If niche memory price declines occur earlier than expected, or CSP procurement demand weakens, the short-term price increase thesis could be undermined.
- Macronix International Co LtdA Greater China legacy memory comparable used for BVPS valuation support comparisons.
- Strengths
- Benefits from rising legacy memory prices and tight industry supply-demand conditions.
- Weaknesses
- Valuation remains affected by memory cycle volatility.
- Comparison
- Trading at about 1.5x 2028E BVPS, above the 1.0x historical downside support level mentioned in the report.
- Risks
- If the price cycle weakens, the valuation multiple may compress.
- Nanya Technology Corp.A DRAM-related comparable used for legacy memory cycle and BVPS valuation comparisons.
- Strengths
- Rising DDR4 prices could improve short-term earnings expectations.
- Weaknesses
- Mainstream DRAM price increase expectations are relatively moderate, and cycle sensitivity is high.
- Comparison
- Trading at about 1.2x 2028E BVPS, close to but still above the historical strong support level.
- Risks
- DRAM price increases fall short of expectations or demand slows.
- Winbond Electronics CorpA legacy memory comparable affected by the cycles of DDR4, SLC/MLC NAND, and NOR flash.
- Strengths
- Rising prices for traditional Flash and DDR4 support short-term earnings.
- Weaknesses
- The business is sensitive to the memory price cycle.
- Comparison
- Trading at about 1.2x 2028E BVPS, close to the historical support range.
- Risks
- If supply gaps narrow or demand weakens, price elasticity may decline.
Key data
- 3Q26 conventional DRAM blended price forecast+13-18% Q/QSource: Trendforce forecast; the report believes this is below some investors' previous expectations.
- 3Q26 PC DDR5 price forecast+15-20% Q/QTrendforce's quarterly price forecast for PC DDR5.
- 3Q26 server DDR5 price forecast+13-18% Q/QTrendforce's quarterly price forecast for server DDR5.
- 3Q26 mobile LPDDR5(X) price forecast+8-13% Q/QTrendforce's quarterly price forecast for mobile LPDDR5(X).
- 3Q26 NAND price forecast+10-15% Q/QTrendforce's quarterly forecast for overall NAND prices.
- 4Q26 conventional DRAM price forecast+3-8% Q/QTrendforce's forecast for conventional DRAM in 4Q26.
- 4Q26 NAND price forecast0-5% Q/QTrendforce's forecast for NAND in 4Q26.
- 3Q26 DDR4 price viewquarterly increase of at least 30%The report believes monthly DDR4 price increases could exceed 20%, and CSPs may raise bids and seek 1-2 year volume-only LTAs.
- 3Q26 SLC/MLC NAND price view+50-60% Q/QThe report continues to expect a significant rise in mature-node NAND prices.
- 3Q26 NOR flash price view+30-40% Q/QThe report believes NOR flash is likewise supported by structural supply gaps.
- GigaDevice share price pullbackdown 45.6% from the June 29 peak of Rmb840The report believes this pullback provides some valuation support.
- 603986.SS current priceRmb104.23The price date shown in the coverage table is 2026-07-27.
Impact & implications
From an investment perspective, legacy memory stocks may benefit in the short term from strong price increases in DDR4, SLC/MLC NAND, and NOR flash, especially in segments with clear supply gaps and stronger customer restocking willingness. For related A-share names, earlier valuation derating and position unwinding may reduce further downside pressure, but in the long term it is still necessary to watch whether downside risks in niche memory prices materialize.
Risks
- Price increases in mainstream DRAM and NAND are below some investors' previous expectations, which may weigh on sector sentiment.
- GigaDevice's announcement suggests niche memory products may see sharp price declines in the future.
- Concerns about CSP free cash flow may affect customer procurement pace and valuation preferences.
- If the unwinding of positions in China memory-related stocks continues, share prices may remain under pressure in the short term.
- If legacy memory price increases cannot be sustained, 2028E BVPS valuation support may be insufficient to offset downward revisions to earnings expectations.
What to watch
- Whether monthly DDR4 price increases in 3Q26 continue to exceed 20%.
- Whether CSPs sign 1-2 year volume-only LTAs with suppliers.
- Whether SLC/MLC NAND delivers the expected 50-60% QoQ price increase in 3Q26.
- Whether NOR flash delivers the expected 30-40% QoQ price increase in 3Q26.
- Whether price increases for conventional DRAM and NAND slow in 4Q26 as Trendforce forecasts.
- Whether GigaDevice's niche memory price decline risk shifts from a long-term expectation to a short-term reality.
- Whether position unwinding in the A-share memory sector stabilizes.