AI demand, LTAs, and rising prices continue to support global storage technology momentum

Overview

This report is a weekly review of the global storage technology industry, focusing on long-term agreements (LTAs), AI server-driven demand for MLCCs/FC-BGAs, DRAM/NAND spot and contract price trends, and the impact of the Korean ETF market on storage-stock volatility and re-rating. The overall view is optimistic, with AI infrastructure investment and supply reallocation continuing to support the storage and semiconductor supply chain.

Core views

First, the importance of LTAs is increasing: Samsung Electronics stated that 60-70% of storage sales will be covered by LTAs, with terms more favorable to sellers, limiting price reductions while allowing greater room for price increases. Second, the AI server supply-chain upcycle is spreading to passive components and packaging substrates, with SEMCO and LG Innotek expressing strong confidence in MLCC and FC-BGA demand, prepayments, and future contract price increases. Third, DRAM/NAND prices remain in a strong range, with inventory replenishment, new product launches ahead of the IT peak season, and a bottoming in Chinese smartphone shipments jointly supporting spot prices. Fourth, Korean ETF flows and leveraged products amplify short-term volatility, but pension inflows and regulatory improvements may support a re-rating of storage stocks.

Analysis framework

The report combines management guidance from company earnings meetings, storage spot and contract price series, cloud-provider capital expenditures and cloud revenue margins, smartphone shipment data, and key points from expert calls on the Korean ETF market to form a comprehensive view of industry supply and demand, pricing, and stock performance.

Methodology notes

• Industry supply and demand analysisLTA and price transmission analysis

  Assessing supply-chain bargaining power through LTA terms, prepayments, contract prices, and capacity commitments.

  The report emphasizes that LTAs not only lock in demand but may also limit price declines while preserving room for price increases, which is positive for the revenue and margins of storage manufacturers and AI server component suppliers.

• Cycle analysisSpot/contract price tracking

  Tracking monthly and long-term trends in DRAM, NAND, server DRAM, and SSD prices.

  The report uses pricing information from DRAMeXchange, TrendForce, and others to show that DDR4, DDR5, and NAND prices are at historical highs or significantly above trough levels.

• Fund flows and market structureETF trading-structure analysis

  Analyzing the impact of active ETFs, leveraged ETFs, and pension fund flows on the volatility and valuation of Korean storage stocks.

  The report believes that 2x leveraged ETFs may continue to create volatility, while regulation and pension inflows into active ETFs could moderate market volatility and support re-rating.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Samsung Electronics

  A global storage leader and one of the core beneficiaries of improved LTA terms.

  Strengths

  A high proportion of storage sales covered by LTAs, limited downside and greater upside in pricing, supported by AI server demand and HBM supply-demand reallocation.

  Weaknesses

  Storage stocks have been highly volatile recently, and the market is concerned about earnings falling short of expectations.

  Comparison

  Compared with downstream OEMs, storage suppliers have stronger bargaining power during periods of tight supply.

  Risks

  A slowdown in AI capex, declining spot prices, or LTA execution falling short of expectations.

• SEMCO (009150 KS)

  A beneficiary of AI server-related MLCC and FC-BGA demand.

  Strengths

  Strong management guidance, increasing LTA orders, ample prepayments, and expected contract price increases in 2H and 2027.

  Weaknesses

  New capacity construction requires capital investment, and the new Vietnam FC-BGA plant is not expected to begin production until mid-to-late 2027.

  Comparison

  AI server-related MLCC/FC-BGA demand is stronger than traditional consumer electronics component demand.

  Risks

  Delays in capacity expansion, changes in customer demand, or price increases falling short of expectations.

• LG Innotek (011070 KS)

  A beneficiary of the AI server FC-BGA and related high-end component supply chain.

  Strengths

  2Q operating profit improved significantly year over year, and management is optimistic about AI server demand and contract price increases.

  Weaknesses

  Still dependent on Big Tech’s continued commitment to new capacity.

  Comparison

  AI server-driven order visibility is stronger than ordinary smartphone component demand.

  Risks

  Big Tech capex cuts, a difficult ramp-up of new Vietnam capacity, or slower-than-expected margin recovery.

• DRAM/NAND storage industry

  The industry asset primarily covered by this report.

  Strengths

  Spot and contract prices have risen significantly; supply is being reallocated toward HBM and server DRAM, while inventory replenishment and the IT peak season support demand.

  Weaknesses

  Prices are already at historical highs, and price increases in some categories may moderate temporarily.

  Comparison

  DRAM price momentum is stronger, while NAND contract and spot prices are also significantly above their 2025 troughs.

  Risks

  A correction from elevated prices, pressure on end demand, expansion of domestic Chinese supply, or an inventory-cycle reversal.

• Korean ETFs/storage stocks

  A market-structure factor affecting trading volatility and valuation re-rating of Korean storage stocks.

  Strengths

  Large ETF AUM; pension funds may shift toward active ETFs, and fundamental stock selection favors companies with stronger growth, valuations, and shareholder returns.

  Weaknesses

  2x leveraged ETFs and inverse/gamma effects may still amplify short-term volatility.

  Comparison

  Compared with passive KOSPI products, active ETFs are more likely to allocate to individual stocks based on fundamentals.

  Risks

  Regulatory effects falling short of expectations, leveraged trading continuing to amplify volatility, or a reversal in fund flows.

Key data

• Share of Samsung storage sales under LTAs60-70%Samsung Electronics stated that 60-70% of its storage sales will use LTAs, with terms more open to price increases and more limited on price reductions.
• SEMCO and LG Innotek 2Q operating profitMore than doubled year over yearEven though MLCC/FC-BGA margins remain at mid-cycle levels, both companies’ 2Q OP more than doubled year over year.
• Capex of large U.S. technology companiesApproximately US$730bn in 2026, exceeding US$1tn/year in 2027/28AI infrastructure spending by Amazon, Microsoft, Alphabet, Meta, Oracle, and others continues to grow rapidly.
• Chinese smartphone shipments17.1mn units in June 2026, -36% m/m, -17% y/yThe report believes shipments are at low levels and channel inventories are low, helping support replenishment demand.
• TrendForce July DRAM contract pricesLow-double-digit m/m increase, approximately 30-50% q/qNAND contract prices were broadly flat for the month.
• 16Gb DDR5 spot priceApproximately US$50The report states that the price reached a historical high, significantly above the previous peak of approximately US$10.
• 16Gb DDR5/DDR4 contract priceUS$35-40 rangeDDR4 shortages have largely eliminated DDR5’s relative premium.
• 512Gb NAND contract priceApproximately US$26Approximately 10 times the February 2025 trough of US$2.5.
• 64GB server DRAM module pricesApproximately US$1,480 for DDR5 and US$1,300 for DDR4The report states that prices have reached historical highs and exceeded US$1,000.
• Korean ETF market sizeApproximately W500tn AUM, 1,000+ funds, 30%+ of KOSPI trading volumeThe head of TIMEFOLIO ETF noted the significant participation and trading impact of the Korean ETF market.

Impact & implications

The report is positive on the storage and AI server supply chain. If AI cloud capex continues and LTA prepayments and price increases materialize, the revenue visibility and margins of storage manufacturers, MLCC suppliers, and FC-BGA suppliers could improve. For the Korean stock market, ETF inflows and regulation of leveraged ETFs could reduce extreme volatility and strengthen the re-rating case for undervalued storage and financial stocks.

Risks

• AI infrastructure capex comes in below expectations, slowing demand for storage and FC-BGAs.
• DRAM/NAND spot or contract prices correct from elevated levels.
• LTA execution or realization of price increases falls short of management guidance.
• Delays in new capacity construction or the commissioning schedule of the Vietnam FC-BGA plant.
• Expansion of domestic Chinese storage supply or insufficient recovery in end-market smartphone/PC demand.
• Korean 2x leveraged ETFs continue to amplify short-term volatility in storage stocks.

What to watch

• LTA coverage ratios, pricing terms, and renewal pace at Samsung and other storage manufacturers.
• Orders, prepayments, and contract price changes at SEMCO and LG Innotek in 2H26 and 2027.
• Monthly changes in DRAM, NAND, server DRAM, and SSD prices from TrendForce/DRAMeXchange.
• Capital expenditures, cloud revenue growth, and cloud-business OPM trends at U.S. hyperscalers.
• Whether Chinese smartphone shipments recover from June’s low level to normal levels.
• Implementation of Korean ETF regulations, pension inflows into active ETFs, and changes in storage-stock valuations.