BofA maintains its memory supercycle view; Nanya Technology remains Buy with a target price of NT$660

Overview

This is a Bank of America weekly research note on the global memory technology industry, focusing on Samsung’s share pullback, the BofA memory-cycle indicator, CXMT IPO progress, and Nanya Technology’s improving earnings. The core view is that recent market concerns have not turned into a storage downtrend signal, with AI servers, HBM, DDR5, traditional DRAM shortages, and premium NAND/eSSD demand still supporting the continuation of the supercycle through 2027.

Core views

The report argues that Samsung’s share pullback is mainly driven by three concerns: reduced chip orders at Meta, CXMT expansion, and a slowdown in quarter-on-quarter growth after 2Q. But BofA does not see any cycle-reversal signal, with channel checks still showing strong storage demand from large U.S. technology companies, limited impact of CXMT on high-end DRAM competition, and more favorable 3Q ASPs. Nanya Technology benefits from sharply higher traditional DRAM prices, with 2Q gross margin and operating margin reaching very high levels, and management remains constructive on 3Q and on long-term traditional DRAM shortages.

Analysis framework

The report cross-validates top-down industry forecasts, the BofA Memory Indicator, WSTS data, Korean semiconductor exports, DRAM/NAND spot and contract prices, company monthly sales, wafer capacity, capex, HBM specification evolution, hyperscaler capex, and company-level earnings revisions. It uses an earnings forecast and P/E valuation framework for Nanya Technology, and industry decomposition for DRAM, NAND, and HBM by revenue, ASP, bit growth, capacity, and end-use demand.

Methodology notes

• cycle_indicatorBofA Memory Indicator

  Measures memory cycle strength using year-over-year changes in spot prices, global billings, and Korean exports.

  The indicator was 183 in May, significantly above the mid-cycle 100, down-cycle 80, and 2017/2024 peaks of 120-130; the report notes it includes a backtested component and is not a benchmark for any fund or account performance.

• industry_forecastTop-down global memory forecast

  Forecasts DRAM, NAND, and HBM market size by decomposing ASPs, shipments, revenue, and application demand.

  The report raised 2026-2028 DRAM and NAND revenue forecasts, with the key drivers being improved ASP assumptions, rising storage content in servers and AI systems, and continued relative supply-side tightness.

• Valuation methodsP/E valuation

  Uses forward earnings and valuation multiples to determine target price.

  Nanya Technology’s target price of NT$660 is unchanged, with valuation based on 9x 2027-2028E P/E; because 2Q results were broadly in line with prior bullish forecasts, EPS adjustments for 2026-2028 are nearly zero.

Asset mapping & comparison

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

• Nanya Technology

  core beneficiary

  Strengths

  Rising traditional DRAM prices supported +684% YoY 2Q sales growth, with OP margin reaching 74%; valuation multiples are comparatively low, so the report maintains Buy.

  Weaknesses

  The business is more exposed to traditional DRAM, so any price pullback or unexpected supply normalization could amplify profit reversals.

  Comparison

  The report states Nanya Technology’s DRAM business profitability is even stronger than HBM, and 2Q results broadly matched prior optimistic forecasts.

  Risks

  Traditional DRAM price declines, faster-than-expected capacity expansion from Chinese memory peers such as CXMT, and weaker-than-expected end-market demand.

• Samsung Electronics

  large memory supplier and market sentiment marker

  Strengths

  2Q OP was strong, HBM normalization and demand from NVIDIA Tier 2 customers and large U.S. technology clients could support upside.

  Weaknesses

  Share is pressured by concerns over Meta order reductions, CXMT capacity expansion, and post-2Q growth deceleration.

  Comparison

  Together with SK Hynix, Micron, and Nanya, Samsung remains in the DRAM/NAND/HBM upside cycle, and improving HBM execution is viewed as a potential incremental tailwind.

  Risks

  Changes in HBM customer qualification, pricing, market share, and competitive landscape.

• CXMT

  potential supply-side disruption factor

  Strengths

  2Q26 sales guidance indicates rapid growth, with the IPO subscription date set for 2026-07-16.

  Weaknesses

  Although wafer capacity is sizable, global DRAM market share remains a high single-digit figure, and supply of high-end DRAM is constrained by quality and U.S. semiconductor restrictions.

  Comparison

  The report views CXMT’s impact on high-end DRAM, HBM, SOCAMM, and GDDR7 as limited.

  Risks

  If capacity ramp, technology breakthroughs, or pricing strategy exceed expectations, traditional DRAM competitive pressure could increase.

• HBM / AI memory supply chain

  long-term industry growth driver

  Strengths

  AI GPU/ASIC memory content is rising, with HBM TAM forecast at US$77bn in 2026E and US$135bn in 2027E.

  Weaknesses

  High capex requirements, fast technology upgrades, and strong dependence on customer roadmaps and yield performance.

  Comparison

  Compared with traditional DRAM, HBM is more strongly driven by AI compute demand, but the report also emphasizes that traditional DRAM profitability is currently exceptionally strong as well.

  Risks

  AI capex slowdown, GPU/ASIC shipment underperformance versus expectations, and intensified price or share competition in HBM.

Key data

• BofA Memory Indicator183May reading, far above the 2017/2024 peak range of 120-130; February to April were 186/189/189.
• 3Q DRAM ASP assumption+21% QoQRaised from the prior +17% QoQ, with some new-quarter contracts showing price hikes above 20%.
• Nanya Technology 2Q sales growth+684% YoYPrimarily driven by DRAM ASP increases of more than +60% QoQ and over +500% YoY.
• Nanya Technology 2Q OP margin74%Prior-year period was a large loss or -43%, and the report expects strong margins to continue through 2H26-2027.
• 2026E global DRAM revenue forecast+325% YoYPrimarily driven by ASP growth of +249% YoY.
• 2026E global NAND revenue forecast+299% YoYPrimarily driven by ASP growth of +238% YoY.
• HBM TAMUS$77bn / US$135bnFor 2026E/2027E respectively, with 2026E up +122% YoY.
• CXMT 2Q26 sales guidanceCNY59-69bn (about US$9.5bn)About 7x year-on-year, but still only a high single-digit share of the global DRAM market.
• Top U.S. cloud providers' capexabout US$650bn in 2026ECombined capex from Amazon, Microsoft, Alphabet, Meta, and Oracle is expected to rise about +80% YoY, potentially reaching US$800bn/US$950bn+ in 2027/2028.

Impact & implications

The report is broadly constructive on the storage chain: if AI servers, HBM, and traditional DRAM shortages persist, supplier profitability and valuation support should remain, and names like Nanya Technology that benefit from traditional DRAM price increases may continue to sustain high margins. For downstream smartphones and PCs, elevated storage BOM may pressure 2026 shipments, but server and AI-system demand can partially offset that. CXMT’s expansion and IPO raise supply-side attention, but the report judges its impact on high-end DRAM, HBM, SOCAMM, and GDDR7 to be limited.

Risks

• DRAM or NAND spot prices could fall more than expected after reaching high levels, weakening ASPs and earnings forecasts.
• CXMT or other Chinese memory suppliers could release capacity faster than expected, increasing competitive pressure in traditional DRAM.
• AI capex or chip orders at large U.S. technology companies could come in below expectations, affecting HBM and server DRAM demand.
• Smartphone and PC players could further cut output due to expensive storage BOM, weighing on some end-market demand.
• Changes in HBM technology roadmap, customer qualification, pricing, yield, or market share could cause supplier profitability divergence.
• The BofA Memory Indicator in the report includes a backtested methodology and should not be treated as equivalent to actual investment portfolio performance or a formal benchmark.

What to watch

• Whether 3Q DRAM contract pricing continues to reflect price increases above 20%.
• Whether Nanya Technology’s subsequent monthly sales, gross margin, and OP margin remain at high levels.
• Progress of CXMT’s July IPO, post-listing expansion pace, and product mix.
• Monthly trends in Korean semiconductor exports, WSTS billings, and DRAM/NAND spot prices.
• Demand and supplier shares for high-end products such as HBM4, SOCAMM, GDDR7, and 12-hi HBM3e.
• Capex and cloud-operating margins of hyperscalers like Amazon, Microsoft, Alphabet, Meta, and Oracle.