Short-term trends diverge in legacy memory: DDR4 and traditional Flash price increases exceed expectations for mainstream memory

Overview

This report focuses on the legacy memory cycle within Greater China semiconductors and discusses the short-term divergence between price expectations for mainstream DRAM/NAND and legacy memory products. It points out that recent debate over the memory cycle, concerns over cloud service providers' free cash flow, and liquidation of positions in China memory stocks have compressed valuations of legacy memory names, but DDR4, SLC/MLC NAND, and NOR flash still have stronger-than-expected pricing power, while valuations are also beginning to show some downside support.

Core views

The core view is that the pace of mainstream memory price increases may be below what some investors expect, but supply and demand are tighter for legacy memory products, giving them stronger price elasticity. DDR4 may continue to rise month by month in 3Q26, and some CSPs may even be willing to lock in DDR4 supply at higher prices through 1-2 year long-term agreements that lock volume only. SLC/MLC NAND and NOR flash likewise benefit from structural supply shortages that provide strong pricing power. The report remains attentive to the long-term risk of price declines highlighted in GigaDevice's announcement, but believes the short term should focus more on the price support created by structural shortages.

Analysis framework

The report uses a framework combining supply-demand gaps, price forecasts, peer valuation multiples, and historical valuation bottoms. On pricing, it cites TrendForce forecasts for 3Q26 and 4Q26 traditional DRAM, DDR5, LPDDR5(X), and NAND, and compares them with Morgan Stanley's stronger price-increase view on DDR4, SLC/MLC NAND, and NOR flash. On valuation, it compares legacy memory-related companies such as GigaDevice, Macronix, Nanya, and Winbond, using 2028E BVPS multiples to assess downside support.

Methodology notes

• Industry cycleMemory price cycle analysis

  Assess the cycle position of DRAM, NAND, and legacy memory products through quarterly and monthly price changes.

  The report distinguishes mainstream DRAM/NAND from legacy memory products: the former have milder price increase expectations, while the latter may see much larger price increases due to supply shortages.

• Supply-demand analysisStructural supply shortage

  Insufficient supply of DDR4, SLC/MLC NAND, and NOR flash supports price increases.

  The report believes GigaDevice's warning about future price declines in niche memory is more of a long-term issue, while short-term supply shortages remain the main contradiction.

• Valuation analysis2028E BVPS multiple downside support

  Use price-to-book relative to future book value per share to assess the valuation floor of legacy memory stocks.

  Macronix, Nanya, and Winbond are trading at around 1.5x, 1.2x, and 1.2x 2028E BVPS, respectively; the report believes 1.0x has historically 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 memory and niche memory; the report focuses on its announcement, share price pullback, and valuation support.

  Strengths

  Supply shortages in DDR4, SLC/MLC NAND, and NOR flash may support short-term price increases; valuation pressure has eased after a significant correction from the stock's peak.

  Weaknesses

  As a design company, the bottom in P/E is harder to judge; the company's announcement indicates niche memory products may see significant price declines in the future.

  Comparison

  Macronix, Nanya, and Winbond are at about 1.5x, 1.2x, and 1.2x 2028E BVPS, respectively, while 1.0x 2028E BVPS is viewed as a historical strong support level for Greater China IDM companies.

  Risks

  Long-term declines in niche memory prices, mainstream memory price increases falling short of expectations, and continued liquidation of A-share positions.

• DDR4

  One of the legacy memory categories most emphasized by the report for price upside.

  Strengths

  CSPs may accept higher DDR4 prices and may sign 1-2 year long-term agreements that lock volume only; 3Q26 quarterly gains may be at least about 30%.

  Weaknesses

  Demand and price sustainability depend on the lifecycle of legacy platforms and the pace of customer restocking.

  Comparison

  Compared with the overall traditional DRAM 3Q26 forecast increase of 13-18%, DDR4 price increase expectations are stronger.

  Risks

  If supply recovers or customer inventory rebuilding ends, monthly price momentum may weaken.

• SLC/MLC NAND

  A legacy Flash category with high price elasticity.

  Strengths

  The report expects 3Q26 prices to rise 50-60% Q/Q, indicating strong pricing power.

  Weaknesses

  It is a relatively niche product, so its demand structure may be narrower.

  Comparison

  Significantly stronger than TrendForce's overall NAND 3Q26 forecast of 10-15% growth.

  Risks

  Long-term supply adjustments or weaker niche demand could lead to price declines.

• NOR flash

  A beneficiary category of the supply-demand shortage in traditional Flash.

  Strengths

  The report expects 3Q26 prices to rise 30-40% Q/Q, supported by structural supply shortages.

  Weaknesses

  If downstream demand recovers less than expected, price elasticity may decline.

  Comparison

  Compared with mainstream NAND, the short-term price increase view for NOR flash is more positive.

  Risks

  Future capacity adjustments, customer destocking, or substitution may weaken the sustainability of price increases.

Key data

• 3Q26 traditional DRAM blended price forecast+13-18% Q/QTrendForce forecast.
• 3Q26 PC DDR5 price forecast+15-20% Q/QTrendForce forecast.
• 3Q26 server DDR5 price forecast+13-18% Q/QTrendForce forecast.
• 3Q26 mobile LPDDR5(X) price forecast+8-13% Q/QTrendForce forecast.
• 3Q26 NAND price forecast+10-15% Q/QTrendForce forecast.
• 4Q26 traditional DRAM price forecast+3-8% Q/QTrendForce forecast, slower than 3Q26.
• 4Q26 NAND price forecast+0-5% Q/QTrendForce forecast, slower than 3Q26.
• 3Q26 DDR4 price viewQuarterly increase of at least about 30%The report believes monthly prices may rise more than 20%.
• 3Q26 SLC/MLC NAND price view+50-60% Q/QMorgan Stanley view.
• 3Q26 NOR flash price view+30-40% Q/QMorgan Stanley view.
• GigaDevice share price drawdown-45.6%Correction from the June 29 high of Rmb840.
• GigaDevice table priceRmb104.23Price for 603986.SS in the coverage table as of 2026-07-27.

Impact & implications

In terms of investment implications, the report tends to believe that recent selling pressure on legacy memory stocks may gradually stabilize, with rising prices and valuation support jointly improving risk-reward. Beneficiaries include companies with greater exposure to DDR4, SLC/MLC NAND, and NOR flash; however, slower price increases in mainstream DRAM/NAND, CSP capex or free cash flow pressure, and long-term niche memory price decline risks may still limit the extent of valuation recovery.

Risks

• GigaDevice's announcement suggests niche memory products may see significant price declines in the future; if this trend materializes earlier, it would weaken the short-term price increase thesis.
• The forecast slowdown in traditional DRAM and NAND price increases in 4Q26 may weigh on market confidence in the memory upcycle.
• Concerns over CSP free cash flow may affect the pace of memory procurement related to servers and data centers.
• If liquidation of positions in China memory stocks continues, it may keep pressuring valuations of related A-share names.
• The report discloses that Morgan Stanley has investment banking or other business relationships with multiple covered companies; investors should treat this research as only one factor in making investment decisions.

What to watch

• Whether actual monthly transaction prices for DDR4 in 3Q26 continue rising by more than 20%.
• Whether CSPs sign 1-2 year long-term agreements that lock volume only with DDR4 suppliers.
• Whether SLC/MLC NAND and NOR flash achieve quarterly gains of 50-60% and 30-40%, respectively, in 3Q26.
• Whether TrendForce subsequently revises up or down its 4Q26 price forecasts for traditional DRAM and NAND.
• Whether GigaDevice's niche memory product price decline risk shifts from a long-term expectation to actual short-term pressure.
• Whether 2028E BVPS valuation multiples for peers such as Macronix, Nanya, and Winbond approach or fall below the 1.0x support level.