Recently, a rumor regarding flash memory has drawn market attention. According to reports cited by Jiemian News, Apple has recently signed a Long-Term Agreement (LTA) with a NAND flash memory supplier, with the specific supplier, volume, and pricing terms remaining undisclosed. Market insiders believe that Japan's Kioxia might be the counterparty. Other sources suggest the agreement could span 3 to 5 years and may not include a price cap, though these details have not been officially confirmed.
The news itself may not be entirely verified, but the expectations it has stirred are real. As one of the most powerful buyers globally, Apple has long relied on "short-term bargaining and multi-source price suppression" as leverage. Now, however, it is willing to secure supply through long-term agreements and voluntarily relinquish pricing power. The last time this occurred was with SK hynix's HBM orders. As "long-term agreements without price caps" extend to NAND for the first time, the supply-demand balance in the memory industry is quietly shifting in favor of the sellers.
01. Why the Memory Sector Is Back in the Spotlight
Based on institutional expectations, the memory market rally appears far from over.
Recently, Goldman Sachs and Nomura almost simultaneously issued bullish forecasts. Goldman Sachs' research report points to 2028 as the window for tight supply and demand, while Nomura has even put forward the judgment of a "triple supercycle."
In addition, a report released by South Korean brokerage KB Securities on September 7 estimates that, as of the third quarter, the available inventory of memory chips for shipment from Samsung Electronics and SK hynix has dropped to less than a 10-day supply. It also warns that the memory industry may face the most severe supply shortage in history next year. The report also provides a broader proportion: the share of memory chips in cloud service providers' AI infrastructure investments will rise from 14% last year to 40% this year, and further increase to 57% next year.
More attention should be paid to the structural shift in demand. AI servers require eight to ten times the DRAM capacity of traditional servers and about three times the NAND capacity. When original manufacturers allocate 70% to 90% of their advanced capacity to HBM and server-grade memory, consumer-grade NAND, which is pushed out of focus, often becomes the first segment where prices start to loosen.
02. What Is a Memory Supercycle
Returning to the inherent characteristics of memory chips themselves, semiconductor memory is broadly divided into two categories: DRAM and NAND. DRAM (Dynamic Random-Access Memory), which loses data when powered off, serves as computer memory, while NAND flash memory (NAND gate flash memory), which retains data without power, is the medium for storing data in smartphones and solid-state drives.
Over the past two decades, these two types of memory have consistently followed a cyclical rhythm almost precise to the month: capacity expansion by manufacturers, oversupply, plummeting prices, production cuts for inventory digestion, and price recovery. Typically, driven by the inventory cycles of smartphones and PCs, such a cycle completes a round every two to three years.
The so-called "memory supercycle" refers to a situation where chip price increases are no longer driven by restocking in consumer electronics, but directly fueled by the explosion in AI computing power. First, the memory consumption of AI servers far exceeds that of traditional devices, with data centers ravenously "devouring" memory. Following this, original manufacturers prioritize their limited wafer capacity for the more profitable HBM and enterprise-grade SSDs, creating a structural shortage in consumer-grade memory. To make matters worse, building a new memory wafer fab takes one to two years or even longer. Even with maximum investment now, new capacity will not be released on a large scale until the end of 2027. With surging demand, relatively rigid supply, and capacity expansion failing to keep pace, these combined forces have sustained a price rally that institutions generally believe will last at least until 2027, or even longer.
This cycle also introduces a new dynamic: the shift in bargaining power. For the first time, memory original manufacturers can say "no" to the most powerful buyers. Giants like Apple are willing to sign long-term agreements without price caps just to secure supply first. When buyers are willing to pay a premium for certainty, the seller-dominated landscape is clearly laid bare.
03. Apple's Concession and the Price Increase Logic Behind a NAND Chip
Apple's concession serves as a perfect window to observe this cycle. For years, it has held absolute initiative at the negotiating table thanks to its massive purchasing volume, habitually using "short-term bargaining plus multi-source price comparison" to drive component costs to the lowest level. This time, however, to lock in flash memory supply for the iPhone, it is even willing to accept market-driven contract prices with no upper limit. Data from TrendForce bluntly illustrates this helplessness: for the 256GB version of the iPhone, memory costs in Q3 2026 will be nearly 4× their level a year earlier.
The proportion of memory in the overall bill of materials has climbed from about 10% in the early years to approximately 34%, and could exceed 40% in the first half of 2027. In other words, the most expensive and fastest-rising single component in a smartphone has shifted from the screen and chips to that unassuming memory module.
For Apple, this is directly related to its upcoming foldable flagship. According to supply chain disclosures, the foldable iPhone Ultra will be equipped with 12GB of LPDDR5 memory, supplied by Samsung Electronics, SK hynix, and Micron. The two South Korean companies will collectively supply about 70%, while SK hynix and Samsung will jointly supply about 45% of the flash memory. The high-capacity memory configuration, combined with steadily rising prices, has pushed this flagship into an unprecedented pricing range. Institutions generally expect its starting price to be between $2,099 and $2,299, equivalent to about CNY 14,000 to 15,000, with high-end configurations potentially exceeding $3,000, setting a new price record for the iPhone product line.
Samsung and SK hynix have reportedly lowered their NAND wafer production targets for this year, shifting more capacity toward the higher-margin HBM. Meanwhile, Kioxia has listed long-term agreements as a core strategy, aiming to increase the volume locked in long-term agreements with major clients to half of its shipments by 2028. Original manufacturers are using long-term agreements to secure capacity in advance, turning price increases into a foreseeable trend. Buyers still on the sidelines are left with only one option: "the longer you wait, the more expensive it gets."
Kioxia's annual report for the fiscal year ending in March 2026 shows that its annual revenue from Apple has reached 476 billion yen, a significant year-on-year increase of 58%. This also explains why Apple prefers to renew longer agreements rather than gamble on spot prices for flash memory just to save a few percentage points in costs.
04. The Supply Chain: The Tide of Price Increases Spreads from Original Manufacturers to Modules and Controllers
The transmission of price increases is first reflected in the financial statements of original manufacturers.
According to data from the CFM Flash Market, the global NAND market size in the second quarter of 2026 surged by 73.1% quarter-on-quarter, reaching $76.776 billion. The quarterly revenues of the six original manufacturers—Samsung, SK hynix, YMTC (Yangtze Memory Technologies Co.), Kioxia, Micron, and SanDisk—almost all saw quarter-on-quarter increases. Among them, Micron's revenue surged by 99% quarter-on-quarter, driven by an over 80% quarter-on-quarter increase in ASP (Average Selling Price), while SK hynix saw an 89% increase due to its enterprise SSD revenue doubling quarter-on-quarter. Counterpoint's statistical caliber is slightly different, but the conclusion is consistent: NAND contract prices rose by about 55% quarter-on-quarter in the second quarter, with the increase significantly outpacing shipment volumes. The rise in market value is driven more by prices than by sales volume.
As the wave of price increases spreads from overseas original manufacturers to A-shares, the benefit logic unfolds along the supply chain link by link. At the very upstream are the equipment and materials companies undertaking domestic capacity expansion. Soochow Securities points out that the vast majority of equipment orders required for capacity expansion by domestic memory manufacturers are undertaken by domestic equipment companies. The order visibility for leading companies in front-end core equipment such as etching and thin-film deposition has significantly improved, and testing equipment manufacturers have also deeply benefited. The ones truly reaping the biggest price dividends are the memory module and controller manufacturers in the mid-stream of the industry.
Among them, module companies have earned substantial price spreads by "stockpiling at low prices and shipping at high prices," while controller manufacturers have broken into the high-end enterprise SSD market relying on their in-house R&D capabilities.
Longsys (301308) reported a first-half revenue of CNY 24.088 billion, a year-on-year increase of 136%, and a net profit attributable to shareholders of CNY 10.577 billion, with a gross margin approaching 59%. Relying on overseas channels and the Lexar brand, it has turned its module business into the highest profit margin sample in the entire industry;
Biwin Storage (688525) achieved a revenue of CNY 15.575 billion, a nearly three-fold year-on-year increase, successfully turning a loss into a profit of CNY 7.166 billion; TWSC (Shenzhen Techwinsemi Technology Co., Ltd.) (001309) reported a revenue of CNY 16.911 billion, a more than three-fold year-on-year increase, and a net profit of 6.017 billion yuan after the implementation of its self-developed enterprise SSD controller;
GigaDevice (603986), a leader in niche memory and NOR flash, reported a first-half net profit of 6.857 billion yuan, a more than ten-fold year-on-year increase, with a gross margin exceeding 63%.
Overall, the stronger the design attributes and the further upmarket a company goes, the thicker the price increase dividends it can capture.
05. From Contract Prices to Financial Reports: How Far Has the Story Progressed
Based on a review of public data, in the first half of 2026, the combined revenue of 12 listed memory chip companies reached CNY 292.532 billion, with a total net profit attributable to shareholders of 117.21 billion yuan. In the same period last year, these 12 companies as a whole were still operating at a loss of CNY 502 million.
Regarding the sustainability of this cycle, institutions have rarely been so united. Citi raised its forecast for the average selling price increase of NAND in 2026 from 44% to 74%, warning of a "severe supply shortage" globally. Goldman Sachs judges that the supply-demand tension for DRAM, NAND, and HBM in 2027 will be even tighter than in 2026, a pattern expected to continue into 2028. Jefferies expects memory prices to rise by another 40% to 50% quarter-on-quarter in the third quarter of 2026, with true relief likely not arriving until new capacity comes online in 2028. The electronics team at China Merchants Securities reminds that long-term agreements enhance the earnings visibility of original manufacturers, potentially further extending the duration of this cycle. Guojin Securities estimates that the consumption of DRAM and NAND in the server sector will surge by 40% to 50% year-on-year this year, with an even higher growth rate in the AI server sector.
The more uniformly bullish institutions are, the more sober one should remain. This round of price increases is dominated by AI demand. Once cloud providers' capital expenditures fall short of expectations, or domestic manufacturers' capacity expansion is implemented beyond expectations, the rebalancing of supply and demand will come faster than the consensus. Morgan Stanley previously warned that the supply side of mature-node DRAM might respond first under the stimulus of high prices, and price increases could peak before high-end categories. At the end of the price increase, consumers are also voting with their feet: when the price of a mid-range smartphone generally rises by 300 to over 1,000 yuan due to memory costs, the elasticity of demand will eventually react back on sales volume.
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