Jefferies: Storage price increases may exceed expectations; AI cloud vendors locking up inventory exacerbates supply shortages.

According to Mars Finance, on June 22, Jefferies stated that global memory chip price increases may significantly exceed market expectations due to cloud computing giants locking in capacity in advance, continued expansion of AI server demand, and a lack of significant expansion intention among major memory manufacturers. In a global technology industry report released on June 21, Jefferies cited memory industry experts who predicted that memory prices could rise by 40% to 50% quarter-on-quarter in the third quarter of 2026, followed by a further 30% to 40% increase in the fourth quarter. This forecast is significantly higher than the 15% to 20% previously expected by European and American investors, and also higher than recent feedback from some Asian supply chains. The report stated that excluding Chinese manufacturers, global memory bit supply is expected to grow by only 7% to 8% in 2026, mainly due to process migration rather than new wafer capacity. The combined supply gap for DRAM and NAND could reach 150,000 to 200,000 wafers per month. Since there is also a lack of significant wafer capacity growth in 2027, supply tightness may continue. AI demand is the main driver of this memory cycle. The report points out that cloud service providers have signed two-year long-term supply agreements with storage manufacturers and paid approximately 40% upfront payments. These long-term agreements currently account for about 50% of the industry's capacity, and this could rise to 70% in the future. In contrast, consumer electronics manufacturers are finding it difficult to secure similar agreements and may face greater cost and supply pressures in 2026-2027. HBM remains in short supply. Jefferies cites expert estimates that the industry's HBM capacity is approximately 330,000 wafers per month, potentially rising to 480,000 wafers per month by 2027. The new capacity will limit HBM price increases over the next 12 months, but the increase could still reach approximately 70%. The report also believes that Chinese storage manufacturers will not threaten the current bull market in the short term. Changxin Memory Technologies is still about 1.5 to 2 generations behind global leaders in DRAM technology, and without EUV capabilities, it will be difficult to upgrade to DDR6 or HBM3E in the short term. The capacity expansion by Chinese manufacturers in 2026-2027 will primarily impact the low-end market. However, the report also points out that Chinese NAND technology may become more globally competitive by 2028. Jefferies warns that 2028 could be a cyclical risk point. If global wafer capacity grows by 15% to 20% by then, while AI demand slows, storage prices could fall sharply. However, in 2026-2027, the storage industry is likely to maintain strong pricing power, especially given the backdrop of cloud vendors locking up inventory and squeezed supply in consumer electronics.