Jefferies expects memory prices to see a sequential increase of 40% to 50% in Q3 2026, and the market should brace for another 30% to 40% hike in Q4 2026. For 2027, they're forecasting another 40% to 45% year-over-year price increase, with a recovery not expected until 2028 when ASPs are projected to decline as new capacity, around 15% to 20%, comes online. This supply increase might not be as significant as anticipated, given the ongoing rise in demand for AI and compute.
Currently, 50% of total capacity is covered by long-term agreements and contracts signed between memory makers and major tech firms. $Micron Technology(MU)$ has already signed 16 Strategic Customer Agreements. This coverage could rise to 70%, meaning even less supply will be available for consumer products like PCs, laptops, consoles, and smartphones, likely leading to higher prices across the board.
Meanwhile, expectations that Chinese DRAM and NAND will overturn the market remain flawed. Chinese firms are selling memory at similar prices to others, with their main advantage being supply, which is primarily for domestic consumption at present. Chinese products pose no immediate threat and aren't expected to disrupt the market during the 2026-2027 period. This could change by 2028 when CXMT and YMTC enter the next phase of their "Epic Expansion" initiative, accelerating new fab and production line construction. That might enable China to build enough supply inventory to cater to offshore markets.
The dominance of CSPs in LTAs is reshaping supply allocation, while China's expansion remains a longer-term factor rather than an immediate concern.
$SanDisk Corp.(SNDK)$ $Western Digital(WDC)$ $Taiwan Semiconductor Manufacturing(TSM)$ $Advanced Micro Devices(AMD)$
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