Regarding the topic of the article, this structural vacuum for standard memory is fascinating. Do you think the Tier 2 gains are sustainable long term or just a temporary side effect of the HBM rush? Your insight into these market dynamics is truly brilliant.
Usually the DRAM cycle is <2 years and priced by the stocks in the first yr. This cycle is different in that the HBM and 1:3 dynamic means a lot of traditional DRAM capacity has been removed. That means there’s both underlying demand growth and capacity removal (2 drivers) of this upcycle. However countering that is Chinas capacity plans set to really ramp in 2027
Traders will be skeptical of a longer cycle given past experience. DRAM is low end silicon and OEMs double and triple book orders when it gets scarce only
To cancel those later. The stocks have already priced more than a conventional cycle in P/Bk terms in only 6 mths. I personally think there’s a lot of digestion necessary for 6 mths to see where the S/D balance is heading.
This is a really well researched breakdown of the tier 2 memory space. The point about the 1:3 wafer ratio for HBM vs DDR5 is something I hadn't seen quantified before and it really drives home why companies like Nanya are seeing such strong tailwinds. What's interesting is how fast this has moved - I remember looking at Winbond earlier this year when it was still considered a legacy player, and now it's pivoted into being an edge AI story with CUBE. The 6-year LTAs are kind of wild too, that's basically unheard of in this indusrty. One thing I'm watching closely is whether the Tier 1 guys will actually stick with HBM focus or if they'll flip back to standard DRAM once margins compress on HBM as supply catches up. That timing is probly the biggest wildcard for how long this window stays open for the Tier 2s.
The whole industry is very aware of China’s coming DRAM capacity additions. I suspect industry margins o. DRAM will be smashed in 2027 and take years to recover. So the HBM pivot is necessary and aligns with years of AI demand plus chinas relative disadvantage in that space with EUV export restrictions
Regarding the topic of the article, this structural vacuum for standard memory is fascinating. Do you think the Tier 2 gains are sustainable long term or just a temporary side effect of the HBM rush? Your insight into these market dynamics is truly brilliant.
Usually the DRAM cycle is <2 years and priced by the stocks in the first yr. This cycle is different in that the HBM and 1:3 dynamic means a lot of traditional DRAM capacity has been removed. That means there’s both underlying demand growth and capacity removal (2 drivers) of this upcycle. However countering that is Chinas capacity plans set to really ramp in 2027
Traders will be skeptical of a longer cycle given past experience. DRAM is low end silicon and OEMs double and triple book orders when it gets scarce only
To cancel those later. The stocks have already priced more than a conventional cycle in P/Bk terms in only 6 mths. I personally think there’s a lot of digestion necessary for 6 mths to see where the S/D balance is heading.
This is a really well researched breakdown of the tier 2 memory space. The point about the 1:3 wafer ratio for HBM vs DDR5 is something I hadn't seen quantified before and it really drives home why companies like Nanya are seeing such strong tailwinds. What's interesting is how fast this has moved - I remember looking at Winbond earlier this year when it was still considered a legacy player, and now it's pivoted into being an edge AI story with CUBE. The 6-year LTAs are kind of wild too, that's basically unheard of in this indusrty. One thing I'm watching closely is whether the Tier 1 guys will actually stick with HBM focus or if they'll flip back to standard DRAM once margins compress on HBM as supply catches up. That timing is probly the biggest wildcard for how long this window stays open for the Tier 2s.
The whole industry is very aware of China’s coming DRAM capacity additions. I suspect industry margins o. DRAM will be smashed in 2027 and take years to recover. So the HBM pivot is necessary and aligns with years of AI demand plus chinas relative disadvantage in that space with EUV export restrictions