CICC International: Supply and demand tension leads to continuous price increase, storage industry chain may have high certainty opportunities.

Bank of China International released a research report stating that AI and data expansion are driving storage into a new cycle, with tight supply and demand leading to continued price increases. The demand for new technologies like HBM is strong, and opportunities for accelerated development of domestic storage in China are emerging, leading to a rating for the industry that is stronger than the overall market. Taking into account the demand increment brought by AI and the structural supply shocks, the bank believes that there are highly certain opportunities in the storage industry chain in both the short and medium to long term. The bank suggests focusing on the following areas: 1) distributors and module manufacturers benefiting from cyclical price fluctuations; 2) IC design companies focusing on niche markets and storage product complementary chips; 3) domestic semiconductor memory supply chain. The main points of Bank of China International are as follows: Overview: Data expansion + AI diffusion, accelerating the arrival of a new storage cycle Driven by the continuous expansion of storage technology demand in various fields of the digital economy, the size of the storage market continues to rise. From the perspective of downstream application structure, the growth rate of AI edge storage demand is significantly higher than other segmented markets, and has become a key driver for the expansion of the global storage market. The trend of large model technology has driven the rapid growth of AI server storage demand, and storage demand in the server field will also maintain a high growth rate. In terms of prices, there has been a significant increase in the prices of all storage products in 2025, and it is expected to further increase in 2026. The bank believes that this round of price increases is being driven by both AI servers and general servers, and there are still structural capacity conversions and multidimensional demand competitions, making the situation more complex. Shortages and price increases may continue for a longer period of time. Supply and demand: Structural supply constraints continue, OEMs vie for new technology opportunities, and the health of the AI industry chain opens up long-term demand space In terms of capital expenditures: In 2026, capital expenditures will focus on process technology upgrades and the introduction of advanced processes such as hybrid bonding. The growth of bit supply is limited, and the market imbalance of supply and demand may continue throughout the year. In terms of technology upgrades: HBM is accelerating iteration, and performance indicators such as bandwidth are constantly advancing. At the same time, with the rapid growth of the AI inference market, the storage industry is gradually entering the "post-HBM era" -- HBF is emerging. In terms of demand: From the perspective of leading international suppliers in AI infrastructure configuration, there is still strong demand for high-performance HBM and LPDDR5X. In terms of end demand, the server market will continue to see rapid growth in storage demand. Domestic: OEMs head towards global standards + independent industrial chains, product anchors platformization + category upgrades In terms of DRAM, Yangtze Memory has officially launched LPDDR5X products, and in terms of NAND, the third phase of construction at Yangtze Memory is moving towards the goal of 100% domestically produced equipment. In terms of technology, CBA+4F2, under the pressure of process node and the accumulation of hybrid bonding technology, may become the path for domestic storage to overtake at the bend. The bank believes that Yangtze Memory and Yangtze Memory, as leading domestic memory chip manufacturers, have stable production and operation, determination to push forward construction, and are expected to bring many opportunities to the industry chain. In addition, the domestic niche storage market will also usher in favorable development opportunities under the promotion of AI customized storage. Major risks faced by the rating Risk of industry cyclicality; Risk of technological iteration and intensified competition; Geopolitical and supply chain risks; Risk of sustainability of AI demand; Risk of domestic substitution and unexpected technological breakthroughs.