Bank of America communicates with top tier storage vendors: the Middle East currently has minimal impact, strong sales in February.

According to the latest communication between Bank of America and more than 10 storage chip manufacturers and supply chain companies, the impact of the Middle East conflict on the global storage chip supply chain is minimal. Surprising February sales data indicate a significant increase in industry profit margins. On March 7th, according to market news, Bank of America's global research team stated in its latest storage industry tracking report that the storage industry is currently in a super-cycle. The Middle East conflict has almost zero impact on the storage supply chain, due to the highly interconnected nature of the storage chip industry in Asia. The report indicates that demand for DRAM and NAND remains strong, far exceeding current production capacity. The average operating profit margin for the DRAM industry is expected to easily exceed 60%, and for NAND to exceed 30%. South Korea's semiconductor exports in February increased by 161% year-on-year, and the sales of Taiwan's NAND technology in February skyrocketed by 587%, confirming these assessments. The Middle East crisis has minimal impact, as demand continues to outpace supply. Bank of America discussed the impact of the Middle East conflict with more than 10 storage chip manufacturers and supply chain companies this week. All interviewed storage manufacturers stated that the Middle East conflict currently has almost no substantial disruption to their businesses. This is because the storage chip supply chain has a high degree of Asian self-circulation: Production end: over 95% of global storage chips are produced in Asia, with ample materials stockpiles (such as helium from Japan) and high localization levels. Equipment end: semiconductor equipment comes from Asia, the United States, and Europe, usually transported by air, bypassing the Strait of Hormuz. Distribution end: storage chip distribution is centered in Asia, especially for HBM required by NVIDIA's AI servers, produced in South Korea and then transported to packaging/ODM companies in Taiwan. The report states that while manufacturers are concerned that a prolonged Middle East conflict may drag down macroeconomic demand, current demand for DRAM and NAND is extremely high, surpassing current production levels. Furthermore, manufacturers are actively negotiating long-term agreements (LTA) to lock in multi-year average selling prices (ASP), indicating a high level of confidence in the industry's future prospects. In terms of pricing data, Bank of America states that DRAM spot prices have remained stable this week, but are still over 50% higher than the previous quarter; NAND spot prices have surged by over 10% this week due to ongoing shortage expectations. Specifically, 16Gb DDR5 spot prices are at $39.3, a year-on-year increase of 698%; 16Gb DDR4 spot prices are as high as $77.2, with a year-on-year increase of 2530%. February sales data shocks the market: Super-cycle characteristics fully revealed. The report states that February sales data surprised the Bank of America team, with all indicators significantly exceeding expectations: South Korea semiconductor exports: February exports reached $25.2 billion, a year-on-year increase of 161%, reaching a new historical high, and a 22% increase compared to January; Taiwan's NAND technology: February monthly sales increased by 587% year-on-year, achieving triple-digit year-on-year growth for the seventh consecutive month, driven mainly by the significant increase in DDR4 and DDR5 prices. The Bank of America team points out that such strong revenue growth is mainly driven by the rise in traditional storage chip prices (DDR4, DDR5, NAND) and product structure optimization (HBM3e and increasing proportion of enterprise-grade SSDs). In this context: - The average operating profit margin for the DRAM industry is expected to easily exceed 60%; - The average operating profit margin for the NAND industry is expected to exceed 30%; - With continuous price increases for DDR5 new contracts, sales, exports, and profit margins in March are expected to be higher than in February. Considering that ASP is expected to continue to rise (including new contract prices for DDR5), sales, exports, and profit margins in March should be higher than February. Bank of America clearly stated: "This is clearly a super-cycle."