CITIC SEC: AI reasoning drives explosive demand for storage, continues to favor storage innovation growth trends

CITIC SEC released a research report stating that in the Agent AI era, storage is the core strength, driving the storage industry to transition to a long-term paradigm shift. In terms of supply and demand, AI reasoning is driving a dramatic increase in Token consumption, leading to a linear surge in KV Cache. The explosive demand, coupled with mismatches between supply and expansion by original manufacturers, has led to shortages becoming normalized. It is expected that demand will continue to outstrip supply until 2027, with price increases expected throughout 2026. On the technical side, in the context of extreme shortages and high costs of HBM and DRAM, manufacturers are sharing innovative solutions for NAND to alleviate the pressure on memory capacity. The industry continues to be optimistic about the growth trend of storage innovation. CITIC SEC's main points include: - The Flash Memory Market Summit in China in 2026 will focus on storage innovation in the AI era and opportunities for industry chain upgrades. - The summit aims to address trends in AI-driven storage innovations and highlight the challenges faced by the industry, particularly in relation to the explosive demand for storage resources driven by AI applications. The report also discusses the trends in the storage industry chain and the value reconfiguration in the industry. It highlights the impact of AI on cloud and edge storage trends, such as the surge in demand for high-capacity QLC and the evolution of interfaces. Additionally, it addresses the challenges and advancements in storage solutions in AI terminals and the innovations in storage technologies for AI applications. Overall, the report emphasizes the opportunities and challenges in the storage industry in light of the AI era and the ongoing shifts in technology and market dynamics.