HK Stock Concept Tracker | Hon Hai says memory chip and component shortages will persist into next year; HBM, enterprise SSDs, and server DRAM become the main themes (with concept stocks attached)

According to reports, Hon Hai Chairman Young Liu recently stated that overall AI demand is expected to continue exceeding supply in 2027, and tight supply-demand conditions will persist. He expects that over the next 3 to 5 years, AI-related cloud products' share of Hon Hai's revenue will rise to more than 60%. Liu said that tight supply of chips, memory, and some key components is currently a challenge facing the entire industry. Although supply bottlenecks will gradually ease as new capacity comes online, looking ahead to next year, overall demand is still expected to exceed supply, and tight supply-demand conditions may persist for some time. Memory chips are integrated circuits manufactured using semiconductor processes for data storage, mainly including DRAM, NAND Flash, and high-bandwidth memory HBM stacked and packaged on that basis. They are widely used in servers, mobile phones, PCs, and AI computing equipment. Under the influence of AI infrastructure, demand for memory chips is growing rapidly, and since 2026 the entire industry has entered a rapid price-increase cycle. In the fourth quarter, memory chip giants continued the upward pricing momentum, which became a market focus. According to reports, on November 10 memory chip giant SanDisk Technology raised NAND contract prices by as much as 50%. This was SanDisk's third memory price increase in 2026, with the magnitude far exceeding market expectations. In April this year, SanDisk raised prices by 10% across all products, and in September it raised prices by 10% across all channels and consumer memory products. The market had previously expected SanDisk to continue raising prices in the fourth quarter by a similar magnitude. However, SanDisk's increase greatly exceeded market expectations, further worrying downstream customers about memory chip product supply. Recently, several memory industry figures told media that some leading companies have verbally informed channel distributors of their intention to raise prices for enterprise-grade particles. Formal price-increase letters have not yet been issued, but prices on the channel side have already moved first. Some manufacturers said the products being raised in price remain mainly enterprise-grade memory chips. At the end of October, several memory manufacturers released financial reports, entering an earnings boom period. SK Hynix's third-quarter report not only set a new record, but the company also signed long-term agreements with 14 major customers, locking up half of its capacity for the next two years. SK Hynix's third-quarter revenue reached KRW104.62 trillion, breaking through KRW100 trillion for the first time, with year-on-year growth of 328%. Third-quarter operating profit was KRW83.3 trillion, surging 632% year on year, with an operating margin of 80%. Another HBM giant, Samsung Electronics, saw third-quarter revenue rise 126.59% year on year to KRW195 trillion, while operating profit rose 782.5% year on year to KRW107.4 trillion. Samsung Electronics became the world's first technology company to post quarterly operating profit exceeding KRW100 trillion, with financial data continuing to set records. "The memory supply shortage is expected to continue through 2028 and beyond." CITIC SEC pointed out that AI and data center demand are driving downstream customers to lock in supply, and memory manufacturers continue to advance long-term agreement signings. Micron's remaining performance obligations calculated at floor prices are about US$150 billion, while SanDisk's reach US$88.9 billion, significantly improving industry earnings visibility. On the price front, Morgan Stanley raised its forecast for the quarter-on-quarter increase in fourth-quarter 2026 DRAM contract prices from 3% to 8% to 10% to 15%, and raised its forecast for NAND contract price increases to 15% to 20%, with enterprise SSD increases accelerating to 23% to 28%. The institution estimates 2026 DRAM industry capital expenditure at about US$98 billion, up 82% year on year, with new capacity gradually released only in the second half of 2027. Sealand noted that the memory market has gradually shifted from being driven purely by earlier price-increase expectations to a stage of earnings realization and verification, with clear divergence in prosperity across categories. HBM, enterprise SSDs, and server DRAM are the main themes of this cycle. Related concept stocks: Semiconductor Manufacturing International Corporation (00981): Announced interim results for the period ended 2026. The group recorded revenue of US$5.511 billion, up 23.7% year on year; profit attributable to owners of the company for the period was US$677 million, up 111.1% year on year; basic earnings per share were US$0.08. The announcement said the revenue increase was mainly due to higher wafer sales volume, higher average selling prices, and changes in product mix during the period. The number of wafers sold (equivalent to 8-inch standard logic) increased 14.9% from 4,682 thousand pieces in the same period last year to 5,379 thousand pieces in the current period. The average selling price (wafer sales revenue divided by total wafers sold) was US$966 in the current period, compared with US$903 in the same period last year. GigaDevice Semiconductor Inc. (03986): The company's memory chip products saw both volume and price increases, and profitability improved significantly. In the first half of 2026, memory chips achieved revenue of RMB9.827 billion, up 245.44% year on year, with a gross margin of 67.57%. Niche DRAM and SLC NAND Flash grew rapidly year on year. MCU products benefited from demand in industrial, consumer, and automotive sectors, and shipment scale achieved good growth. In terms of results, the company achieved operating revenue of RMB11.566 billion in the first half of 2026, up 178.67% year on year; net profit attributable to shareholders was RMB6.857 billion, up 1,091.50% year on year. Montage Technology (06809): As a leader in the memory interconnect chip market, Montage Technology is transforming from a memory interconnect leader into a platform-based interconnect chip company. In the AI era, leveraging its long-term focus on key high-speed interconnect chips between computing power and storage, the company has formed a rich product matrix and occupies a leading position in the global market. PCIe Retimer products have entered the volume ramp-up stage, and the company is extending along the same path into the higher-value PCIe Switch field, which is expected to open new growth space. As AI shifts from model training to inference, especially with the development of AI agents, demand for server CPUs is continuing to rise, and the company is a major beneficiary of strong CPU demand. Shenzhen Longsys Electronics (09976): According to the prospectus, Shenzhen Longsys Electronics is a globally leading independent brand semiconductor memory manufacturer. Based on the company's vertically integrated capabilities covering controller chip and memory chip design, firmware development, system-level packaging, and testing, Shenzhen Longsys Electronics designs, develops, manufactures, and sells a complete memory product portfolio for edge AI and traditional consumer, enterprise, and industrial-grade applications. According to CIC data, based on 2025 memory product revenue, Shenzhen Longsys Electronics is the second-largest independent semiconductor memory manufacturer among more than 100 market participants globally and the largest independent memory manufacturer among more than 30 market participants in China. In 2025, Shenzhen Longsys Electronics held a 1.2% share of the global memory product market. Given the enormous size of the industry, this share is significant for an independent memory company.