Semiconductor Memory. Profits Return & Tailwinds Mount On Surging (and remarkably similar) ASP Increases

The Q124 DRAM & NAND ASP increases from Micron, SK Hynix & Samsung were remarkably similar.. just saying

Q124 saw the continuation of a robust rebound for the semiconductor memory segment from the depths of the most severe downturn in well over a decade. In the case of DRAM, first quarter revenues amounted to $18.2 billion, up 6% QoQ and up 88% YoY.

In the case of NAND, revenues amounted to $$14.1 billion, up 23.4% QoQ and 68.8% YoY.

While the YoY growth numbers are impressive, we should keep in mind that we are comparing to what was the trough quarter of this downturn when revenue levels were similar to what they were way back in the 2015/2016 timeframe. Hence it was a pretty easy compare.

Nonetheless, the first quarter brought with it nothing but good news for the beleaguered memory segment. The recovery back to profitability is best exemplified by SK Hynix in the following graphic taken from their latest earnings call.

Here we can see the trajectory of the long and painful recovery from the depths of the downturn back in Q123, with each successive quarter since then eking out gradual improvements in both operating and net profit margins. It was the same story with Samsung, albeit they are as usual less forthcoming about the details:

If we look at the share prices of the key players, they are at near all time record highs in most cases. Here’s SK Hynix for example:

And here’s Micron’s chart:

This trend is somewhat less pronounced in the case of Western Digital in the sense that the stock has now just returned to its previous most recent high set back in mid 2021 at the peak of the previous upcycle:

To frame our thinking on where their share prices might go in the coming months, we first look in more detail at the tailwinds lining up behind the memory industry in the coming quarters. We dig into the unexpectedly strong performance of NAND and investigate what drove that. We also review the Q124 bit growth and ASP number for the key players and note how remarkably similar they are and what the implications of this might be down the line.