Recently, memory chip manufacturers including SK hynix, Samsung Electronics, and Kioxia have successively released their financial results for the second quarter of 2026, collectively delivering "windfall profits." Unlike the past when memory price fluctuations relied more on the inventory cycles of smartphones and PCs, these three financial reports clearly demonstrate that AI computing power has spawned three high-growth sub-sectors: HBM under the DRAM segment, server DDR5, and enterprise SSDs under the NAND segment, while the traditional inventory cycle dominated by consumer electronics has significantly weakened. Memory chips have transformed from traditional consumer electronics supporting products into a core component of AI infrastructure. Meanwhile, following the release of these impressive financial reports, global memory stock prices have collectively pulled back, revealing varying degrees of cognitive divergence between the industry and capital markets.
Volume and Price Surge in Computing-Grade Memory; AI Becomes the Largest Growth Engine
The three financial reports reveal a consistent industry signal, with every set of data corroborating the driving role of AI.
SK hynix's average selling price (ASP) for DRAM increased by 30% quarter-over-quarter (QoQ), and its NAND ASP rose by 50% QoQ, directly driving a 51% QoQ increase in revenue and a 61% QoQ increase in operating profit. Samsung's memory business revenue surged by 471% year-over-year (YoY), propelling the operating profit of its Device Solutions (DS) division to 89.2 trillion KRW, directly offsetting the overall losses in its DX consumer segments such as smartphones and TVs. Kioxia's NAND prices continued to jump, coupled with the surging demand for AI server SSDs, driving its single-quarter net profit from 18.3 billion JPY in the same period last year to approximately 842.2 billion JPY, a 45-fold increase in one year.
In their financial guidance, the management of the three companies repeatedly mentioned the expansion of AI agents and the continuous infrastructure investment by cloud providers: SK hynix forecasts a 20% YoY increase in DRAM demand and a nearly 20% increase in NAND demand for the full year of 2026, with the incremental growth almost entirely coming from data centers. From a product structure perspective, 73% of SK hynix's revenue comes from DRAM, while the share of PC and smartphone memory continues to shrink. Over 60% of Kioxia's revenue comes from data center SSDs, and the growth rate of embedded flash memory is less than one-third of that of AI memory. Samsung is prioritizing its capacity allocation towards computing products such as servers and HBM, optimizing the proportion of consumer memory.
Unlike previous market peaks with heavy investments in building new fabs, the new memory-related capital expenditures of the three companies are entirely directed towards high-end AI production lines: SK hynix's capital expenditure for the full year of 2026 is expected to reach the high end of the 40 trillion KRW range, prioritizing the expansion of HBM production lines. Samsung is stepping up its 1c nm DRAM process technology and next-generation HBM R&D, while simultaneously laying out advanced foundry businesses. Kioxia has initiated the sample delivery of its 332-layer BiCS10 flash memory, seizing the supply chain window for data center SSDs.
Mature consumer memory processes are no longer adding new capacity, and the supply of general-purpose dies in the spot market is tightening. Coupled with long-term volume-locking supply agreements signed by leading cloud providers, the market maintains a stable state of slight shortage without excess inventory.
Segmented Prosperity in Sub-Sectors; Consumer Memory Under Continuous Pressure
Combining the next-quarter and second-half performance guidance of the three companies, the divergence in prosperity among the four sub-sectors is clearly visible in the financial data.
HBM is in the first tier with the tightest supply. Currently, only Samsung, SK hynix, and Micron globally possess mass production capabilities. Constrained by the dual capacity limitations of wafer supply and Advanced Packaging, the production capacity struggles to match the procurement demands of cloud providers, making it the memory category with the highest gross profit margin in the entire industry.
Server DDR5 ranks in the second tier. As the installed base of AI servers continues to climb, the two South Korean memory manufacturers are continuously shifting some of their PC-oriented DRAM production lines to server models. In the earnings call, SK hynix predicted that the industry's DRAM demand for the full year will achieve approximately a 20% growth, and the supply-demand gap on the server side will persist in the long term.
Enterprise SSDs (based on NAND flash) form the third tier. AI databases and local large models are driving SSD demand, but the NAND flash sector involves more manufacturers and has greater supply elasticity, resulting in price increases falling short of those for server-side DRAM.
Consumer memory for smartphones and PCs continues to weaken. The three companies are no longer adding new capacity for consumer memory, downgrading the shipment priority for the consumer end. With the slow recovery of end devices, the price increase of general-purpose dies falls far short of that of computing-dedicated memory, making it the "drag" sector in the financial report portfolio.
The three companies unanimously judge that the supply and demand for high-end computing memory will remain tight in the second half of 2026, and the prosperity cycle has the foundation to continue. Samsung Electronics' management released a strong bullish signal during the conference call: AI agents are igniting computing power demand, and the memory supply shortage is expected to last until 2028.
Financial Report Benefits Materialized; Memory Sector Pulls Back from Highs
Although the industry is collectively bullish, the international memory sector pulled back after the disclosure of financial results. Samsung Electronics released its second-quarter earnings preview on July 7, and South Korean stocks closed down by 6.92%. SK hynix released its official financial report after the US stock market close on July 28, and its US-listed ADR once fell by nearly 9% in after-hours trading.
Market doubts did not start with this financial report; rather, the decline of the entire memory sector has been ongoing for some time. The memory sector saw massive gains in the first half of this year, and the market had already priced in the high prosperity of AI in advance. The realization of record-breaking second-quarter performance falls under the category of "buy the rumor, sell the news," leading to concentrated profit-taking at high levels and driving a sector adjustment. On the other hand, although the absolute values of SK hynix's revenue and operating profit hit historical highs, both indicators were slightly below Wall Street expectations. Meanwhile, the QoQ price increase magnitude of DRAM and NAND spot prices in the second quarter narrowed significantly, raising market concerns that ultra-high profit margins cannot be sustained in the long term. SK hynix's finalization of LTAs (Long-Term Agreements) with several leading cloud providers also brings a dual impact: while locking in long-term stable orders, it also limits the room for spot price increases, leading some institutions to worry that memory companies will lose their short-term price increase elasticity.
Compared to the widespread industry losses in 2023 and the sustained low profitability in the first half of 2024, 2025 has become a watershed for the cycle. Driven by the wave of AI and computing power development, the global memory market has ushered in a price increase trend since the third quarter of 2025. The three "money-printing" financial reports from April to June this year reveal the essential difference between this round of market trends and the traditional inventory cycle: in the past, memory price fluctuations were dictated by smartphone and PC shipments; today, AI computing power brings long-term structural demand, with HBM and server DDR5 under the DRAM segment, along with enterprise SSDs under the NAND segment, forming a high-growth curve.
At the same time, it should be noted that a divergence has emerged between industry prosperity and secondary market valuations. Some institutions believe that the supply-demand tightness brought by AI will continue until 2027, while others warn that the upward cycle of industry profitability has already peaked. Two major variables will affect the industry's future trajectory: first, the concentrated release of advanced capacity by various companies in 2027; if the supply expansion exceeds the demand growth rate, it may compress industry profit margins. Second, once the pace of AI capital expenditures by global cloud providers slows down, the prosperity of the memory sector may cool down rapidly.
Author | Zhang Xinyi, Liu Lu (Intern) Editor | Qiu Jiangyong Art Editor | Maria Supervisor | Qi Xu