According to Huatai Securities, looking back at 2Q26, the five Samsung/Hynix/Micron, Sandisk/Kioxia companies combined total revenue of US$227.4 billion and operating profit of US$147.5 billion, +70% month-on-month. Revenue and profit are at historically high levels. However, the price increase has begun to slow. Samsung revealed that DRAM blended ASP fell from about low -90% month-on-month for 1q26 to mid -40% for 2q26, and TrendForce expects 3q26 server DRAM contract prices to rise 13-18% month-on-month. According to the combination of P/B and ROE, this round has already entered the second stage of “profits are still rising, valuations are falling first”. The market focus is shifting from room for profit improvement to where the lower profit limit is, focusing on: 1) Long-term cooperation. If ASP falls to a floor price level of about 40% lower than 2Q26 in 2027, it will correspond to the 2027E PE of the corresponding industry by about 14x; 2) Shareholder returns. Hynix has raised the 2025-2027 FCF return target to more than 50%, focusing on the subsequent increase in Korean payout ratio; 3) long-term demand. AI storage requirements spread from HBM to a more complete memory/storage hierarchy. Taking into account the three criteria of long-term price protection mechanism, repurchase intensity, and supply and demand stability, we have given the five companies' concerns.

According to Huatai Securities, looking back at 2Q26, the five Samsung/Hynix/Micron, Sandisk/Kioxia companies combined total revenue of US$227.4 billion and operating profit of US$147.5 billion, +70% month-on-month. Revenue and profit are at historically high levels. However, the price increase has begun to slow. Samsung revealed that DRAM blended ASP fell from about low -90% month-on-month for 1q26 to mid -40% for 2q26, and TrendForce expects 3q26 server DRAM contract prices to rise 13-18% month-on-month. According to the combination of P/B and ROE, this round has already entered the second stage of “profits are still rising, valuations are falling first”. The market focus is shifting from room for profit improvement to where the lower profit limit is, focusing on: 1) Long-term cooperation. If ASP falls to a floor price level of about 40% lower than 2Q26 in 2027, it will correspond to the 2027E PE of the corresponding industry by about 14x; 2) Shareholder returns. Hynix has raised the 2025-2027 FCF return target to more than 50%, focusing on the subsequent increase in Korean payout ratio; 3) long-term demand. AI storage requirements spread from HBM to a more complete memory/storage hierarchy. Taking into account the three criteria of long-term price protection mechanism, repurchase intensity, and supply and demand stability, we have given the five companies' concerns.