Galaxy Securities: The current point marks a new starting point for the next cycle in the storage chip sector

Galaxy Securities believes that the current point marks a new starting point for the next cycle in the storage chip sector. With the rapid growth in demand for AI servers and domestic substitution, they are optimistic about the investment opportunities in listed companies related to the domestic storage industry chain.

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【Galaxy Electronics Peak】Industry Trends January 2026 | Storage Prices Continue to Rise, TSMC Achieves New High in Performance

Key Points

In January, the storage market continued its strong upward trend since Q4 2025, with DRAM and NAND flash memory prices rising beyond expectations. Leading manufacturers such as Samsung Electronics and SK Hynix significantly increased their contract prices in Q1, with NAND flash supply prices up over 100% and DRAM prices rising by 60%-70%. The main drivers of the price increases include: explosive demand for HBM in AI servers, increased capital expenditure in data centers, and structural capacity adjustments. The supply-demand gap continues to widen, and this price increase cycle is expected to last until mid-2026. Currently, storage price hikes have had a significant impact on downstream industries, with consumer electronics terminal manufacturers facing cost pressures. According to TrendForce data, global smartphone shipments are expected to decrease by 2% in 2026, and Q1 notebook shipments may decline by 14.8%. Storage products account for 10%-20% of smartphone BOM costs, and rising costs are forcing manufacturers to adjust product structures and pricing strategies.

TSMC’s Q4 2025 quarterly performance greatly exceeded expectations, reaching a record high. TSMC achieved revenue of $33.73 billion in Q4 2025, a year-over-year increase of 25.5% and a quarter-over-quarter increase of 1.9%, surpassing the previous guidance range of $32.2 billion to $33.4 billion. Net profit was approximately $16.3 billion, up 35% year-over-year and 11.8% quarter-over-quarter. Gross margin reached 62.3%, up 3.3 percentage points year-over-year and 2.8 percentage points quarter-over-quarter, setting a new record. Operating profit margin was 54%, and net profit margin was 48.3%, both significantly exceeding market expectations. Process node optimization led to advanced process revenue accounting for 77%, with 3nm process accounting for 28%, 5nm for 35%, and 7nm for 14%. The 3nm process entered mass production in Q4 2025 with good yield performance, becoming the core engine of revenue growth. Revenue from mature processes accounted for 23%, showing a structural recovery trend.

Prices of passive components and analog products are rising, mainly driven by cost increases. In January, the passive component market experienced a new round of price hikes. Major manufacturers such as Yageo, Fenghua High Tech, and Sunlord Electronics issued price increase notices, with increases generally between 5% and 30%. The price hikes are mainly driven by rising raw material costs such as silver, copper, and tin, combined with growing demand from AI servers, new energy vehicles, and other high-end sectors. Prices of products like MLCCs, inductors, and resistors have all increased to varying degrees. Overseas giants like Analog Devices and Texas Instruments announced price hikes of 10%-30% in January. Some domestic analog chip manufacturers have also followed suit. The reasons for price increases include rising wafer foundry costs, strong demand for automotive-grade and industrial-grade chips, and tight 8-inch wafer capacity. As fundamental electronic system components, the price increases in analog chips will propagate to various downstream application fields.

Investment Recommendations

We believe that the current point marks a new starting point for the next cycle in the storage chip sector. With the rapid growth in demand for AI servers and domestic substitution, we are optimistic about the investment opportunities in listed companies related to the domestic storage industry chain.

Risk Warnings

Risks include weaker-than-expected downstream demand, intensified industry competition, underwhelming new product development, and increased uncertainties caused by supply chain shifts.

(Source: People’s Financial News)