Author: Jack Liu, Boom Beatz

The ongoing memory shortage has finally trickled down to consumers.

On June 17, Tim Cook was still complaining about cost pressures to The Wall Street Journal. He mentioned that while consumers need devices, the supply has decreased. Memory manufacturers are passing on significant price hikes to downstream partners, and memory pricing and supply need to return to a level that consumer products can bear.

Less than a week later, on June 25, Tim Cook once again spoke to The Wall Street Journal, describing this cost surge as a "once-in-a-century flood." He stated that in his over 40-year career, he has never seen a situation like this in any industry. Just after becoming the first person in history with a net worth exceeding $1 trillion, Musk immediately echoed this sentiment on social media, saying it was one of the most intense price surges he had ever seen.

Then he announced an Apple price increase.

In hindsight, these two interviews seemed more like Apple's public relations groundwork for a price adjustment.

Apple's explanation was straightforward: they didn't want to raise prices, but the rapid expansion of AI data centers has driven up demand for memory and storage chips. The company had been trying to avoid passing the cost on to consumers, but now they couldn't hold out any longer.

The timing was delicate. The day before Apple announced the price hike, Micron had just released an exaggerated financial report: an 84.9% gross margin, quadruple year-on-year revenue growth, and a significant after-hours stock price surge. The next day, Apple's stock price plummeted, with a market cap evaporation of over a hundred billion dollars. Upstream memory manufacturers reaped the benefits of a cyclical windfall, while downstream consumer electronics manufacturers began passing the bill to consumers.

This is the most authentic chain reaction of this AI infrastructure expansion: cloud giants snatch up GPUs and HBMs, data centers compete for power and servers, memory manufacturers lock in long-term contracts and raise prices, and finally Macs, iPads, Xboxes, and potentially iPhones facing a future price hike bear the brunt.

And Apple is not alone. Microsoft also announced that starting from August 1, they will increase Xbox console prices, with the 512GB model rising by $100 and the 1TB model rising by $150. The reason is the same: game console storage and memory prices have already more than doubled, and by the fall of 2027, they may double again.

However, Micron doesn't quite see eye to eye with Apple on this issue.

Micron's Chief Business Officer, Sumit Sadana, did not directly name Apple, but in an interview with The Wall Street Journal, he stated that some customers in the past had been very aggressive on pricing. The entire industry shut down many investment plans in 2023 due to low prices and low margins. Tom's Guide directly interpreted this statement as Micron insinuating that Apple-type large customers had long been squeezing prices.

And so the war of words between Apple and Micron began: Apple said, "It's not that I want to raise prices, it's that memory is too expensive"; while Micron believed, "In the past, you drove prices so low that no one was willing to expand production. Now, don't blame the shortage entirely on the suppliers."

As users, the inevitable consumer growth means we have to earn from somewhere else: considering this round of changes, what will be the next target for speculation?

Micron Locks in Profits, Korean Giants Forced to Increase Investment

To understand the severity of this shortage, let's first look at the recent financial reports from competitors Western Digital and Samsung.

For the fiscal Q3 2026, Micron reported revenue of $41.456 billion, compared to just $9.301 billion in the same period last year; non-GAAP EPS was $25.11; gross margin was 84.9%. The Q4 guidance is even more dramatic, with a mid-range revenue of $50 billion, a gross margin of around 86%, and a mid-range EPS of $31.

This is no longer the gross margin structure expected from a cyclical company.

More noteworthy than the financial report is Micron's long-term contracts. The company has already secured 16 Strategic Customer Agreements, usually spanning from 2026 to 2030.

Of these agreements, 14 are based on minimum pricing, with total revenue of approximately $100 billion, and an expected receipt of around $22 billion in customer prepayments or financial commitments. The agreements are filled with take-or-pay terms, minimum purchase quantities, and price floors, with some even setting price ceilings. Micron emphasizes that even agreements with price ranges, the floor price can deliver gross margins higher than any previous cycle peak.

While Apple and Micron argue, the most significant signal from this war of words is actually directed at the two South Korean giants.

If they do not expand production, the most profitable orders in the coming years will be taken by their competitors; but if they massively expand production, they will have to bear the cost of the next cycle reversal. So, Samsung and SK Hynix have entered an investment race.

At a press conference yesterday, South Korean President Lee Jae-myung announced South Korea's plan to invest 80 trillion won to build four chip plants, with Samsung and Hynix each constructing two new factories. South Korea is betting the country's next industrial position on AI hardware.

Semiconductors are already a critical industry for South Korea. Exports, chaebol profits, exchange rates, employment, and stock market valuations are all tied to Samsung and SK Hynix. In the previous electronics cycle, Korea enjoyed the global digitalization dividend through storage and smartphones; in this AI era, Korea aims not for application entry but for the HBM, advanced packaging, and storage supplies that every AI server from Nvidia, AMD, Google, and Microsoft cannot do without.

Regular investors can think of HBM as the high-speed memory stack next to the AI chip. AI training and inference require not only a GPU but also memory to continuously feed data into it. The one who can get certified earlier and deliver faster will secure the most scarce orders in this round of AI infrastructure.

This is also why Samsung and SK Hynix have been brought to the table.

The key variable here is the time lag. Ramp-up is not a process where you invest today and start shipping tomorrow. SK Group Chairman Chey Tae-won has already mentioned that the memory shortage may last until 2030 because adding wafer capacity will take at least four to five years. HBM is even more challenging than regular DRAM. It involves not only front-end wafers but also TSV, thinning, stacking, bonding, advanced packaging, and a complete testing process.

In other words, the money that South Korea is investing today will address the supply in 2027, 2028, and 2029, and may not immediately alleviate the price pressure faced by Apple, PC manufacturers, and server manufacturers.

After the expansion, where will the funds flow?

Once the expansion is confirmed, we need to look at the beneficiaries of the expansion narrative. The orders for the construction of these storage companies will first flow to equipment, materials, packaging, plant facilities, and power systems. They will receive the money first.

Yesterday, Jac KJ hit the limit up, signaling the market's anticipation.

Jac KJ is an upstream material supplier for major storage factories like SK Hynix. The market speculation is not about it producing HBM, but about it being involved in the material process before HBM and DRAM expansion. As long as SK Hynix, Samsung, and Micron increase wafer production, consumables such as precursors, specialty gases, CMP slurries, photoresists, and wet chemicals will also see increased demand.

This is why the storage sector hype usually does not stop at just Micron, Hynix, and Samsung, but rapidly spills over to the "storage upstream."

Expansion first corresponds to orders for front-end wafer fabs. EUV and DUV lithography, deposition, etching, cleaning, ion implantation, CMP, and metrology; each step needs to be rescheduled.

In US stocks and European targets, ASML corresponds to lithography and EUV; AMAT Applied Materials covers deposition, materials engineering, and CMP; LRCX Lam Research corresponds to etching, deposition, and cleaning; KLAC KLA Corporation corresponds to inspection metrology; TER Teradyne, COHU Cohu correspond to testing; MKSI MKS Instruments, ICHR Ichor correspond to vacuum, power, and fluid delivery and other process sub-systems. These targets in last night's US stock market are much stronger than storage.

If mapped to the A-share market, funds usually flow into the domestic semiconductor equipment chain: North HC, SMIC GS, Top Instrument KJ, Sunic System SH, Naura QK, Xinyuan W, JCET DZ, and so on.

The idea is not that they directly supply Samsung or SK Hynix, but that the global memory expansion boosts equipment demand, while the expectations for domestic YMTC, CXMT expansion, and domestic substitution will be revalued together.

Materials and consumables are also the easiest targets for funds to dig into repeatedly in this round.

Equipment orders are one-time, while material consumption is continuous. As long as the production line is running, each wafer will consume photoresist, electronic specialty gases, photoresist, wet chemicals, CMP slurry and pad, targets, silicon wafers, quartz parts, and filter materials. HBM is more complex than regular DRAM, with more process steps and higher material intensity.

The hype around Advanced Micro-Fabrication Equipment Inc. (AMEC) is all about this. The market sees it as an upstream play on SK Hynix's expansion: Hynix's HBM ramp-up will drive demand for memory wafer processing and high-end process materials, giving suppliers of photoresist and other materials room for repricing.

Following the same logic, A-share funds will also target several areas: photoresist and electronic materials will be focused on AMEC and NAURA; electronic specialty gases will look at Huateng Microelectronics and Beijing Sevenstar Electronics; and CMP materials will be linked to ACM Research and Dongjin Semichem.

In the overseas material chain, Entegris corresponds to filtration, chemicals, materials, and CMP-related consumables; Linde and Air Products to electronic specialty gases and industrial gases; Corning can serve as an indirect observation point for the glass and material chain, but it is not a pure-play memory material target.

The resilience of these companies comes from three questions: whether they are in the supply chain of major fabs, whether the value and volume of single-wafer materials can be increased, and whether price increases and production ramp-ups can truly reflect in gross margins.

In addition to these positives, there are also domestic substitution and Chinese storage capacity.

If the conflict between Apple and Micron continues to escalate, end manufacturers will be more actively seeking alternative suppliers. While YMTC and CXMT are not a simple replacement for Samsung, SK Hynix, and Micron, they will become new bargaining chips in the supply chain negotiations.

As long as domestic DRAM, NAND, and HBM capacities are repriced, A-share equipment and material suppliers will attract funding together. The inclusion of YMTC in the DRAM ETF is the best example.

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