Summary of Key Points
On June 25th, the A-share storage chip sector experienced a collective surge, with 16 individual stocks reaching record highs. This was driven by Micron Technology's earnings report, which exceeded expectations (net profit increased by 12 times, gross margin at 85%), confirming the high demand in the industry driven by AI. The sector's market value soared by 2.1 trillion yuan within the year (equivalent to the market value of 1.4 Guizhou Moutai companies), and 13 stocks reached prices above 100 yuan each (with 3 exceeding 700 yuan). The wealth of the controlling shareholders of the six leading companies increased by a total of 256.4 billion yuan in 22 months. More importantly, the industry's trajectory has shifted from "cyclical fluctuations" to "long-term growth"—AI demand is persistent, long-term supply agreements have locked in production capacity, and supply shortages are expected to continue until 2028. Institutions believe that this market trend will be strong and sustained.
I. Micron's Earnings Report: The "Trigger" for the A-share Storage Sector
Micron Technology (one of the top three global storage manufacturers) released its earnings report on the 24th, which significantly boosted investor sentiment in the A-share market:
- Outstanding Performance: Quarterly revenue reached $41.5 billion (16% above expectations), net profit was $28.24 billion (a 12-fold increase year-over-year), and the gross margin was 84.9% (the highest in history). The main reason for this is the surge in demand for products such as HBM (high-bandwidth memory, essential for AI servers), which led to both increased volume and higher prices.
- Future Signals: Micron indicated that supply shortages will persist until after 2027, with improvements not expected until 2028. The company also plans to invest $10 billion in capital expenditures for the fourth fiscal quarter (a total of $27 billion for the year). This message reassured investors: "Demand will not decline, and price increases are likely to continue."
A-share investors saw that if the global leader was making such profits, domestic companies could surely benefit as well, leading to a massive influx of capital into the storage sector.
II. The Storage Sector Goes Wild: Market Value Soars by 2.1 Trillion Yuan
The scale of this market rally was beyond expectations:
- Market Value Explosion: The total market value of 36 storage stocks increased from 1.23 trillion yuan at the beginning of the year to 3.33 trillion yuan, a rise of 2.1 trillion yuan—equivalent to the market value of 1.4 Guizhou Moutai companies (currently valued at 1.51 trillion yuan).
- Emergence of High-Price Stocks: Now, 13 stocks have prices above 100 yuan each, with Demingli (891 yuan), GigaDevice Technology (775 yuan), and Puran Semiconductor (754 yuan) all exceeding 700 yuan, and Jiangbolong (677 yuan) close to that level. In September last year, before the "9·24 rally," there was not a single stock in the sector with a price above 100 yuan; at that time, GigaDevice Technology's highest price was only 68 yuan.
- Stunning Stock Price Increases: Demingli's market value increased from 9.8 billion yuan to 20.21 billion yuan (a 20-fold increase), Puran Semiconductor from 6.3 billion yuan to 112.1 billion yuan (a 17-fold increase), and Dongxin Semiconductor from 6.5 billion yuan to 79.4 billion yuan (a 11-fold increase). There are now ten companies with a market value of over 100 billion yuan.
III. The Bosses Are Making Big Profits: Wealth of the Six Leading Companies Increases by Over 250 Billion Yuan
The sharp rise in stock prices significantly increased the wealth of the company owners:
- Cai Huabo (Jiangbolong): Holding 38.67% of the shares, his current market value is 109.8 billion yuan, an increase of 99.3 billion yuan from September last year (equivalent to a daily profit of 180 million yuan).
- Li Hu (Demingli): Holding 35.01% of the shares, his market value is 70.7 billion yuan, an increase of 67 billion yuan (Demingli's stock price rose from 47 yuan to 891 yuan, a 18-fold increase).
- Sun Chengsi (Bawei Storage): Increased wealth by 36.5 billion yuan; Zhu Yiming (GigaDevice Technology) increased by 24.8 billion yuan (while also selling 6.33 million shares for 2.57 billion yuan in cash); Wang Nan (Puran Semiconductor) increased by 20.1 billion yuan; Liu Qiang (Beijing Junzheng) increased by 78 billion yuan.
In total, these six individuals have gained 256.48 billion yuan—think about how many luxury homes that amount of money could buy!
IV. Can the Market Trend Continue? The Industry Logic Has Changed: From "Cyclical" to "Growth"
The storage chip industry used to be highly cyclical, with price drops when supply exceeded demand and price increases when demand fell short, leading to significant fluctuations. However, the situation has changed:
- Persistent AI Demand: The demand for high-end storage such as HBM from AI servers is explosive and expected to last for many years.
- Long-Term Supply Agreements: Storage manufacturers have signed 3-5-year supply agreements with customers, locking in 30%-50% of production capacity, which reduces the impact of price fluctuations and stabilizes profits.
- Supply Shortages Persist: Both Micron and Samsung predict that supply shortages will not improve until 2028. Manufacturers are cautious about expanding production (for example, Hynix plans to double its capacity by 2030) and prioritize the production of high-margin AI storage, while reducing capacity for general-purpose storage.
Institutions believe that the storage sector is transitioning from short-term speculation based on cycles to long-term growth, which should result in higher valuations and a sustained market trend.
Conclusion
This surge in the storage sector is not accidental. The core driving force is AI demand, with Micron's earnings report serving as a catalyst, and the change in industry logic providing support. For individual investors, it's important to note that although the industry is performing well, stock prices have already risen significantly, so caution is advised when chasing higher prices—after all, even the best sectors can experience valuation bubbles. However, in the long term, storage chips, as a critical component for AI, hold great potential for growth.