The New Cycle Of Memory Price Increases, How Do Distributors Deal With The Challenges Amid The Benefits?

1. This round of storage price increases: a new long cycle driven by AI, completely different from the past

1. Main line of price increase

   After SanDisk took the lead in raising prices,DDR4/DDR5/NAND/SSD/HDD surge across the boardDuring the National Day, inquiry and stocking continued to be hot, module manufacturers suspended quotations, and a new round of price increases after the holiday is imminent.
2. Core logic (AI siphon effect)
   • supply side: Samsung, SK Hynix, and Micron willDDR4 production capacity shifts to DDR5/HBM, the supply of old processes has dropped sharply;
   • demand side: AI server storage capacity is upgraded from 64TB to 96~120TB, and memory bandwidth demand explodes;
   • structural mismatch: HDD shortage drives data centers to switch to SSD,QLC NAND demand surges, further pushing up the overall market.
3. Market outlook forecast
   • Q4 DRAM contract price month-on-month+10%~20%
   • NAND contract price comparison+5%~10%
   • Institutions generally believe that this round of AI-driven business cyclemay last for years。

2. Distributors: The benefits are significant, but the challenges are equally severe

good

• Inventories have appreciated significantly, and profit elasticity has exploded (typically, Shannon Core's short-term stock price has surged by more than 140%);
• The bargaining power of channels has improved, and transaction volume and revenue scale have expanded.

core challenge

1. Inventory and cash flow pressure increased sharply
   Replenishment costs have soared and capital is occupied; high-level stockpiling faces the risk of future price declines and impairments; demand forecasting has become increasingly difficult.
2. Price transmission and terminal pressure
   High prices may suppress terminal demand, leading to a situation where there is a price but no market; gross profit margins are compressed due to transmission lag.
3. Supply chain tensions
   It is difficult to get goods from the original factory and the delivery time is unstable; customers have lower tolerance for price and delivery time, and have higher service requirements.
4. Competition and strategic risks
   The rush for goods in the industry has intensified, and short-term profit pursuit interferes with long-term planning.

3. How distributors break the situation: balance short-term profits and long-term security

1. Communicate transparently and manage customer expectations

• Actively synchronize market conditions, cost pressures, and supply conditions to reduce friction and build long-term trust.

2. Flexible pricing to lock in core customers

• Promote to big customersLong-Term Agreement (LTA) + Floating Pricing Mechanism；
• For materials in short supply, the cost + reasonable premium model is adopted, taking into account both revenue and relationships.

3. Value-added services to enhance irreplaceability

• provideAlternative material selection, BOM optimization, supply chain collaborationand other comprehensive services;
• Shift from simply selling materials to providing solutions + guaranteed supply service providers.

4. Refined inventory and cash flow management

• Data-driven control of inventory levels and age to avoid aggressive stocking at high levels;
• Strictly control the occupation of funds to ensure the safety of cash flow and prevent cycle reversal risks.

5. Digital tools improve efficiency and control risks

• Implemented using DMS and supply chain platformReal-time inventory, demand forecast, price management, anti-crossing goods；
• Use platforms such as IC Trading Network to efficiently connect supply and demand and expand high-quality customers and supply sources.

4. Summary