J.P. Morgan: Storage Price Increase May Exceed Expectations, AI Cloud Providers Hoarding Inventory Intensifies Supply Shortage

June 22 – JF Securities anticipates global semiconductor chip prices will surge far beyond market expectations, driven by cloud computing giants locking in production capacity in advance, booming AI server demand, and major chipmakers’ reluctance to significantly ramp up output. In a June 21 global tech industry report, JF Securities (drawing on semiconductor sector expert insights) forecasts storage prices will rise 40–50% quarter-over-quarter in Q3 2026, followed by another 30–40% jump in Q4. This forecast is far higher than the 15–20% growth previously projected by European and U.S. investors, and exceeds recent feedback from Asian supply chains. The report notes that excluding Chinese manufacturers, global storage bit supply will only increase 7–8% in 2026—driven by process upgrades rather than new wafer capacity. Combined DRAM and NAND supply could face a gap of 150,000 to 200,000 wafers per month; with no clear wafer capacity expansion expected in 2027, this shortfall is likely to persist. AI demand is the core driver of this storage cycle. Cloud service providers have signed two-year long-term supply deals with chipmakers, paying roughly 40% upfront. These contracts currently account for ~50% of industry capacity and are projected to hit 70% soon. By contrast, consumer electronics manufacturers are failing to secure similar agreements and will face heightened cost and supply pressures between 2026 and 2027. High Bandwidth Memory (HBM) remains tight: experts estimate current industry HBM capacity is ~330,000 wafers monthly, rising to 480,000 by 2027. While new capacity will cap HBM price hikes over the next 12 months, prices are still expected to climb around 70%. The report also downplays short-term risks from Chinese chipmakers. Yangtze Memory Technologies Co. (YMTC) lags leading global firms by 1.5 to 2 generations in DRAM technology, and without EUV capabilities, it cannot quickly advance to DDR6 or HBM3E. Chinese manufacturers’ expansion in 2026–2027 will mostly affect the low-end market, though their NAND tech could become globally competitive by 2028. JF Securities warns 2028 could be a cyclical risk point: if global wafer capacity grows 15–20% and AI demand cools, storage prices may plummet. But through 2026 and 2027, the storage industry is set to retain strong pricing power—fueled by cloud providers’ locked inventory and squeezed supply for consumer electronics.