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Micron, Sandisk Reset Memory Market
17 Oct
Summary
- Memory market shifts from cyclical to stable pricing.
- DRAM and NAND chips serve different storage needs.
- New contracts lock pricing, reducing volatility for investors.
The memory chip industry, long characterized by its cyclical nature, is experiencing a significant reset driven by companies like Micron and Sandisk. Historically, this cyclicality made investors hesitant to value memory stocks highly, but a current demand wave is prompting a potential paradigm shift.
DRAM and NAND flash memory chips serve different functions. NAND is used for long-term storage in devices like SSDs, while DRAM, particularly High Bandwidth Memory (HBM), is crucial for rapid data processing in AI applications. Micron produces both, while Sandisk focuses on NAND.
Recent strategic agreements by Micron with partners like Nvidia, and similar "New Business Model" contracts from Sandisk, are establishing structured pricing and committed sales volumes. These deals, some extending through 2030 and 2031, aim to mitigate the volatile pricing traditionally seen in the memory space.
This move towards more predictable revenue streams and stable pricing could lead the market to re-evaluate these stocks, potentially valuing them more akin to other tech sector companies rather than purely cyclical commodity businesses. Both Micron and Sandisk appear to be trading at attractive valuations based on current earnings projections.
