21 Live｜On-site Investigation of Huaqiangbei: Memory Prices Drop by 100 Yuan, Merchants Say "Still Optimistic This Year"

Ask AI · When will the shortage of storage chips truly ease?

21st Century Business Herald Reporter Wu Jianan, Shenzhen Report

Recently, topics such as “massive drop in memory prices” and “a wave of sell-offs in the spot market” have continued to stir market nerves.

The market attributes this price fluctuation to Google’s release of a new AI memory compression algorithm, worrying that it may weaken long-term storage demand and thus impact the recent decline in related storage concept stocks.

Are memory module prices really experiencing a significant drop? On April 1, after visiting Shenzhen Huaqiangbei, the largest electronics product distribution center in China, the 21st Century Business Herald reporter found that the spot market prices for memory modules have indeed declined compared to the peak levels last week, with a decrease of 100 to 500 yuan.

However, many merchants reported that the recent price drops are merely a slight adjustment driven by market sentiment compared to previous sharp increases, and current spot prices are far from returning to normal levels. Some merchants even openly stated that their stores do not have memory modules in stock, “Prices are still rising this year. If you have a need for installation, you can buy now after the slight price correction.”

Will the short-term fluctuations in the spot market truly disturb the upward trend of storage chip prices?

Recently, multiple analysis agencies including TrendForce and others have stated that this storage cycle shortage is mainly driven by strong demand from AI and servers. The spot price correction is a short-term fluctuation, and the overall trend of memory shortages lasting until 2027 will not change. The industry-wide shortage is expected to gradually ease only after new capacity from manufacturers comes online in 2028, with tight supply continuing through 2027.

Slight correction, still in shortage

There are two main ways to purchase storage chips: one is contract pricing, where major electronic manufacturing companies leverage bulk purchasing advantages to directly sign purchase orders with memory chip manufacturers or buy through authorized agents; the other is spot pricing, where chips are bought on the spot market at prevailing prices.

Since Q2 last year, the storage chip industry has experienced a surge, with both contract and spot prices rising to record highs, driving up the entire storage market.

The recent surge began with DDR4 memory, as storage manufacturers prioritized advanced capacity for high-margin AI storage products, squeezing DDR4 capacity and causing severe supply shortages.

Recently, news about Google launching a new AI memory compression technology called “TurboQuant” has intensified market fears about long-term storage demand. This led to a sharp decline in memory spot prices.

This news directly impacted the capital markets, with stocks of overseas storage giants like Micron, SanDisk, and Western Digital falling more than 15% from March 26 to 30. The A-share market was also affected, with stocks like Jiangbolong, Buwei Storage, and GigaDevice experiencing significant declines on March 31.

Market concerns are that if AI models become less dependent on memory due to technological breakthroughs, the growth narrative of the storage industry during the super cycle might be rewritten. So, did the “flash crash” and sell-offs really happen?

On-site visits to Huaqiangbei in Shenzhen revealed that while spot prices for memory modules have indeed fallen noticeably compared to previous levels, it was not a catastrophic collapse.

A merchant said that the recent price decline is due to some large stockpiling distributors rushing to liquidate inventory for cash flow reasons. “There are some speculators under cash flow pressure in the market who are cashing out, but these goods are not hard to sell.”

“Compared to last week, prices have dropped a bit. A 16GB DDR4 memory module now costs 680 yuan, down from 1200 yuan last week. Another 16GB DDR5 module is priced at 1100 yuan, down from around 1500 yuan last week, nearly 30% reduction,” another merchant said.

According to on-site inquiries, a DDR4 8GB 3200MHz module is quoted at 345 yuan today, down more than 100 yuan from last week, and a Kingbank DDR5 16GB 6400MHz module is priced at 1460 yuan, compared to about 1700 yuan last week.

(Photos of spot memory modules at Huaqiangbei stores, photo by Wu Jianan)

During inquiries, many merchants also openly stated that they no longer have memory modules in stock. They believe that the price drops are minor and just a slight market sentiment correction, and they forecast that prices will remain bullish this year. “Memory modules haven’t returned to normal prices yet. If you need to build a system, now is a good time to buy after the correction.”

Regarding the impact of Google’s new algorithm technology, industry opinions are becoming more rational. Industry insiders point out that the approach proposed in the paper is currently only an academic design, and many issues remain before practical implementation.

Morgan Stanley analysts clearly stated in their latest report that there is a misunderstanding in the market: this technology only affects key-value caches during inference and does not impact the high-bandwidth memory (HBM) used for model weights, nor is it related to AI training tasks. The so-called 6x compression does not reduce total storage demand but increases throughput per GPU through efficiency improvements.

Limited volatility, still in tight supply

Does the short-term correction in the spot market mean that the shortage and price increase driven by AI data centers have reached a turning point?

Several industry insiders say that the current storage chip market remains tight, and at least for the next 24 months, shortages will persist.

“A turning point in storage chip prices is unlikely this year,” said an executive from a leading storage module company. “Samsung and SK Hynix’s new factories have started mass production, and Micron’s second plant will gradually come online in the second half of 2028. These capacities won’t be fully released until 2028, so shortages are likely to continue this year and next.”

The executive also noted that the contract market for storage chips is experiencing a shrinking transaction cycle, with no new supply from the source, and the large gap in the contract market continues to drive prices upward, keeping the industry in a price-increasing trend.

TrendForce analyst Xu Jiayuan told reporters earlier that the current DRAM price increase is expected to continue until 2027, mainly because cloud service providers’ data center infrastructure demand has high visibility, while capacity expansion from memory manufacturers will only significantly ramp up in 2028.

CFM Flash Market General Manager Tai Wei recently stated at MemoryS 2026 that storage manufacturers generally adopt a strategy of stabilizing prices and maintaining profits, prioritizing advanced capacity for high-margin AI storage products. Mature process and consumer-grade capacity are being continuously squeezed, and industry inventory levels have fallen below historical safety lines. Due to the long 18-24 month expansion cycle for storage capacity, short-term supply shortages are unlikely to ease, and structural mismatches have become the norm.

“The industry’s focus has shifted from who is cheaper to who can get the goods. Prices are expected to stabilize after Q3 2026, but there will be differentiation among products,” Tai Wei said. “Despite the prosperity, we must stay alert. It is recommended that supply side rationally expand capacity, and demand side plan ahead with diversified sourcing, shifting from passive storage purchases to proactive storage optimization.”

On March 31, TrendForce revised upward the contract prices for storage in Q2 this year, estimating that overall general DRAM contract prices will increase by 58-63% quarter-over-quarter. The chain price increase across all NAND Flash product lines remains strong, with an expected quarterly increase of 70-75% in overall contract prices in Q2.

On April 1, storage concept stocks rebounded. By the close, the memory index (8841241.WI) rose 2.36%, GigaDevice (603986.SH) up 7.10%, East Chip (688110.SH) up 3.50%, Langke Technology (300042.SZ) up 3.48%, Buwei Storage (688525.SH) up 1.70%.

The prosperity of the storage industry is reflected in corporate profitability. Recently, major domestic storage listed companies released their 2025 performance reports, showing significant improvement in industry profits, with some companies experiencing explosive growth or turning losses into profits.

Among those that have disclosed annual reports, Buwei Storage and Microchip Semiconductor (688380.SH) performed notably, with net profits attributable to parent company in 2025 increasing by 429.07% and 107.68%, respectively.

Currently, domestic storage companies are also adjusting prices timely. Buwei Storage stated that storage price increases are positive for the industry, and the company benefits from the rising prices, with product prices following market trends.

Recently, some companies announced price hikes. Microchip Semiconductor announced price adjustments for MCU, NOR Flash, and other products, with increases of 15%-50%. If costs change significantly again, prices will be adjusted accordingly. Puran Co., Ltd. (688766.SH) disclosed on social media that the demand for storage has surged due to AI functions, and NOR Flash chip prices have increased within a reasonable range due to changes in industry supply and demand.