A once-in-a-century memory shortage: Apple raises prices, Korea expands production, where is the capital flowing?

Original Author: Jia Liu, Beatz by ZS

This round of memory shortage has finally trickled down to consumers.

On June 17, Cook was still complaining about cost pressures to the Wall Street Journal. He said that when consumers need devices, supply has decreased, and memory manufacturers are passing huge price hike pressures downstream. Memory pricing and supply must return to levels that consumer products can bear.

Less than a week later, on June 25, Cook spoke to the Wall Street Journal again, describing this cost impact as a "once-in-a-century flood." He said that in over 40 years of his career, he had never seen anything like it in any field. Musk, who had just become the first person in human history to surpass a trillion-dollar net worth, chimed in on social media, calling it one of the most violent price jumps he'd ever seen.

Then he announced Apple's price increase.

In hindsight, these two interviews seem more like public groundwork laid by Apple for its price adjustment.

Apple's explanation is straightforward: it's not that they want to raise prices, but the rapid expansion of AI data centers has pushed up demand for memory and storage chips. Previously, the company had tried to avoid passing costs onto consumers, but it can no longer bear the burden.

The timing is quite subtle. The day before Apple announced the price hike, Micron had just released a staggering financial report: gross margin of 84.9%, revenue up fourfold year-over-year, and stock surging after hours. The next day, Apple's stock price tumbled, with market value evaporating over a hundred billion dollars. Upstream memory manufacturers capture cyclical windfall profits, while downstream consumer electronics makers start pushing the bill to consumers.

This is the true transmission chain of the current AI infrastructure expansion: cloud giants grab GPUs and HBM, data centers seize power and servers, memory manufacturers lock in long-term contracts and raise prices, ultimately being paid for by Mac, iPad, Xbox, and potentially future iPhone price hikes.

And Apple isn't alone. Microsoft also announced a price increase for Xbox consoles starting August 1, with the 512GB model rising by $100 and the 1TB model by $150, citing that game console storage and memory prices have already risen over 2.5 times and could double again by fall 2027.

But Micron isn't readily accepting Apple's reasoning.

Micron's Chief Commercial Officer Sumit Sadana didn't name Apple directly, but he told the Wall Street Journal that some customers in the past have been very aggressive on pricing, leading the entire industry to shut down a lot of investment plans in 2023 due to low prices and low margins. Tom's Guide directly interpreted this as Micron hinting at price suppression by major customers like Apple.

So began the war of words between Apple and Micron: Apple says 'It's not that I want to raise prices, memory is just too expensive'; Micron counters 'You previously squeezed prices so low that no one wanted to expand production. Don't blame suppliers entirely for the current shortage.'

As users, consumption growth is inevitable, so we need to make up for it elsewhere: what will the market hype next following this shift in storage?

Micron Locks in Profits, Korean Duo Forced to Up the Ante

To understand the severity of this shortage, first look at the just-released financial report of Micron, a competitor to SK Hynix and Samsung.

In Q3 of fiscal year 2026, Micron's revenue was $41.456 billion, compared to only $9.301 billion in the same period last year; non-GAAP EPS was $25.11; gross margin was 84.9%. The Q4 guidance is even more staggering, with midpoint revenue of $50 billion, gross margin around 86%, and midpoint EPS of $31.

This is no longer the typical gross margin structure of a cyclical commodity company.

More noteworthy than the financials are the long-term contracts in Micron's hands. The company has signed 16 Strategic Customer Agreements, typically covering 2026 through 2030.

Among these, 14 agreements, calculated at minimum prices, represent cumulative revenue of approximately $100 billion, and Micron expects to receive around $22 billion in customer deposits or financial commitments. These agreements are filled with take-or-pay clauses, minimum purchase quantities, and price floors, with some even setting price ceilings. Micron emphasizes that even with price range agreements, the floor pricing can yield gross margins higher than any peak in previous cycles.

The dispute between Apple and Micron aside, the strongest signal from this war of words was actually directed at the two Korean giants.

If they don't expand production, the most profitable orders in the coming years will be locked up by competitors; but if they do scale up massively, they'll have to pay for the next cyclical downturn. Consequently, both Samsung and SK Hynix have entered an investment race.

At yesterday's press conference, South Korean President Lee Jae-myung announced plans to invest 800 trillion won to build four chip factories, with Samsung and SK Hynix each constructing two new facilities. South Korea is betting its next national industrial position on the entry point of AI hardware.

Semiconductors are fundamentally a national destiny-defining industry for South Korea. Exports, *chaebol* profits, exchange rates, employment, and stock market valuations are all tied to Samsung and SK Hynix. In the previous electronics cycle, Korea benefited from the global digital dividend through memory and smartphones. In this AI cycle, Korea isn't competing for application entry points but for HBM, advanced packaging, and memory supply – components unavoidable in every AI server from Nvidia, AMD, Google, and Microsoft.

Ordinary investors can understand HBM as a high-speed memory stack placed next to AI chips. AI training and inference require not just GPUs but also memory to continuously feed data in. Whoever passes certification earlier and delivers faster secures the most scarce orders in this AI infrastructure buildout.

This is also why Samsung and SK Hynix find themselves at the poker table.

The most critical variable here is the time lag. Expanding production isn't just investing money today and shipping tomorrow. SK Group Chairman Chey Tae-won has already stated that the memory shortage could persist until 2030, because adding wafer fabrication capacity takes at least four to five years. HBM is even more difficult than ordinary DRAM; it involves not just front-end wafer processing but also TSV, thinning, stacking, bonding, advanced packaging, and testing.

That means the money Korea is investing today addresses supply for 2027, 2028, and 2029, but may not immediately ease the current price pressures on Apple, PC makers, and server manufacturers.

After Expansion, Which Sectors Will Capital Speculate On?

With expansion confirmed, we need to look at the beneficiaries of this expansion narrative. Orders for building these memory factories will first go to equipment, materials, packaging, facility management, and power systems. They will receive the money first.

Yesterday, Yoke KJ hit the daily limit, the market has already signaled.

Yoke KJ is an upstream material supplier to major memory manufacturers like SK Hynix. The market isn't speculating that it will make HBM itself, but that it is entrenched in the materials segment that is a gating factor for HBM and DRAM expansion. As long as SK Hynix, Samsung, and Micron increase wafer starts, consumables like precursors, specialty gases, CMP slurries, photoresists, and wet electronic chemicals will also ramp up in volume.

This is why a memory cycle usually doesn't stop only with Micron, Hynix, and Samsung themselves, but quickly spills over to the "memory upstream."

Expansion first corresponds to orders for front-end wafer fabs. EUV and DUV lithography, deposition, etching, cleaning, ion implantation, CMP, metrology and inspection – every step needs to be rescheduled.

Among US and European listed companies: ASML corresponds to lithography and EUV; AMAT (Applied Materials) covers deposition, materials engineering, and CMP; LRCX (Lam Research) corresponds to etching, deposition, and cleaning; KLAC (KLA) corresponds to inspection and metrology; TER (Teradyne) and COHU (Cohu) correspond to testing; MKSI (MKS Instruments) and ICHR (Ichor Systems) correspond to subsystems for vacuum, power, and gas/liquid delivery. These targets performed much stronger than memory in last night's US stock market.

If mapping this to A-shares, capital typically looks for the domestic semiconductor equipment chain: North Huachuang, AMEC, Tokyo Electron (likely referring to a Chinese counterpart like 拓荆科技 - Piotech), Shengmei Shanghai, Huahai Qingke, Xinyuan (likely 芯源微 - Kingstone/SEMI), Jingce Electronics, etc.

The logic isn't that they all directly supply Samsung or Hynix, but that global memory expansion boosts equipment sector sentiment, while expectations for domestic expansion by ChangXin Memory Technologies (CXMT) and YMTC, along with import substitution, get revalued together.

Materials and consumables are also areas most prone to repeated capital speculation in this cycle.

Equipment orders are one-time, but material consumption is ongoing. As long as production lines are running, every wafer consumes precursors, electronic specialty gases, photoresists, wet electronic chemicals, CMP slurries and pads, targets, silicon wafers, quartz components, and filtration materials. HBM is more complex than ordinary DRAM, involving more process steps and higher material consumption intensity.

The core reason Yoke KJ was hyped is right here. The market interprets it as an upstream reflection of SK Hynix's expansion: Hynix's HBM ramp-up drives demand for memory wafer starts and advanced process materials, giving material suppliers like precursor providers room for repricing.

Under the same logic, A-share capital will also seek targets along several lines: for precursors and electronic materials, look at Yoke KJ, Nanda GD; for specialty gases, look at Huate QT, Jinhong QT; for CMP materials, look at Anji KJ, Dinglong GF, etc.

In the overseas materials chain: ENTG (Entegris) corresponds to filtration, chemicals, materials handling, and CMP-related consumables; LIN (Linde), APD (Air Products) correspond to electronic specialty gases and industrial gases; GLW (Corning) can be an indirect observation point for glass and materials chains but is not a pure memory materials target.

The elasticity of such companies comes from three questions: Have they entered the supply chain of major manufacturers? Can the material value per wafer increase? Can price increases and volume growth truly reflect in gross margins?

Additionally, beneficiaries also include import substitution and Chinese storage capacity.

If the conflict between Apple and Micron continues to ferment, terminal manufacturers will more actively seek alternative supply. Although CXMT and YMTC are not simple drop-in replacements for Samsung, Hynix, and Micron, they will become new bargaining chips in supply chain negotiations.

As long as domestic DRAM, NAND, and HBM capacity gets repriced, A-share equipment and material suppliers will be sought out by capital. GigaDevice being added to the DRAM ETF is the best illustration.