Storage chip stocks have fallen over 20% in the past few weeks, with the underlying logic facing a reassessment

Odaily Planet Daily News Industry insiders say that historically, whenever the storage chip industry experiences a boom, manufacturers tend to simultaneously expand production capacity, leading to a concentrated release of new capacity, a sharp drop in prices, and losses across the entire industry. Subsequently, manufacturers collectively cut capital expenditure, and only when demand recovers does another boom cycle begin – this cycle constitutes the industry's unique periodicity.

Since US storage chip stocks hit highs in late June, news such as Meta selling computing power has sparked market concerns about a computing power glut, leading to a collective correction in storage chip stocks. Data shows that industry leaders such as SanDisk, Micron Technology, Seagate Technology, and Western Digital have all seen their stock prices fall by more than 20% over the past few weeks.

Analysts point out that the core industry logic currently underpinning demand for storage chips is facing a reassessment, with the key variable being whether the technological gap between various AI large language models will continue to narrow.

Analysts also noted that the storage chip industry is undergoing a profound shift in its business model: In the past, storage was more like a commodity, with prices fluctuating with the market, and contracts often spanning quarters or years. Now, cloud vendors and AI data centers, in order to secure critical supplies, are increasingly signing long-term supply agreements with manufacturers. These agreements typically span three to five years and include price ranges, minimum purchase quantities, and customer deposits. (CCTV Finance)