Citi Foresees Strong NAND Market Recovery
Citi, a prominent financial services company, has projected a positive outlook for the global memory market in 2025. According to Citi analysts, the average selling prices (ASP) for NAND, a type of non-volatile memory used in devices like smartphones and computers, are expected to rise by 30% year over year. This anticipated growth is significant, especially given prevailing concerns about potential oversupply.
Stable Prices Supported by AI Demand
In a recent research note, Citi highlighted that memory ASPs are expected to remain stable, bolstered by trends in semi-customization and robust demand for AI-related memory. Semi-customization involves tailoring memory products to specific customer needs, which increases their value. With the rise of AI, the demand for memory that can efficiently process large data sets has surged, supporting more stable pricing.
DRAM vs. NAND: Different Growth Rates
While NAND is projected to see a 30% increase in ASP by 2025, DRAM (Dynamic Random-Access Memory) is anticipated to grow at a slower pace, with a 14% year-over-year increase. DRAM is another type of memory frequently used in computing devices for short-term data storage.
Balancing Supply and Demand
Citi forecasts a balanced supply and demand dynamic in the memory market. For the DRAM sector, Citi expects a supply growth of 16.6% compared to a demand growth of 17.0%, indicating a slight undersupply which can support price stability. The introduction of High Bandwidth Memory (HBM) 4 in the latter half of 2025 is anticipated to stabilize the market further.
In contrast, NAND is expected to experience a noticeable supply-demand gap. While NAND supply is projected to grow by 12.2%, demand is predicted to surge by 17.1%, largely due to a 32.1% increase in enterprise SSD demand. This discrepancy suggests a tighter NAND market with a negative supply-demand ratio of -4.2%.
Shifts in Capital Expenditure Priorities
Memory manufacturers are strategizing their investments to optimize returns. Citi notes that DRAM capital expenditures (capex) will increase by 45% year over year in 2025, compared to an 18% uptick in NAND capex. This strategic allocation reflects the anticipated growth trajectories of these memory types.
Investment Opportunities in Memory Makers
Citi has reiterated its "Buy" ratings on leading memory manufacturers such as SK Hynix and Western Digital. These companies are well-positioned to capitalize on the projected favorable market conditions and benefit from strong demand and effective supply management in 2025.
