Morgan Stanley: Lack of Long-Term Agreements May Benefit Traditional Memory Prices

According to Chaoxiang Research, a Morgan Stanley report dated August 14 highlighted that the fundamentals of three traditional memory products—DDR4, SLC NAND, and NOR Flash—are continuously improving, with widening supply-demand gaps and strengthened pricing power. Major manufacturers are exiting the DDR4 market faster than expected. Morgan Stanley forecasts DDR4 prices to rise by 50% in 3Q26 and by over 10% in 4Q26; SLC NAND prices are expected to increase by more than 50% in both 3Q26 and 4Q26, with supply constraints potentially lasting until 2027; NOR Flash is also set for another price hike in 4Q26, with momentum likely to extend into 1H27. The report concludes that the market is overly pessimistic about the sustainability of the traditional memory cycle. Morgan Stanley has raised earnings estimates for Macronix, Winbond, GigaDevice, and Powerchip. AP Memory, due to its SiCap business, is rated as the top pick, with the preference ranking as follows: AP Memory > GigaDevice > Macronix > Winbond > Powerchip > Nan Ya PCB. EPS estimates for Macronix are raised by 139%, 144%, and 147% for 2026, 2027, and 2028 respectively; GigaDevice’s EPS estimates are raised by 108%, 49%, and 48% for the same periods. Morgan Stanley believes that the absence of LTAs (long-term agreements) removes price ceilings, allowing traditional memory manufacturers to benefit from greater profit elasticity when supply-demand imbalances widen and pricing power shifts to suppliers.