BlockBeats News, July 22nd - An independent research firm, TS Lombard, reported that the valuation of South Korean memory chip stocks has approached a reasonable level. However, the market's expectation for the future profitability of storage companies may still be overly optimistic. The traditional DRAM contract price quarterly increase has decreased from 93% to 98% in the first quarter to 58% to 63% in the second quarter. TrendForce expects a further slowdown to 13% to 18% in the third quarter. The spot market has stabilized, and both DRAM and HBM prices have started to decline.

The report indicates that long-term supply agreements can provide a bottom support for sales volume and prices but may also limit suppliers from further price hikes. The related protections will gradually weaken in the next year, making it difficult to support another significant increase in profit expectations.

Regarding HBM, the annual contract price increases in 2026 lag behind traditional DRAM. In the first quarter, HBM profits were even lower than 64GB DDR5 RDIMM. Although the larger chip size and wafer resources in 2027 theoretically favor supplier bargaining power, the number of supply participants is increasing. ChangXin has started sampling, and global traceable DRAM capacity is expected to reach approximately 2.1 million wafers per month by the end of 2026. TSMC has also entered the HBM4 base chip and packaging process.

The current market consensus expects storage companies to grow their 2027 EPS by 36% to 40%, while TrendForce expects only a 15% to 20% increase in unit supply. TS Lombard believes that the current stock prices of Samsung Electronics and SK Hynix already roughly reflect a scenario where 2027 earnings are 40% to 50% lower than the market consensus. The valuation is approaching a reasonable level, but the storage cycle risk has not completely disappeared.