Demingli Investment Value Analysis Under Memory Chip Cycle Reversal: Industry Boom is High, but Valuation Risk is Significant

The memory chip industry is in a clear super upward cycle, verified by multiple key indicators:

• The price of 16Gb DDR5 chips soared from approximately $6.84 to $27.20,
  a nearly 300% increase in 3 months
  [1]
• Q4 2025 DRAM prices rose 18-23%, far exceeding the previous expectation of 8-13% [2]
• Samsung raised DDR5 contract prices
  by 100%
  , approaching $20 per unit [3]
• TrendForce predicts Q1 2026 prices will “rise sharply again” [4]

• NAND Flash prices entered an upward channel, with spot prices adjusted “daily” [5]
• Some manufacturers received notices of
  50-100% cost increases
  within 7 days [6]

• Global semiconductor sales reached $72.7 billion in October 2025, up 27.2% year-over-year [7]
• WSTS predicts the global semiconductor market will grow 22.5% to $772.2 billion in 2025 and approximately 26% in 2026 [8]
• Memory and logic chips are the main growth drivers [8]

• Micron’s December 2025 financial report shows quarterly revenue of $13.64 billion, up 56.6% year-over-year [9]
• The data center IT component market grew 40% year-over-year in Q3 2025 [10]
• Micron CEO clearly stated: “AI data center construction plans have driven a sharp increase in demand for memory and storage” [11]

• Micron CEO Sanjay Mehrotra clearly stated: “Tight industry conditions are expected to
  continue beyond 2026
  ” [11][12]
• DRAM supply is expected to grow by approximately 16% in 2026, and NAND by approximately 17%,
  below historical normal levels
  [13]
• Manufacturers are reallocating production capacity to HBM and AI products, limiting traditional DRAM/NAND supply [13]

• Current stock price: $239.00, year-to-date increase of
  296.55%
  , 1-year increase of +263.44% [0]
• Market capitalization: $54.23 billion, 52-week range: $78.79 - $306.00 [0]
• P/B ratio as high as 21.84x
  , far above the industry average [0]
• Negative profitability
  : ROE of -4.05%, net profit margin of -1.25%, EPS of -0.48 [0]

Demingli’s main businesses include [14][15]:

1. Mobile Storage (2024-2026 expected growth: 50%/25%/20%)
2. Solid-State Drives (2024-2026 expected growth: 270%/25%/20%)
3. Enterprise Storage (2025-2026 expected growth: 1000%/80%)
4. Embedded Storage

• Self-developed controller chips SD6.0 and SATA SSD controller chips have been mass-produced [15]
• Enterprise storage has entered the supply chain of multiple cloud service providers
• However, PCIe SSD, UFS, and eMMC controllers are still under development [15]

---

• AI-driven storage demand is a
  structural change
  rather than a short-term fluctuation
• Supply tightness will last at least until 2026-2027, supporting prices
• Capacity reallocation to HBM and high-capacity DDR5 exacerbates shortages of traditional products
• WSTS predicts 26% semiconductor market growth in 2026, continuing the industry boom [8]

• Excessively fast price increases (nearly 300% in 3 months) may suppress downstream demand [4]
• TrendForce has revised down 2026 mobile phone/PC shipment forecasts [4]
• Uneven recovery of the consumer electronics market
• AI capital expenditure may slow down in 2026

• Direct beneficiary of industry boom
• Breakthrough in self-developed controller chips, enhancing competitiveness
• Expectation of “rapid volume growth” in enterprise SSD business (brokerage forecast) [14]

• Stock price has over-reflected future expectations
  : YTD increase of 296.55% [0]
• Fundamentals have not improved
  : Profitability remains negative [0]
• Cost pass-through is questionable
  : DRAM/NAND price increases may squeeze module manufacturers’ gross margins
• Extremely low valuation safety margin
  : P/B ratio of 21.84x, significant downside risk

This difference reveals a core issue:

.

The memory chip industry has a high boom sustainability rating (★★★★☆), mainly supported by AI structural demand and supply tightness. However, Demingli’s investment value rating is low (★★☆☆☆) due to:

1. Valuation has fully or even over-reflected optimistic expectations
2. Profitability has not improved yet, with great uncertainty in future performance
3. As a mid-stream module manufacturer, gross margin pressure risk is higher than upstream chip manufacturers
4. Competitive landscape has not fundamentally changed

---

• ⚠️
  Overvaluation Risk
  : 5-year increase of 1493% [0], huge profit-taking pressure
• ⚠️
  Chasing High Risk
  : Current stock price of $239.00 is close to the 52-week high of $306.00 [0]
• ⚠️
  Cost Pressure
  : DRAM/NAND price increases may squeeze module manufacturers’ gross margins
• ⚠️
  Stock Price Volatility
  : Year-to-date increase of nearly 300% [0], significant correction risk

• ⚠️
  Demand Below Expectations
  : AI capital expenditure may slow down in 2026
• ⚠️
  Increased Competition
  : Overseas giants increase investment in controller chips
• ⚠️
  Uneven Consumer Electronics Recovery
  : May affect downstream demand

• ⚠️
  Cyclical Characteristics
  : The memory industry is highly volatile, and the current cycle may peak in 2027-2028 [2]
• ⚠️
  Technological Substitution Risk
  : New storage technologies may disrupt the existing pattern
• ⚠️
  Geopolitical Risk
  : Sino-US tech frictions continue

• ✅ AI-driven structural growth in storage demand
• ✅ Supply tightness lasts at least until 2026-2027
• ✅ WSTS predicts 26% semiconductor market growth in 2026 [8]
• ✅ Increased penetration of new products such as DDR5 and HBM

• ✅ Breakthrough in self-developed controller chip technology
• ✅ Expectation of enterprise SSD business expansion
• ✅ Revenue growth driven by industry boom
• ⏳
  Await Q4 financial report and 2026 Q1 performance to verify profitability improvement

• December 2025-January 2026
  : Key observation period, caution against short-term profit-taking
• 2026 Q1 Financial Report
  : Key node to verify whether profitability has improved
• 2026 Full Year
  : Industry boom continues, but need to pay attention to AI capital expenditure sustainability
• 2027-2028
  : Cycle peak risk

---

1. Industry cycle reversal has been confirmed
   : DRAM prices surged nearly 300% in 3 months, NAND prices continued to rise, and supply tightness lasted beyond 2026 [1][2][3][4][11][12]

2. AI-driven structural demand growth
   : Data center IT components grew 40% year-over-year in Q3 2025, Micron’s revenue increased 56.6% year-over-year [9][10]

3. Demingli’s stock price over-reflects expectations
   : YTD increase of 296.55%, but profitability is negative (ROE of -4.05%) [0]

4. Prominent valuation risk
   : P/B ratio of 21.84x [0]

5. Cost pass-through is questionable
   : DRAM/NAND price increases may squeeze module manufacturers’ gross margins, with uncertainty in profit improvement

• ✅ 16Gb DDR5 price: $6.84 → $27.20 (+297%) [1]
• ✅ Supply tightness lasts until 2026-2027 [11][12]
• ✅ WSTS predicts 26% semiconductor market growth in 2026 [8]

• Current stock price: $239.00 (daily limit +10%) [0]
• YTD increase: +296.55% [0]
• P/B ratio: 21.84x (overvaluation risk) [0]
• ROE: -4.05% (negative profitability) [0]
• Market capitalization: $54.23 billion [0]

• Current valuation has fully or even over-reflected optimistic expectations
• Fundamentals have not兑现 the profit improvement from cycle reversal
• Significant short-term profit-taking pressure
• It is recommended to wait for a better buying opportunity or verify profitability improvement in the Q4 financial report before making a decision

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: This report provides information collection, analysis, and market background to support decision-making. It is not investment advice, trading recommendation, or financial guidance. The analysis aims to objectively present factual information, market background, and risk identification, and does not provide prescriptive advice on buying, selling, or holding securities.