Gasgoo Munich-"We frequently encountered rejection when seeking business." That is a sentiment shared by multiple executives at domestic memory chip firms. In the early days, sales teams would visit automakers only to return empty-handed. Back then, the automotive memory market was dominated by overseas giants, leaving local players with virtually no voice in the supply chain.Now, the dynamics are shifting. This year in particular, memory chips have become a central priority for major automakers’ supply chain discussions, with some even proactively reaching out to local manufacturers for partnerships. From being turned away to being regarded as key partners, this shift is driven by global supply constraints that have made chip shortages a periodic industry norm.That market momentum is extending to both operations and capital markets. Over the past year, rising memory prices have helped restore industry profitability, with domestic firms seeing revenue and profits generally double. The sector has been performing strongly in the secondary market, becoming a key target for capital investment in the tech space.One Year, Stock Prices Rise Several-FoldThe global memory chip industry has entered an upcycle over the last 12 months, with prices rising steadily. Driven by supply and demand dynamics, major players worldwide have posted significantly improved operational results and stock market performance.According to TrendForce, contract prices for general-purpose DRAM increased 90% to 95% quarter-over-quarter in the first quarter of 2026, while NAND Flash prices rose 55% to 60%. Further price increases are possible.This shift is evident in the South Korean market. Social media and short-video platforms are active with discussions from retail investors: those holding shares in Samsung Electronics and SK Hynix are realizing significant gains, while those who missed out are expressing concern.As the two market leaders in global memory, Samsung Electronics and SK Hynix control over 60% of the world's DRAM capacity and more than half of NAND flash production, making them the backbone of the global supply.Image Source: YMTCRising prices have directly boosted profits, prompting both giants to implement significant performance incentives. SK Hynix posted an operating profit of 37.61 trillion won in the first quarter of 2026. Several financial institutions estimate that its annual per-employee bonus could exceed 3 million yuan.Samsung Electronics’ Device Solutions (DS) division recorded an operating profit of 53.7 trillion won in the first quarter, yet bonuses for similar roles were less than a third of what SK Hynix paid, leading to prolonged labor tensions. In May 2026, Samsung’s union achieved an agreement: a 6.2% across-the-board pay raise and a new unlimited bonus set at 10.5% of operating profit for the semiconductor division, significantly narrowing the gap with its rival.In the capital markets, shares of both Samsung Electronics and SK Hynix have increased significantly over the past year. Their market capitalizations have each exceeded the $1 trillion mark, hitting record highs.Micron Technology, another global giant, also saw its market cap exceed $1 trillion in May. Driven by an optimized product mix and rising prices, Micron’s stock has increased more than 760% over the past year. It posted a net profit of $5.24 billion in the first quarter of 2026 — its highest quarterly profit in five years.The strong performance of these three major companies underscores the intensity of the current memory upcycle.Turning to the domestic market, local listed memory firms are reporting significant growth. Public data from first-quarter 2026 A-share reports shows notable operational gains for many companies in the sector.Longsys, for instance, reported operating revenue of 9.9 billion yuan in the first quarter, up 132.8% year-on-year, while net profit attributable to shareholders jumped 2,644% to 3.86 billion yuan. In the stock market, Longsys shares have increased sixfold over the past year from around 70 yuan to over 500 yuan, pushing its market capitalization past 210 billion yuan.Biwin and Dmingli are also growing. Biwin’s first-quarter revenue increased 3.4 times year-on-year, marking three straight quarters of profitability, with gross margins climbing to 53.3%. Dmingli saw its revenue jump fivefold, and its stock has gained over 150% this year. Both companies have joined the 100-billion-yuan market cap club. Dmingli’s founder, meanwhile, has seen his personal wealth increase by about 32 billion yuan in just five months thanks to an early investment in memory chips, making him a symbolic figure of this cycle.CXMT, the world's fourth-largest DRAM manufacturer, holds roughly an 8% market share. It generated 50.8 billion yuan in revenue in the first quarter of 2026, with a net profit of 24.76 billion yuan, indicating a return to profitability.It is expected to list on the STAR Market between July and August 2026. Given its rarity on the A-share market and the valuation premium for domestic substitution, institutions anticipate a valuation exceeding 100 billion yuan. Its prospectus shows that revenue from DDR series products rose to 19.53 billion yuan in 2025, accounting for 30% of total revenue.Another domestic leader, Yangtze Memory Technologies (YMTC), has initiated IPO guidance. Market consensus places its potential valuation between 200 billion and 300 billion yuan.It is clear that domestic memory chip makers now match top automakers in both market value and profitability. Companies like Great Wall Motor, Geely, NIO, and XPeng all stand near the 100-billion-yuan mark.Who could have predicted this? Just two years ago, the global memory industry was in a downturn, with prices falling and manufacturers worldwide under immense pressure. Companies like Dmingli and CXMT were barely breaking even or posting modest profits last year. Now, fueled by a "upcycle" in memory and exploding AI demand, market conditions have reversed. A supply-demand imbalance has driven up prices, restoring corporate profits and triggering a rally in capital markets — a benefit distributed across the entire supply chain.An Opening for Domestic Makers to Gain TractionThe current shortage has distinct structural characteristics. AI servers require far more memory than traditional hardware. A single AI server needs 8 to 10 times the DRAM capacity of a standard server, and about three times the NAND flash.This massive demand has led overseas giants to prioritize high-margin AI memory products, tightening supply for automotive and traditional consumer segments — creating fresh supply chain pressures for automakers.TrendForce data shows that Samsung, SK Hynix, and Micron are currently allocating 70% to 80% of their advanced capacity to AI-focused products like HBM high-bandwidth memory and premium DDR5. Less than 20% of their capacity is being allocated to the automotive and traditional consumer sectors.Image Source: LongsysFacing the shortage, executives from NIO, Xiaomi, and Voyah have commented. Voyah’s Lu Fang told media outlets like Gasgoo that a shortage of memory chips increases component procurement costs — pressure that eventually transfers to retail prices while extending delivery times. Already, models like the Xiaomi SU7 and the Qiyuan Q07 have announced price increases due to supply chain constraints.As the supply-demand balance shifts, the automotive memory sector is opening up, creating opportunities for local manufacturers. Domestic firms have been increasing R&D spending, with several new automotive-grade products recently passing certification and entering production.For example, at Qualcomm’s Automotive Technology and Cooperation Summit in June, Longsys introduced an automotive-grade UFS 4.1 product. Featuring a proprietary controller chip, it delivers high read-write speeds and meets the auto industry’s rigorous quality and performance standards, including resilience to extreme temperatures. With up to 2TB of storage, it suits mainstream applications like smart cockpits and in-vehicle intelligent systems.On supply security, Longsys’ automotive market director, Wang Zuopeng, told Gasgoo that the most challenging phase isn't the early or mature stage, but the mid-term rapid growth. Demand fluctuates wildly, and popular models can cause orders to increase sharply. Now, domestic firms like Longsys are facing that exact moment of rapid growth.Strategies vary. CXMT is focusing on automotive-grade DRAM chips; its DDR4, DDR5, and LPDDR5 lines have earned automotive certification and began shipping in volume to major automakers like BYD and NIO in 2025. Biwin, meanwhile, focuses on industrial and automotive SSDs, offering high-reliability storage solutions for commercial vehicles and intelligent in-vehicle scenarios.Longsys has adopted a strategy of securing safety stock and building inventory ahead of time. It is actively absorbing production and inventory risks, using its financial strength to lock in wafer capacity and accumulate finished goods to handle the sudden, surging demand of the automotive market.While no single domestic firm can yet fully replace the overseas giants, a coalition of local suppliers can already meet most automakers' memory needs. Analysts note that after years of development, China's memory supply chain is mature in technology, capacity, and certification. By sourcing from multiple local vendors, automakers can effectively alleviate supply pressure.Image Source: CXMTTrendForce analysts believe that more than a dozen domestic automotive memory products are currently in the testing phase with automakers. Given the current pace, the market share of domestic automotive memory is expected to increase within the next 12 to 18 months.To accelerate substitution, domestic firms are adjusting their strategies: accelerating automotive certification while optimizing core performance metrics like temperature resistance and anti-interference capabilities, and working directly with automakers to provide customized storage solutions.Gasgoo noted in a March report that the opportunity for automotive-grade memory is evident. Domestic vendors are prioritizing certification, securing long-term orders, and strengthening supply chain ties over short-term profits. The agreement suggests that brand trust and technical depth take time to build, meaning the shift to domestic automotive memory will be incremental.How Long Will the Boom Last?The memory industry remains booming, but a key question remains: How long will this supply tightness last? And how can domestic firms use this cyclical upswing to build lasting competitiveness?An employee at one firm noted that the company doesn’t have a definitive forecast yet. However, looking at global supply, the shortage is unlikely to ease significantly in the short term. Samsung, SK Hynix, and Micron have all announced major expansion plans, but memory fabs are capital-intensive projects; building plants, installing equipment, and ramping up production all take time.Micron plans to invest over $100 billion into two new production bases. SK Hynix has raised its investment in its South Korean cluster to $400 billion, focusing on HBM and high-end DRAM. Samsung, meanwhile, is expanding its Pyeongtaek plant and plans to commence operations by 2028.CITIC Securities analysis suggests that given the lead times for core equipment and capacity being diverted to HBM, significant new global capacity won’t come online until late 2027 or 2028. The supply-demand imbalance is likely to persist through the first half of 2027.Judging by the available data, 2026 through the first half of 2027 represents a clear window of opportunity for domestic memory firms.Image Source: LongsysDuring this window, capacity strategies diverge. Overseas giants are allocating the bulk of their new capacity toward high-end AI memory, leaving limited expansion for automotive and traditional consumer products.Domestic players are pursuing a dual strategy of "AI and automotive." While expanding capacity for AI servers and automotive memory to capture the high end, they are also prioritizing the filling of gaps in automotive and consumer storage left as overseas giants pull back.CXMT’s Hefei plant is gradually increasing production. Module makers like Longsys and Biwin are bringing new lines online, prioritizing automotive orders. YMTC’s 12-inch wafer capacity hit 140,000 wafers per month last quarter, with a target to increase its global NAND sales share to 15% by the end of 2026. Numerous smaller firms are also adding equipment based on their own needs.Moreover, this domestic expansion isn’t just about chasing short-term price gains. It’s driven by long-term considerations: filling capacity gaps, seizing market share, and building out a robust support ecosystem.One leading domestic memory firm described its strategic goal as becoming the "universal core supplier" of the automotive memory sector — a core supplier similar to CATL for batteries or Horizon Robotics for autonomous driving chips. That likely represents the shared ambition of China’s top local players.Collaboration between local memory firms and automakers is strengthening. For the auto industry, the persistent memory shortage has escalated from a matter of cost fluctuation to one of supply chain security. After enduring multiple rounds of chip scarcity, domestic automakers are placing a higher priority on diversifying their supply base.Beyond ensuring current supply, automakers are negotiating long-term partnerships and joint R&D with local memory firms, using long-term agreements to stabilize supply while co-optimizing product performance. In turn, these long-term orders provide domestic chipmakers with stable revenue, buffering them against cyclical volatility.Industry cycles are cyclical. Once new global capacity comes online after 2027, the supply-demand balance in the memory market will gradually restore, and this price surge will stabilize.For domestic memory firms, this window is not just a short-term profit opportunity; it is a critical period to close technological gaps, expand capacity, lock in downstream customers, and build brand equity. History shows that companies focused solely on short-term profits often find themselves at risk when the cycle turns. Those that use the boom to steadily build comprehensive strength are far more likely to weather the downturns.Using this window, domestic makers are overcoming technical bottlenecks in automotive-grade and high-end consumer memory, while strengthening ties with downstream partners in automotive and consumer electronics to build a stable industrial ecosystem.Of course, short-term gains don’t guarantee long-term competitiveness. Overseas giants, with their technological depth and capacity advantages, still dominate the high end, and the path to catching up for domestic firms remains long. Over the next one to two years, local players must ensure delivery while refining product performance and strengthening ties with automakers, using this period of high demand to accumulate both technology and market share.Only by moving beyond the focus on cyclical speculation and solidifying the industrial foundation can domestic firms truly secure their footing in the automotive memory market once the boom cools, achieving a leap from mere market share gains to value enhancement.
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