Nomura Securities expects a shortage of memory chips to persist through 2028, even as concerns mount over slowing growth in the artificial intelligence industry and a pullback in data center investment. The global investment bank named Samsung Electronics (005930.KS) and SK hynix (000660.KS) as its preferred picks and maintained buy ratings on both.
In a report on the global memory industry, Nomura said the impact on chip demand from slowing revenue growth at AI companies and funding pressures on data center operators will be limited, according to financial investment industry sources on the 20th. Even if some companies see their investment capacity weaken, the bank said, a broad contraction in demand for AI infrastructure is unlikely.
Nomura said market concerns about the AI industry's growth prospects have been overstated in some respects. By the bank's estimates, combined third-quarter revenue at OpenAI and Anthropic rose about 507% from a year earlier. It added, however, that fourth-quarter results would have to improve sharply to meet market expectations for full-year revenue.
The bank also played down the risk that financial strain at data center operators would spread across the chip sector. Even if an individual operator struggles to raise funds, already-built data centers and related equipment can be used by other operators, it said, so disruptions to capital spending would not translate directly into lower demand across the industry.
Nomura pointed to data center expansion as the key driver supporting the memory market. New global data center capacity tracked by the bank is projected to rise about 41.3% to 31.5 gigawatts next year from 22.3 GW this year. As a result, memory demand should grow faster than supply, sustaining a supply-demand balance favorable to higher prices, it said.
Worries about Chinese memory makers catching up technologically are also excessive, the bank said. Progress by China's ChangXin Memory Technologies (CXMT) on 4F² technology has raised concerns that it could weigh on the competitiveness of South Korean chipmakers, but Nomura said the market is overstating the effect of that technology shift.
The bank expects a sharp improvement in chipmakers' financial capacity. Combined net cash at nine chip companies, including Samsung Electronics and SK hynix, is estimated to grow to about $2 trillion by the end of 2028 from $282 billion in the second quarter of this year. As AI infrastructure investment expands, Nomura said, cash is likely to accumulate at chip suppliers rather than at data center operators.
Nomura set target prices of 670,000 won and 4.7 million won for Samsung Electronics and SK hynix, respectively. It added that its memory demand outlook would need to be reviewed if data center investment plans were cut back continuously or if even fully funded projects were delayed on a large scale.
