BofA Research Report Analysis: DRAM Price Hike Exceeds Expectations, Google Capex Boosts Storage Demand

By: Rita

TechFlow Guide

DRAM prices continue to rise. July PC DRAM contract prices increased 15%-20% month-over-month, and the Q3 month-over-month increase could reach 30%-40%, far exceeding market expectations of 13%-18%. Spot prices rose another 2%-3% this week.

Google's 2027 capital expenditure is expected to reach $300 billion, more than three times the $91 billion in 2025, corresponding to memory chip procurement volume exceeding 2026 levels by over 50%. South Korea's semiconductor exports for the first 20 days of July increased 181% year-over-year, while China's memory imports in June hit a record high of $32 billion, up approximately 250% year-over-year.

Samsung's earnings call on July 30 will be the next key milestone. BofA expects Samsung to announce large-scale buybacks, early dividend payments, and more optimistic guidance for the second half and 2027. Combined, these three factors suggest the memory sector's prosperity may last longer than the market worries.

DRAM Price Surge Far Exceeds Expectations

After completing channel research this week, BofA found that more second-tier OEMs and module manufacturers acknowledge that July PC DRAM contract prices are 15%-20% higher than in June. At this pace, the Q3 average DRAM price month-over-month increase could reach 30%-40%, far higher than TrendForce's forecast of 13%-18%.

Spot prices are also strengthening simultaneously, with DRAM spot prices rising 2%-3% week-over-week this week. DDR5 16Gb spot prices have broken through $50, and DDR4 16Gb reached over $80, both far exceeding the previous peak of about $10 in October 2017.

South Korea's semiconductor exports for the first 20 days of July were $22.1 billion, up 181% year-over-year. Although 13% lower than the record $25.5 billion in June, it is still nearly three times the 2025 monthly average of $8.2 billion. China's memory imports in June hit a record high of $32 billion, up approximately 250% year-over-year, accounting for 54% of China's total chip imports. Although CXMT's DRAM capacity is expanding, Chinese OEMs and cloud providers remain highly dependent on South Korean chips, indicating that the impact of domestic substitution is currently very limited.

Google Capex Increase: The Invisible Driver of Memory Demand

BofA internet analyst Justin Post expects Google's capital expenditures for 2026/2027 to reach $200 billion and $300 billion respectively, while 2025 was only $91 billion. This means Google's memory chip procurement volume in 2027 will be over 50% higher than in 2026.

His judgment is based on three points. First, the proportion of memory in tech giants' Capex is rising. Second, under the LTA framework, DRAM/NAND prices will not fluctuate significantly, but demand volume is increasing. Third, Google selling TPUs to external customers will drive more procurement of Asian memory chips, including HBM.

Post expects Google's free cash flow for 2026/2027 to be negative $16 billion and negative $18 billion respectively, subsequently turning positive to $37 billion in 2028. Cash and equivalents will exceed $50 billion annually from 2026-2028. For memory chip manufacturers, this is a positive signal for capacity expansion; a client of Google's magnitude has sufficient funds to support long-term procurement.

Triple Catalysts at Samsung's July 30 Earnings Call

BofA believes that Samsung's Q2 earnings call on July 30 could be the node where three catalysts are released simultaneously.

First, large-scale buybacks. Samsung needs to prepare treasury stock for year-end special bonuses, based on 10.5% of semiconductor operating profit, expected to exceed 30 trillion KRW, while currently there are almost no treasury stocks. Such large-scale buybacks require operations several months in advance, and the plan is highly likely to be disclosed at the earnings call.

Second, early dividend payments. Samsung has over 4 million individual investors. If the company distributes 40%-50% of 2026 dividends early in Q4, 1-2 quarters earlier than normal, and distributes the rest in Q1 or April next year, retail shareholders can obtain tax benefits, with taxable income spread across two fiscal years.

Third, more optimistic guidance. BofA expects Samsung to give a more positive outlook for the second half and even 2027, with memory chip supply shortages continuing and the LTA framework bringing stable high profit margins.

TechFlow Perspective

The core of this BofA weekly report is about a "time lag". The market is worried about the cycle peaking, but actual data is still moving upward.

The increase in DRAM contract prices far exceeds market expectations, indicating downstream demand is stronger than analysts predicted. Google's Capex jumping from $91 billion to $300 billion means the memory chip demand curve has not yet peaked. A $300 billion Capex corresponding to over 50% incremental chip procurement is sufficient to support the supply-demand balance in 2027.

Samsung's triple catalysts are also worth watching. Buybacks and early dividend payments are company-level positives, but more important is the "more optimistic 2027 guidance". If even Samsung itself states that supply shortages will last until 2027, then the market's worry about "peaking in the second half of 2026" may be a misjudgment.

China's import data is another signal. Memory imports of $32 billion hit a record high, a 250% year-over-year growth. Even though CXMT's capacity has been expanding, Chinese buyers are still purchasing South Korean chips at this pace. The story of domestic substitution, at least on high-end products, still has a long way to go.

Disclaimer

This article is a compilation and interpretation by TechFlow Research of a third-party brokerage research report (BofA Securities, July 24, 2026). The ratings, target prices, earnings forecasts, and related judgments cited in the text are the views of the brokerage analysts, represent only the position of their affiliated institution, do not represent the views of TechFlow Research, and do not constitute any investment advice.

The market carries risks; decisions must be independent. This article should not be used as a basis for buying or selling any securities.