According to a research report recently released by Bank of America, as the fourth quarter of 2026 arrives, the memory cycle will gradually move beyond its previous J-curve growth phase and enter a new stage of development.

This aligns with the recent results and latest guidance from Micron Technology Inc (NASDAQ: MU): sales in the fourth quarter of fiscal year 2026 grew 31% quarter-over-quarter, lower than the 74% growth in the third fiscal quarter; the company expects sales in the first quarter of fiscal year 2027 to grow only 13.5% quarter-over-quarter.

This trend could be used to build a bearish case for the memory industry, but Bank of America believes the fundamental upside remains substantial, mainly for three reasons: 1) High profit margins — despite the sharp decline in quarter-over-quarter sales growth and rising employee incentive costs, Micron still expects gross margins to reach 86% in the first quarter of fiscal year 2027; 2) Low price-to-earnings (P/E) multiples — even based on projected earnings per share for 2028, most memory stocks trade at P/E multiples of only 5-7x; 3) Record stock buybacks or cash dividends.

Like Asian memory chip manufacturers, Micron also appears to believe that despite more wafer fabs coming online in Asia and the United States, the memory chip shortage could continue to intensify through 2027 relative to new chip demand.

Bank of America stated that, overall, as long as sales/operating profit can be maintained at 10 times the peak levels of the 2018 and 2021 upcycles, then slowing growth should not be a concern, and Micron's results and guidance have already provided evidence for this.

Similarities and Differences: Micron vs. Samsung/SK Hynix

Bank of America also learned that Micron's six strategies are broadly consistent with those of Samsung Electronics Co Ltd (KRX: 005930) and SK Hynix Inc (KRX: 000660), including: 1) Actively returning capital to shareholders; 2) Increasing long-term agreements (LTAs) while further diversifying the customer base, including large technology companies and original equipment manufacturers (OEMs); 3) Building new wafer fabs, but wafer capacity expansion is constrained due to longer manufacturing cycles; 4) Chip supply remains insufficient relative to long-term demand; 5) Average selling prices (ASPs) remain stable, with revenue growth driven more by volume rather than aggressive DRAM/NAND price increases; 6) High priority on high-bandwidth memory (HBM), with large-scale capacity expansion relative to conventional DRAM, while ASP increases for 2027 annual contracts are also more pronounced.

However, differences remain in profitability performance and business outlook across companies — third-quarter DRAM ASP quarter-over-quarter: Samsung/SK Hynix expected to rise 23%-25%, Micron expected to rise in the high teens; third-quarter NAND ASP quarter-over-quarter: Samsung/SK Hynix expected to rise 15%-18%, Micron expected to rise about 30%.

In terms of payout ratios, Samsung currently stands at 50% of free cash flow (FCF); SK Hynix exceeds 50%; Micron will achieve a 100% payout ratio after reaching a specific target cash holding level, which is expected to be achieved in the November 2026 quarter, with cash holdings of $75 billion in the August 2026 quarter; LTA share of long-term sales through 2030: Samsung at 60%-70%; SK Hynix over 50%; Micron over 35%.

In addition, regarding the 1c (Gamma) process node migration, Samsung has not yet applied it to DDR5 and remains focused on HBM4; SK Hynix has already used it for mainstream production of high-end DDR5; Micron has clearly stated that 1c is its largest production process node.

HBM, DDR5 and Panic Buying Orders Drive Strong Growth in South Korea's September Semiconductor Exports

South Korea's September semiconductor exports surged, rising 29% quarter-over-quarter and 263% year-over-year. Bank of America believes there are three main drivers: 1) Successful acceleration of HBM4 mass production, now accounting for more than 50% of total HBM sales; 2) Despite increasing long-term agreements, DDR5 prices still rose more than 20%-30% compared to the previous quarter; 3) Increased panic buying orders at quarter-end, including enterprise solid-state drive (eSSD)/NAND orders.

Combining July, August and September export data, it also shows strong third-quarter growth, up 30% quarter-over-quarter, broadly in line with Bank of America's forecasts for SK Hynix and Samsung's third-quarter memory chip revenue — the bank expects SK Hynix's memory chip revenue to grow 32%, while Samsung's grows 27%.

Samsung's third-quarter preliminary operating profit will be announced on October 8 — Bank of America expects it to be 10.7 trillion Korean won, and supported by strong sales and ASP increases in HBM4, DDR5 and even NAND, this figure could easily meet Wall Street's optimistic consensus estimate of approximately 11 trillion Korean won.