Citi analysts predict a better-than-expected outlook for the global memory market in 2025, despite concerns about possible oversupply.
In a research note to clients this week, investment bank Citi forecast that average selling prices (ASP) for memory will remain largely stable, supported by trends in semi-customization and strong demand for AI memory.
Citi expects a robust recovery for NAND, with ASP expected to rise 30% year-over-year in 2025. DRAM ASP, on the other hand, is expected to rise at a more modest pace of 14% year-over-year.
The dynamics of supply and demand are also expected to promote a more balanced market.
In the DRAM sector, Citi forecasts supply growth of 16.6% versus demand growth of 17.0%, with a significant focus on High Bandwidth Memory (HBM).
They explain that the launch of HBM4 in the second half of 2025 and a shift in capital investment to HBM production will help stabilize the market and reduce volatility.
Although a shortage of HBM is expected in 2024, Citi predicts that the supply-demand ratio will improve to -1% by 2025.
NAND supply is expected to grow 12.2% in 2025, while demand is expected to rise 17.1%, driven by 32.1% growth in demand for solid-state drives (eSSD) at companies.
Citi states that this dynamic will likely result in a shortage of NAND supply, with a supply-to-demand ratio of -4.2%.
The bank also notes that memory manufacturers will prioritize DRAM investments, which are expected to rise 45% year-over-year through 2025, compared to an 18% increase in NAND investments.
Citi reiterated its buy recommendations for SK Hynix and West Digital (NASDAQ:) and expects these leading memory manufacturers to benefit from favorable market conditions in 2025.
