‘$1.63 Trillion in Revenue Growth Through 2028, 10-Day Inventory Crisis — UBS: Chip Boom Trend Unchanged; Memory Shortage to Persist Through 2027; DRAM Prices to Rise Another 22% in Q3’

On September 9, 2026, UBS Group released a semiconductor industry report that left markets both buoyed and puzzled. Citing the latest data from the Semiconductor Industry Association (SIA), the report noted that global chip sales declined 9.8% month-on-month in July, with memory chip sales plunging 16.3%. At first glance, this appeared to signal a ‘peak-and-decline’ scenario. Yet UBS’s assessment was precisely the opposite: ‘The chip boom trend remains unchanged.’ UBS forecasts global semiconductor revenue will reach $1.63 trillion in 2026—a 118% increase over 2025—and predicts this upcycle will last at least through 2028. Simultaneously, UBS explicitly states that ‘supply shortages for DRAM and NAND will persist through 2027,’ forecasting DDR prices will rise 22% quarter-on-quarter in Q3 and NAND contract prices will climb 20%. J.P. Morgan’s report, issued the same day, offered an even more aggressive outlook—raising its 2026 global semiconductor sales forecast to $1.73 trillion—and observed: ‘Non-memory segments remain stable; statements from industry players over the past 90 days also indicate accelerating demand, confirming that the sector’s long-term expansion trajectory remains intact.’ ‘Volume down, price up’—this is the key to understanding all current narratives in the semiconductor industry. I. The ‘Apparent Contradiction’ in July Data: Sharp Volume Decline Amid Soaring Prices Memory chip sales fell 16.3% month-on-month in July—but interpreting this 16.3% drop as evidence of ‘weakening demand’ would be a fundamental misreading of the data. UBS precisely dissects the underlying structure behind these figures: the sales decline ‘was primarily driven by reduced shipment volumes,’ not falling prices. In fact, average selling prices (ASPs) for DRAM and NAND rose 8.3% and 9.8%, respectively, during the same period—meaning a ~18% volume decline combined with an 8.3% ASP increase naturally results in a sharp sales drop. This is a classic case of ‘supply-constrained’ decline. Memory chipmakers’ capacity is heavily occupied by high-end products like HBM, causing passive contraction in supply of mainstream DRAM and NAND. Markets simply cannot obtain sufficient inventory. Rising prices alongside falling shipments reflect not soft demand—but rigid supply-side constraints. Excluding memory chips, integrated circuit (IC) sales grew 0.9%; logic device sales rose 2.2% to a record $37 billion; analog device sales increased 3.4%. These figures confirm that non-memory semiconductor segments remain robust—the industry’s overall upcycle remains ‘intact.’ UBS succinctly characterizes the current phase in one sentence: ‘The semiconductor industry is transitioning from a phase of hyper-rapid growth to one of more sustainable expansion.’ The July shipment volatility reflects short-term supply-chain adjustments—not a reversal of the broader trend. II. 10-Day Inventory: A Looming ‘No-Inventory-to-Sell’ Crisis If declining shipments represent the ‘surface phenomenon,’ then inventory levels are the most direct indicator revealing the ‘underlying truth.’ According to a report released by Korean brokerage KB Securities on September 7, based on Q3 2026 market estimates, Samsung Electronics and SK Hynix’s available memory chip inventories—i.e., inventory ready for shipment—have fallen to less than 10 days’ worth of supply.

Today, China’s A-share market underwent another sharp correction, with the technology sector bearing particularly heavy pressure. Although most sell-side analysts remain relatively optimistic about AI-related capital expenditures, semiconductor localization, and China’s tech supply chain, investor sentiment and confidence remain extremely weak amid the current market conditions. Various unverified rumors—so-called ‘micro-essays’—are already circulating widely. For instance, today’s viral claim across WeChat groups—that ‘The Wall Street Journal has again downgraded China’s A-shares, labeling them a “deceptive market”’—is actually a recycled rumor first circulated several years ago. Its re-emergence underscores just how fragile market sentiment has become. UBS published a 174-page analysis of Chinese tech assets two weeks ago. Though ten days have passed and market sentiment has shifted somewhat, the underlying industrial fundamentals have changed little—and UBS’s insights remain highly relevant. The companies mentioned below reflect UBS’s views only and do not represent the author’s investment opinions. From Consumption Recovery to AI Capital Expenditures Thus, UBS’s top recommendations include memory chips, semiconductor equipment, foundry services, advanced packaging, interconnect chips, and AI-oriented PCBs. 1. Semiconductor Equipment and Advanced Manufacturing In the semiconductor equipment segment, UBS highlights NAURA Technology, Advanced Micro-Fabrication Equipment (AMEC), and ACM Research. UBS forecasts China’s wafer fabrication equipment spending will rise from $49 billion in 2026 to $63 billion in 2027 and $70 billion in 2028. With domestic DRAM and advanced logic capacity expansions underway—and with broader validation of domestically made equipment—revenues for these three companies are projected to achieve compound annual growth rates (CAGRs) of over 40% between 2026 and 2028. Regarding foundry services, UBS favors Semiconductor Manufacturing International Corporation (SMIC). It expects SMIC’s advanced-node capacity to grow from 26,000 wafers per month at end-2025 to 98,000 wafers per month at end-2028, with revenues projected to grow at a CAGR of ~23% from 2026 to 2028. The core driver of this theme is not short-term chip pricing—but rather the long-term capacity expansion fueled by domestic equipment adoption, advanced process nodes, and supply-chain self-reliance. 2. Memory Chips and Advanced Packaging Memory represents the highest-leverage theme across UBS’s entire report, and UBS is most bullish on CXMT. UBS projects CXMT’s DRAM capacity will expand from 240,000 wafers per month at end-2025 to 471,000 wafers per month at end-2028; its revenue could surge from approximately RMB 61.8 billion in 2025 to over RMB 90 billion in 2028. Key drivers include DRAM price increases, surging server memory demand, progress on HBM products, and domestic substitution. For advanced packaging, UBS recommends JCET Group.

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