Memory has emerged as one of the most valuable resources in the global economy, with the world’s leading semiconductor manufacturers now collectively valued higher than the largest oil companies. Whether this new hierarchy lasts will depend on how effectively the industry can sustain recent structural changes that are reshaping one of technology’s most historically volatile markets.
The three largest memory-chip producers—Samsung Electronics, SK Hynix, and Micron Technology—now each command market capitalizations exceeding $1 trillion. Combined, their valuations sit roughly 22% above the total market value of the world’s three largest oil companies, even when including Saudi Aramco, which alone is valued at nearly $1.8 trillion.
Further down the memory supply chain, valuations have also surged dramatically. Flash memory producer SanDisk has seen its market capitalization nearly triple since March, now approaching the value of PetroChina, Asia’s largest oil producer. The scale and speed of these gains have raised questions about whether the rally reflects sustainable fundamentals or an overheated market cycle.
Historically, memory chips have been treated as commodities, much like crude oil, subject to extreme price volatility driven by supply cycles and demand shocks. However, the rapid expansion of artificial intelligence has fundamentally altered that dynamic. Demand for high-performance memory is now exceeding supply capacity across much of the industry, pushing prices to unprecedented levels and strengthening the bargaining power of manufacturers.
In response, memory producers are increasingly shifting toward long-term supply agreements with major customers. These contracts are designed to stabilise pricing, secure demand visibility, and reduce the severity of traditional boom-and-bust cycles that have defined the sector for decades.
Early evidence suggests this strategic shift is gaining traction. Micron announced its first five-year supply agreement in its March earnings report and later stated that it had made “meaningful progress” on additional long-term deals during a recent investor conference. The company is positioning itself as one of the early leaders in reshaping industry contract structures.
SanDisk has also reported progress in locking in demand, revealing that five customers have already signed long-term agreements covering more than one-third of its production capacity for the next fiscal year. This level of forward commitment is unusual for an industry that has traditionally relied on short-term pricing mechanisms.
Meanwhile, SK Hynix has not disclosed specific contract volumes but has signalled strong forward demand visibility. The company recently stated that demand for its products “far exceeds” supply capacity over the next three years. Chief Financial Officer Kim Woo-hyun noted that memory has become so critical to customers’ operations that “price and supply uncertainties are now key business risks.”
The growing influence of artificial intelligence is the primary force behind this shift. Large technology companies—often referred to as hyperscalers—are investing heavily in data infrastructure, which requires massive quantities of advanced memory chips to power AI training and inference workloads.
According to UBS analyst Tim Arcuri, these hyperscalers are already securing a significant portion of global output through multiyear contracts. He estimates that such agreements could cover up to 30% of total DRAM shipments next year, with server-grade DRAM already largely locked in by major cloud providers such as Microsoft, Alphabet’s Google, and Amazon.
Arcuri noted that hyperscalers appear increasingly willing to trade higher prices for guaranteed long-term supply and greater predictability in deployment costs. This shift reflects the strategic importance of memory in the AI era, where uninterrupted access to high-performance chips is essential for maintaining competitive advantage.
The financial impact of this demand surge is already visible in corporate earnings. Micron reported adjusted earnings per share of $12.20 in its most recent quarter, a sharp increase from $1.56 a year earlier. Analysts expect earnings per share to exceed $60 for the current fiscal year and potentially reach around $106 in the next, according to Visible Alpha estimates.
Despite these strong fundamentals, valuation multiples across the sector remain relatively low compared with broader semiconductor peers. At a market capitalisation of just over $1 trillion, Micron trades at less than 10 times projected forward earnings. SanDisk sits slightly higher at around 10.5 times forward earnings.
The valuation gap becomes even more pronounced when comparing Korean memory leaders with global semiconductor benchmarks. Samsung and SK Hynix trade at roughly six to seven times forward earnings, according to FactSet data. In contrast, the average forward price-to-earnings ratio of the 30 companies in the PHLX Semiconductor Index is approximately 26 times.
This disparity suggests that despite strong investor enthusiasm and rapidly rising share prices, memory-chip makers may still be undervalued relative to the broader semiconductor sector—particularly given their central role in powering artificial intelligence infrastructure.
However, analysts caution that the industry’s newfound stability is still in its early stages. While long-term contracts and AI-driven demand have reduced some of the traditional volatility, the memory market remains exposed to rapid technological shifts, aggressive capacity expansion, and potential demand slowdowns if AI investment cycles cool.
Even so, the structural transformation underway is undeniable. What was once one of the most cyclical and unpredictable segments of the technology industry is increasingly evolving into a strategically critical, contract-driven market.
Memory chips may now rival oil in economic importance, but unlike crude, the industry is still learning whether its newfound pricing power and stability can truly last across a full market cycle.
