Highest memory chip is the value chain is the weakest link in mainland, under the background of technical update slow, we believe that the mainland industry chain, technology available, capital market can be available, is expected to be in the kingdom of purple light core, wuhan new core two powerful national team under the leadership of bend pursued.

Technical update slow, the three elements of market, technology, capital, mainland memory chips are expected to copy the success of the panel industry. Market might think: a memory chip is monopolistic competition heavy industry assets, overseas giant customer first mover advantage obviously, technology, capital, mainland companies have a hard, we think:

Technology update slow, corner after have time window: Moore's law has been close to the physical limit, 28 nm the following economic benefit is greatly reduced, 3 d technology becomes the mainstream gradually;

(1) 3 d technology update speed, the difficulty and frequency is less than 2 d process updates;

(2) the 3 d technology mature soon, at this time if can through joint ventures, mergers and acquisitions or team introduce access technology, gap is not obvious.

To accelerate the transfer market: stock market, the incremental market in mainland China.

(1) for mobile terminal stock market, mainland China is the world's largest production base and the consumer market, matching the memory chip from Japan Korea to mainland accelerated;

(2) the cloud and the Internet of things is the largest incremental market, large outbreaks of traffic video era, China is the world's largest producer and consumer data, cloud storage chip demand rapid outbreak; China has the best of the world's Internet companies, terminal brand and electronic industry chain, is expected to lead the Internet of things application innovation.

Technology: the monopoly competition, samsung do big, partners or period. DRAM and NANDFlash two of the most main memory chip CR4 as high as 96% and 96% respectively, samsung a monopoly by 46% and 33%, gaining on the market, technology and capital advantage, its rivals such as meguiar's, hynix, sandisk will expand in emerging markets such as intense, mainland memory chip industry market and the capital available in technology, through the introduction of digestion and innovation to master their own core technology.

Capital: dual support national strategy, capital market. Violet light and wuhan new core as memory chip field two heavyweight team, since 2016, with the support of state and local government announced it would invest $30 billion and $24 billion respectively, the project is expected to open after landing China golden development of memory chip industry.

Said by: guotai junan securities