With changes in major assumptions, we now forecast the DRAM market will be flattish in 2020, and grow~10% in 2021,while the NAND market will grow by 27% in 2020 followed by mid-teens% growth in 2021. We also introduce 2022 outlook which shows decent growth for both DRAM (19%) and NAND (25%), implying a historical high memory market of US$154bn. In terms of quarterly momentum, both DRAM and NAND markets will bottom-out in 2Q21 along with seasonal upticks in demand and ASP declinesslowing. 

 Memory price outlook: We model 7% Q/Q DRAM price correction in both 3Q/4Q20 with server/PC DRAM showing the highest magnitude of declines following strong inventory build-ups in 1H, while mobile and specialty DRAM price is relatively resilient on account of strong seasonality, flagship launches and H/H recovery in demand. With structural growth in SSD adoption along with disciplined supply, we forecast 4% Y/Y growth for NAND price in 2020. Moving into 2021, we expect 15% Y/Y NAND price correction on high-base and new wafer adds from Korea/Japanmanufacturers. 

 Capex outlook: decent growth in 2021: We see the updated aggregate industry capex for DRAM at US$18/22bn and NAND at US$26/28bn in 2020/21. DRAM capex has remained subdued/flattish in 2020 after a major 30% decline in 2019 but we expect almost 20% Y/Y growth in 2021. On the other hand, NAND capex likely shows a moderate decline in 2020 followed by high-single digit% growth in 2021. While a majority of the capex allocation in recent years has been to infra, we see equipment capex portion picking up gradually in 2021, as SK Hynix ramps up capacity at Wuxi 2 and M16 and Samsung ramps up PY#2line. 

 Mobile-driven demand growth in 2021: mDRAM demand grows by a lukewarm 10% Y/Y this year amidst contraction in smartphone volumes and decelerated content growth in the low-end to mid-range segments. However, we expect demand growth to bounce back strongly in 2021/22 and model 30%/25% Y/Y growth. As a result, we expect mDRAM demand growth to outpace server demand growth and remain the leading growth driver in 2021/22 as 5G smartphone volume mix increases rapidly and spec upgrades in low-end to midrangecategories accelerate. 

 Server and iPhone’s contribution to overall demand: We observe that the server DRAM contribution to overall demand hovers at 25-30% in 2H20-1H21. On the revenue side, we see server contribution falling to 28-30% in 1H21 amidst meaningful price correction in server DRAM pricing towards end-2020 but the contribution likely jumps back to mid-30% level by end-2021. Hence, server DRAM will contribute ~30-35% of overall DRAM revenue throughout our forecasting periods.For NAND, iPhone contributes a high demand portion to total NAND market concentrating in 2H of the year while SSD represents 50%+ of total NAND demand. 

 Stock implications: Memory’s recent underperformance can be largely explained by the fact that investors see memory-makers as commodity plays, where priceuptrend has been the major driver. As we expect the price decline to slow in 1H21, we believe the current share price correction will provide a good buying opportunity. Our order of preference isSEC>SK Hynix>MU>NTC>PTI>WD.