Can SLS Sustain Growth as DDR4 Supply Disappears and DDR5 Emerges?

Sims Lifecycle Services: A Growth Engine for Sims Group

At its recent Investor Day on 25 March 2026, Sims Lifecycle Services (SLS) showcased its rapid ascent as a critical earnings driver for Sims Group, contributing approximately 40% of the group’s underlying EBIT in the first half of the year. This marks a significant leap from prior periods, underscoring SLS’s transformation from a traditional IT asset recovery business into a strategic infrastructure platform deeply embedded within hyperscaler ecosystems.

CEO Stephen Mikkelsen and the executive team highlighted how SLS’s close partnerships with major hyperscalers, such as Google, Amazon, and Microsoft, position it uniquely to benefit from the ongoing expansion and refresh cycles of global data centre infrastructure. The business model is capital-light and highly scalable, leveraging automation and robotics to maintain quality while increasing capacity.

Riding Structural Tailwinds in Memory Markets

A key theme of the presentation was the structural exit from DDR4 memory production by major semiconductor manufacturers Samsung, SK Hynix, and Micron. These suppliers are reallocating capital towards next-generation memory technologies like DDR5 and High Bandwidth Memory (HBM), driven by surging demand from AI and advanced computing platforms. This shift is not cyclical but a deliberate strategic move, permanently removing new DDR4 supply from the market.

Despite this, a vast installed base of enterprise and industrial systems continues to rely on DDR4, creating a robust secondary market. SLS is capitalising on this dynamic by refurbishing and reselling DDR4 memory, which supports ongoing demand and commands attractive margins. The company is also preparing for the DDR5 lifecycle, expanding testing and refurbishment capabilities to serve next-generation memory markets.

Diversified Revenue Streams and Growth Outlook

SLS’s revenue model is diversified across service fees, resale, commodity recovery, redeployment, and data destruction, linked closely to global data centre refresh cycles. The company introduced a new volume metric, Memory GB Sold, to better align volume with revenue, reflecting the economic value unlocked through its partnerships.

Financial guidance for FY26 projects underlying EBIT between A$165 million and A$185 million, supported by gross margin expectations of A$400 million to A$420 million. Volume growth is expected to accelerate, with an estimated 4 million Memory GB Sold in FY27 scaling to 15 million by FY29. Operational expansions, including a ramp-up in Ireland and increased automation, underpin this growth trajectory.

Strategic Expansion and Market Positioning

The company’s strategic roadmap includes increasing volumes with existing hyperscaler clients, onboarding new partners, expanding geographic footprint, and growing enterprise client relationships. The Ireland expansion is a notable growth platform, designed to add capacity with minimal investment while leveraging automation to enhance quality and reliability.

By embedding itself within hyperscaler ecosystems and capitalising on structural demand growth, SLS has positioned itself as a core driver of Sims Group’s earnings and valuation. Its capital-light, high-return model combined with diversified revenue streams offers resilience amid evolving technology cycles.