Memory shortage to persist through 2027 as supply lags demand

• Memory shortage to persist through 2027 as supply lags demand.
• AI demand and limited capacity keep memory prices high and shipments weak.

Rising memory costs are expected to persist through at least 2027, as supply continues to lag demand, according to Nikkei Asia. Leading US and South Korean suppliers are increasing DRAM output at a pace that would meet only about 60% of demand by 2027.

The report estimates that memory production would need to expand by around 12% annually through 2027 to meet demand. Current growth stands at approximately 7.5%, while a gap of about 40% remains between supply and demand.

Supply constraints persist

Additional data from market research firms indicates that price increases have accelerated in recent quarters. TrendForce estimates that DRAM contract prices rose by approximately 90% to 95% quarter over quarter in early 2026, while NAND flash prices increased by 55% to 60% over the same period.

TrendForce said persistent demand from AI servers and data centres in the first quarter of 2026 further worsened the supply-demand imbalance, increasing suppliers’ pricing power.

AI demand and memory allocation

Nikkei Asia also reported that demand for memory has increased with AI-related workloads, which require higher volumes of DRAM. Samsung Electronics, SK Hynix, and Micron Technology together account for about 90% of the global DRAM market and are effectively the only companies able to produce high-bandwidth memory at scale.

TrendForce and IDC have also pointed to limited capacity expansion following the previous industry downturn as a factor constraining supply, reflecting the time required to bring new fabrication capacity online.

In recent years, those suppliers have prioritised high-bandwidth memory, Nikkei Asia reported. Production increases for general-purpose memory used in PCs and smartphones were delayed, contributing to shortages from late 2025.

Manufacturing capacity expansion is underway but remains limited in the near term. Samsung Electronics plans to bring a fourth fabrication plant at its Pyeongtaek campus online in 2026. However, full-scale mass production at the facility is not expected until 2027 or later.

The Pyeongtaek site is also designed to produce logic chips, which will constrain its ability to increase memory output. Samsung is also developing a fifth production line at the same location focused on AI-oriented memory, though this facility is not expected to begin operations until 2028 or later.

Samsung memory chief Kim Jae-june said in January that production scale remains constrained in the industry and that supply increases in 2026 and 2027 will be limited.

High-bandwidth memory, or HBM, is a type of high-performance DRAM used in AI semiconductors. SK Group Chairman Chey Tae-won said supply constraints in AI memory could continue into 2030 due to wafer shortages and limits on scaling production.

In the interim, SK Hynix began operating an HBM plant in Cheongju in February. According to Nikkei Asiait is one of the few production increases among leading suppliers expected to add to supply in 2026.

SK Hynix is also accelerating construction of a plant in Yongin, with completion targeted for February 2027, three months earlier than originally planned. Micron, meanwhile, plans to begin HBM production in Idaho and Singapore in 2027, and aims to start mass production at a new Hiroshima facility in 2028.

Impact on devices and supply chains

Memory demand remains concentrated in a small number of product categories. About 80% to 90% of memory chips are used in PCs and servers, with the remainder going to automobiles, industrial equipment, and other products, Nikkei Asia reported.

The pressure is already showing up in end markets. IDC said worldsmartphone shipments are expected to fall 12.9% in 2026 to 1.12 billion units, while the PC market is projected to decline 11.3% in 2026.

Cost pressures are more visible in lower-priced devices. Memory accounts for about 20% of the manufacturing cost of low-priced smartphones and could reach nearly 40% by mid-2026, according to IDC figures cited by Nikkei Asia.

TrendForce reported that rising NAND flash prices, with DRAM increases, are contributing to higher overall component costs in PCs and other devices. Its March outlook said DRAM suppliers continue reallocating capacity toward server-related applications, while NAND capacity is increasingly being directed to enterprise SSDs.

Supply chain conditions remain a contributing factor to pricing pressure. Disruptions linked to tensions around the Strait of Hormuz have affected shipping routes and energy markets. Reuters reported that the strait typically carries about 20% of the world’s oil and liquefied natural gas flows.

Nikkei Asia also reported that turmoil in the Middle East is increasing electricity and materials costs, adding further uncertainty to the production outlook.

Counterpoint Research said supply and demand conditions in the memory market are not expected to stabilise until around 2028 based on current production and demand trends.

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