Memory Shortage to Persist Until 2028: Industry Giants Prioritize Profit Over Production

A looming crisis in the memory chip market is expected to continue for several years, as major manufacturers prioritize strategic profitability over rapid production expansion. Samsung and SK Hynix, which collectively dominate 70% of the DRAM sector, have expressed their reservations about significantly increasing output, a move that analysts suggest could extend the current supply crunch until at least 2028.

Samsung's leadership recently articulated a commitment to sustaining long-term profitability, opting for a cautious capital expenditure approach that aligns with customer demand and pricing dynamics, rather than aggressively expanding facilities. This stance is reflected in their current capacity to fulfill only 70% of DRAM orders. Similarly, SK Hynix, while projecting substantial investment, acknowledges the inherent difficulties in meeting the escalating demand, forecasting a 30% revenue allocation towards facilities by 2026 to transition to 1c DRAM, yet admitting that supply shortfalls are unlikely to be resolved swiftly. Furthermore, Samsung is not engaging in long-term contracts to hedge against future price increases, indicating an expectation of sustained high prices.

The underlying issue isn't a stagnation in production, but rather an unprecedented surge in demand that outpaces current and planned manufacturing capabilities. Industry forecasts, such as those from Trendforce, project a 23% rise in memory supply by 2026, yet demand is anticipated to climb by a staggering 35%. Although companies like Micron are investing in new facilities, such as a $10 billion DRAM plant in Japan, these initiatives will not yield production until late 2028. This long-term outlook suggests that unless there is a significant downturn in the AI market—which is currently a primary driver of memory demand—consumers and industries should prepare for elevated memory prices for the foreseeable future. The cautious expansion strategy adopted by leading manufacturers aims to prevent a potential oversupply scenario should the AI sector experience a significant market correction, highlighting a delicate balance between capitalizing on current demand and mitigating future risks.

In the dynamic landscape of technological advancement, this scenario underscores the intricate interplay between innovation, supply chain management, and market forces. It reveals how strategic decisions by a few key players can profoundly impact global industries and highlights the need for adaptability and foresight in navigating periods of both high demand and potential volatility. This current phase, characterized by constrained supply and rising prices, prompts a reflection on the broader implications for technological progress and economic stability.