As demand for memory semiconductors needed for artificial intelligence (AI) infrastructure surges and data generated by AI agents such as OpenAI and Gemini soars, demand is exploding not only for high-bandwidth memory (HBM) but also for commodity DRAM. In response, some large overseas electronics and server corporations have moved to "hoard" inventory, requesting long-term supply contracts with Samsung Electronics and SK hynix to stockpile memory.
According to the industry on the 23rd, due to concerns about a shortage of DRAM supply, some electronics and IT corporations and data center corporations in the United States, China, and elsewhere are reportedly pursuing mid- to long-term DRAM supply contracts of two to three years with Samsung Electronics and SK hynix. Typically, electronics and IT manufacturers or server corporations pursue DRAM supply contracts as short as quarterly to one-year terms for inventory flexibility, but as projections strengthen that a shortage of commodity DRAM will persist, moves are emerging to secure inventory in excess of needs.
Samsung Electronics and SK hynix, which together control more than 70% of the global commodity DRAM market, are currently concentrating DRAM capital expenditures on HBM. On the supply side, production capacity for commodity DRAM is bound to decline. A semiconductor industry official said, "Assuming you can make 100 commodity DRAMs from one DRAM wafer, HBM would be about half that," adding, "Because HBM takes up such a large portion of DRAM production lines, the shipment volume of commodity DRAM is likely to be constrained."
With the two corporations increasing the share of HBM, which has higher revenue, analysis suggests it will naturally be difficult to expand commodity DRAM output for the time being. Ryu Hyung-geun, a researcher at Daishin Securities Co., said, "Concerns about a DRAM supply shortage are prompting buyers to purchase preemptively, and some server customers are discussing volumes even beyond 2027." Global investment bank Citigroup also diagnosed for the same reason that "it will be difficult to increase DRAM supply over the next one to two years, making a severe shortage inevitable."
According to the market research firm DRAMeXchange, the spot price of DDR4 8Gb (gigabit), a commodity DRAM product, closed at $7.3 the previous day. It is the first time in about seven years that the DRAM spot price has topped $7 since Oct. 2018 ($7.042), when the memory supercycle was ending. Given that the price was $2 in Apr., it has soared 265% in just about six months.
Overseas investment banks are also saying the memory semiconductor market has entered a "boom for the first time in 10 years." Global investment bank UBS recently raised its forecast for fourth-quarter DRAM contract price growth this year to 17% from the previous 5% (quarter over quarter) in a report. UBS predicted, "Powered by surging AI server demand, the memory market will see a once-in-a-decade boom in 2026."
As rising memory prices directly translate into improved results for the semiconductor industry, the results of Samsung Electronics and SK hynix are also expected to soar. Kim Dong-Won, a researcher at KB Securities, said, "Next year, the combined operating profit of Samsung Electronics and SK hynix is estimated at 128 trillion won, up 64% from the previous year," adding, "With AI data center demand increasing alongside a concurrent cycle of general server replacements, a prolonged shortage of memory supply and price increases is inevitable, and increasing memory supply is effectively difficult."