As the artificial intelligence (AI) industry grows, a shortage in memory semiconductors centered on DRAM is emerging, while demand for NAND flash is also rising sharply, intensifying competition to secure volumes. With memory semiconductor corporations concentrating production capacity on high-bandwidth memory (HBM) and commodity DRAM, NAND supply is expected to be constrained, driving NAND prices up steeply. It is said that even next year's NAND volumes are sold out, and some big tech customers are already discussing supply volumes for 2027 in advance.
According to the industry on the 19th, memory semiconductor corporations such as Samsung Electronics, SK hynix, and Kioxia are understood to be discussing supply volumes for 2027 with some big tech corporations. With NAND supply constrained, next year's volumes are effectively sold out and prices continue to rise, prompting the unusual step of proactively negotiating NAND supply volumes two years ahead. A semiconductor industry official said, "While NAND demand is increasing, centered on eSSD used in AI data centers, it is true that production capacity is limited," and added, "Some big tech corporations expanding their data centers have already begun supply talks to lock in volumes."
NAND demand is increasing in step with the growth of the AI market. Kim Rok-ho, a researcher at Hana Securities, analyzed, "NAND demand next year is expected to increase 18% from a year earlier, but demand will exceed supply by 5%." Kioxia, the world's No. 3 NAND corporation, said in its earnings release that the NAND market will record an average annual growth rate of 20% from this year through 2029, with demand rising mainly in AI. It also projected that products related to AI will account for about half of NAND demand by 2029.
Despite rising demand, most NAND manufacturers are focusing on maintenance and transitions to advanced processes rather than aggressive investment, resulting in a steep uptrend in prices. Samsung Electronics and SK hynix, Nos. 1 and 2 in the NAND market, are concentrating newly added production lines on HBM and commodity DRAM, while NAND is seeing mainly transition investments to advanced processes rather than additional capacity builds, leaving supply unable to keep up with demand. The average fixed transaction price last month for general-purpose NAND flash for memory cards and USBs (128Gb 16Gx8 MLC) was $4.35, up 14.9% from the previous month. That is the highest of the year and marks a 10th straight month of increases since January.
For these reasons, competition to secure NAND volumes is said to be growing fiercer. A semiconductor industry official explained, "Some suppliers have completed next year's contracts and are changing the unit of price and volume contracts from a quarter to two to three quarters. Many have also opened negotiations for 2027 supply volumes," adding, "Compared with solid demand, NAND corporations' expansion stance is conservative, and as a result, the situation in which demand outpaces supply will continue, keeping the price uptrend intact."
With profitability expected to improve significantly not only in DRAM but also in the NAND business, earnings forecasts for Samsung Electronics and SK hynix are being revised upward. According to financial data firm FnGuide, Samsung Electronics' forecast for next year's annual operating profit rose about 28% to 76.5275 trillion won from 59.6927 trillion won a month earlier. Over the same period, SK hynix's operating profit forecast was also revised up about 28% to 70.5481 trillion won from 55.0499 trillion won.