Around China's Lunar New Year holiday, prices of commodity DRAM and NAND have surged by as much as nearly threefold, deepening a supply shortage in memory chips. The industry expects this memory shortage to persist at least until the second half of next year.

Amid projections that prices of major IT devices such as smartphones and PCs rise across the board as global demand for memory semiconductors surges due to the artificial intelligence (AI) boom, a staff member inspects laptops at a mart in Seoul on the 25th. On the 11th, the industry says soaring demand for High Bandwidth Memory (HBM) used in AI servers pushes low-cost DRAM production down the priority list. Market research firm Omdia analyzes that prices of mobile DRAM (LPDDR) products rise more than 70% from early last year, and smartphone NAND flash prices also jump about 100%. /Courtesy of Yonhap News

On the 12th, market research firm Counterpoint Research shared this analysis in an online webinar. According to Counterpoint Research, prices for 64GB server DRAM modules (RDIMM) DDR5 rose 150% from the previous quarter around the holiday. Mobile 12GB LPDDR5X climbed 130%, and general-purpose 8GB SO-DIMM DDR4 used in laptops jumped 180% despite being an older product. NAND products also rose 130%–150%, marking an unusual surge.

The view is that this supply shortage will be hard to resolve in the short term. Although the industry is carrying out annual capital expenditures (CAPEX) of 80 trillion–90 trillion won, it is not enough to keep up with soaring demand.

Hwang Min-sung, a research fellow at Counterpoint Research, said, "This year, production by major DRAM companies such as Samsung Electronics, SK hynix, Micron, ChangXin Memory Technologies (CXMT), and Nanya Technology is expected to increase by about 26%, and NAND by 24%," but added, "Meaningful supply expansion will be difficult until the second half of 2027, and the timing for resolving the shortage is likely to be late in the second half of 2027."

In this environment, the key theme in this year's high-bandwidth memory (HBM) market is expected to be profitability rather than market share competition. According to Counterpoint Research, SK hynix led the market last year with about a 60% share by HBM shipments and revenue, but its share could slip somewhat this year.

Hwang said, "In the HBM4 market, Samsung Electronics is expected to make strong gains," adding, "SK hynix faces a situation where it needs to modify part of its HBM4 design for Nvidia, and how quickly it normalizes this will be the key."

There is also analysis that, to maximize profitability, memory companies are scaling back some production of customized AI chips (ASIC), such as custom HBM, and focusing on commodity memory production. Hwang said, "Because hyperscalers (large cloud providers) still have strong memory demand, prices are unlikely to drop sharply in the second half of this year."

Geopolitical risks in the Middle East appear to have a limited short-term impact on memory prices. However, if higher energy prices persist over the long term, they could translate into upward pressure on semiconductor prices through higher data center operating expenses and rising capital costs.

Meanwhile, the industry cites the rise of Chinese memory companies as the biggest long-term variable. Hwang said, "The market share of Chinese DRAM company ChangXin Memory Technologies could expand to over 10% in 2028, and the share of Chinese NAND company Yangtze Memory Technologies (YMTC) has already reached about 13%," adding, "In the past we competed with Taiwanese corporations, but now we must compete with Chinese companies that have massive subsidies and a huge domestic market."

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