A forecast says global semiconductor market revenue could approach 2,000 trillion won this year. The main driver behind the market's expansion is cited as the steep surge in memory chip prices, propelled by rising demand from the spread of artificial intelligence (AI) services.
In line with memory chip price hikes, U.S. big tech corporations are raising the scale of their AI infrastructure investments. Analysts say this could make the size and duration of the supercycle (boom period) that Samsung Electronics and SK hynix are currently enjoying unprecedented.
According to the industry on the 4th, Omdia, in a report released on the 23rd of last month, projected that semiconductor market revenue this year could increase 62.7% from a year earlier to about $1.35 trillion (about 1,994 trillion won). In January, Omdia had expected the semiconductor market this year to see an unprecedented boom and "surpass $1 trillion (about 1,477 trillion won) for the first time," but in just three months it raised its growth outlook (30.7%) by another 32 percentage points (P) from its previous forecast.
Omdia cited sustained expansion in demand for memory semiconductors as the reason for its upward revision. It analyzed that the resulting deepening supply shortage would drive price increases across memory chips and significantly enlarge the market. Specifically, Omdia expects the DRAM market this year to double and the NAND flash market to grow about fourfold from last year.
The newly raised revenue outlook for the memory semiconductor market this year stands at $670 billion (about 990 trillion won), up $250 billion from the previous estimate (about $420 billion). That implies 200% growth compared with last year.
Omdia said, "As major corporations focus on producing high-priced high bandwidth memory (HBM), supply constraints are intensifying across memory chips," adding, "Robust memory demand from data centers is continuing, so meaningful supply easing will remain difficult for some time even into 2027." It also said, "Semiconductor market revenue growth is being driven more by average selling price (ASP) increases than by shipment growth," and, "While market expansion also appeared during past memory supercycles tied to cryptocurrency mining, this time the scope and scale are unprecedented."
Memory chip prices are soaring. According to market researcher DRAMeXchange, as of the end of April, the average contract price for standard PC DRAM (DDR4 8Gb 1Gx8) was $16.00, up 23.08% from the previous month ($13.00). Compared with $1.65 in April last year, the price has risen about tenfold in a year.
The April average contract price for standard NAND used in memory cards and USBs (128Gb 16Gx8 MLC) also jumped to $24.16, up 36.29% from the previous month ($17.73). Prices have risen for 16 straight months. Market researcher TrendForce projected that in the second quarter, contract prices would rise 58%–63% for standard DRAM and 70%–75% for NAND from the previous quarter.
The rise in standard memory prices is largely due to major suppliers such as Samsung Electronics, SK hynix, and Micron prioritizing production capacity for high value-added products like HBM and server DRAM. As the race to invest in AI infrastructure intersects with rising memory prices, U.S. big tech capital expenditures (CAPEX) are also growing. Alphabet, Microsoft (MS), Meta, and Amazon, key customers for AI memory chips, said in recent earnings announcements that they would raise capital spending this year to address the AI market. The combined upper-end forecast for these big techs' capital expenditures this year totals as much as $725 billion (about 1,071 trillion won), up sharply from $410 billion (about 606 trillion won) last year. As a result, memory chip price increases are expected to continue for some time.
Omdia analyzed, "Corporations are accelerating the replacement of aging servers to handle workloads that demand higher performance, such as AI and data analytics," adding, "This trend, combined with hyperscalers' exceptional capital spending and component shortages, will lift average selling prices."
With prices rising not only for high value-added products like HBM but also for standard memory, profitability at Samsung Electronics and SK hynix is being maximized. In the first quarter, Samsung Electronics' DS (semiconductor) institutional sector posted revenue of 81.7 trillion won and operating profit of 53.7 trillion won. Revenue from the memory business in the first quarter was 74.8 trillion won. The DS institutional sector is broadly divided into memory and non-memory (System LSI and foundry). Although Samsung Electronics does not disclose detailed operating profit by business unit within DS, the securities industry estimates the memory division's first-quarter operating margin at around 70%–75%. SK hynix recorded first-quarter revenue of 52.5763 trillion won and operating profit of 37.6103 trillion won, for an operating margin of 72%. Operating margin is a key indicator of a business's profitability.
First-quarter operating margins at Samsung Electronics' memory division and at SK hynix are higher than those of Nvidia (65%) and TSMC (58%) over a similar period. They also surpass competitor Micron (68%). A semiconductor industry official said, "With a memory chip shortage, a 'supplier's market' structure is clearly evident now," adding, "The market is so strong that 'the asking price is the price.'"