Major semiconductor corporations such as Samsung Electronics, Micron, and TSMC have recently unveiled record quarterly results in succession. It is evidence that the semiconductor supercycle (a boom period) driven by expanding artificial intelligence (AI) demand is continuing at an unprecedented scale. Even so, the market keeps raising a "semiconductor peak" argument. ▲ Disruptions in data center investment by global big tech corporations ▲ Weakened PC and smartphone demand due to rising memory prices ▲ Simultaneous capacity expansions by major memory corporations could flip today's shortage into oversupply.
In the market, the prevailing view is that this boom will continue for around at least two more years. Big tech capital expenditures (CapEx) and demand for high-bandwidth memory (HBM) and server DRAM are rising, and it also takes time for new fab output to reach the market. Still, concerns are growing that players must respond preemptively to changes in demand, inventories, and supply, mindful of the factors that created the semiconductor chill in 2022–2023.
According to the industry on the 20th, the profitability of major semiconductor corporations has recently remained at a high level. TSMC, the world's largest foundry (contract chip manufacturing) corporation, posted revenue of 1.2704 trillion Taiwan dollars (about 58.6 trillion won) and operating profit of 766.6 billion Taiwan dollars (about 35.4 trillion won) in the second quarter of this year (Apr.–Jun.). Those rose 36.0% and 65.4%, respectively, from a year earlier. The operating margin climbed from 49.6% to 60.3%. ASML, the world's largest semiconductor lithography equipment company, raised its maximum annual revenue outlook for this year from 40 billion euros to 45 billion euros (about 76.5 trillion won).
Micron posted revenue of $41.456 billion (about 61.471 trillion won) and operating profit of $33.318 billion (about 49.404 trillion won) in the third quarter (Mar.–May) of fiscal year 2026. Its operating margin reached 80.4%. Market research firm Counterpoint Research analyzed that the second-quarter operating margins of the Samsung Electronics memory division and SK hynix were at similar levels.
◇ Despite record results, peak worries… Three variables that could flip supply and demand
Although the profitability of major semiconductor corporations is continuing at unprecedented levels, some analysts say the boom could end sooner than the market expects if several variables align. In particular, in the domestic market, concerns about a "memory peak-out (passing the peak)" are becoming more prominent. Market research firm Omdia analyzed that this year could be the peak in the semiconductor market's growth rate.
① Data center investment disruptions… Power and expense hurdles
Delays or cancellations in data center construction can directly shake AI memory demand. Orders for HBM, server DRAM, and enterprise solid-state drives (eSSD) are placed in line with hyperscalers' (large-scale data center operators) facility construction and server installation schedules. If power procurement and permitting are delayed, semiconductor orders are also pushed back.
Recently, government regulation has emerged as a variable in the data center market. In the United States, New York state paused discretionary permitting for one year for new large data centers with power use of 50 megawatts (MW) or more. The move is to review grid expansion expense, electricity rates, and water burdens. Amsterdam in the Netherlands is restricting new builds and expansions of existing facilities through 2030. Omdia projected that while data center power demand will rise 12%–20% annually over the long term, power generation growth rate will be only 1%–5%.
Bruce Bateman, Omdia's Taiwan semiconductor senior analyst, said, "Among major U.S. data center projects, those at risk of delay or cancellation due to power and water issues total 9–12 gigawatts (GW)."
Project costs are also rising. Morgan Stanley raised its estimated cost to build a 1 GW data center based on Nvidia's AI accelerator "Rubin Ultra" by 16%, from $4.3 billion (about 6.376 trillion won) to $5 billion (about 7.414 trillion won). It also lifted the estimate for facilities based on Amazon's "Trainium3" by 36%, from $1.5 billion (about 2.224 trillion won) to $2.1 billion (about 3.114 trillion won). An industry official said, "If monetization of AI services fails to keep up with rising investment, groundbreakings and semiconductor orders could be delayed."
② Memory prices surge… PC and smartphone demand weakens
Memory makers prioritized production capacity for high-margin products such as HBM and server DRAM while cutting supply of commodity DRAM and NAND flash. As component costs were reflected in finished goods prices, shipments began to decline first in the price-sensitive budget segment.
Omdia expects U.S. PC shipments this year to fall 14.4% from a year earlier. According to Counterpoint Research, global smartphone shipments in the second quarter also fell 11% from a year earlier, marking the lowest second-quarter performance since 2013. If commodity memory customers ramp up inventory adjustments in earnest, orders for DRAM and NAND could drop and halt the price uptrend. An industry official said, "Even if AI server products remain strong, if the PC and smartphone markets fail to absorb new commodity volumes, overall inventory burdens could grow."
③ Memory's big three and CXMT expand capacity… Supply burden in 2028
The memory big three (Samsung Electronics, SK hynix, and Micron) are expanding investments in new fabs and existing production lines to address shortages. Even with awareness that prices could fall later, the memory big three find it hard to delay investment. China's ChangXin Memory Technologies (CXMT), which ranked fourth last year with a 7.7% share of the global DRAM market, is rapidly chasing these corporations by scaling production capacity and advancing process technology. If they fail to supply the volumes customers require, they could lose long-term supply contracts and market share.
Samsung Electronics moved up the target start of operations for the first fab in the Yongin semiconductor cluster from 2030–2031 to 2029. SK hynix is ramping up investment in the Cheongju M15X while planning to complete its first Yongin fab early by Feb. 2027. Micron expanded fiscal year 2026 capital expenditures to about $27 billion (about 40.036 trillion won). Analysts say that if demand growth rate slows in the second half of 2027 to 2028, when some new facilities begin full wafer input, supply burdens could rise.
◇ The three variables coincided in 2023… Some say "this time is different"
The semiconductor market downturn in 2022–2023 resulted from the same three variables now reemerging. PC and smartphone corporations reduced inventories and data center investments declined, but memory makers did not immediately cut output, triggering a "semiconductor chill." The 2023 annual operating loss of Samsung Electronics' DS (semiconductor) division was 14.87 trillion won. SK hynix and Micron also posted operating losses of 7.73 trillion won and $5.745 billion (about 8.519 trillion won), respectively.
Meanwhile, many say this boom cycle differs from the past. Counterpoint Research analyzed that server DRAM and HBM will account for 57% of total DRAM shipments this year. In the past, PC and smartphone replacement demand heavily swayed industry conditions, but now AI server demand is absorbing volumes, creating a structure that can fend off a steep price drop.
Major hyperscalers are also increasing capital expenditures. Morgan Stanley projects related investment to grow from $779 billion (about 1,155.101 trillion won) this year to $1.396 trillion (about 2,069.988 trillion won) in 2028. Nomura expects memory demand originating in data centers to rise from $107 billion (about 158.66 trillion won) in 2025 to $1.398 trillion (about 2,072.954 trillion won) in 2030.
Analyst Bruce Bateman said, "Until new fabs come online, it will be hard to resolve the shortage, but we must keep checking whether current orders are translating into real end demand."