Morgan Stanley is raising alarm bells around SK Hynix's rapidly depleting DRAM inventory, which is now at effective "sold-out" levels as the AI-driven demand for high-bandwidth memory (HBM) - a type of DRAM - continues to corner an ever greater proportion of the global memory wafer capacity.
SK Hynix: "DRAM (DDR5) inventory is down to about two weeks, effectively at a 'produce-and-ship' level"
Morgan Stanley is sounding the proverbial gong today as SK Hynix's DRAM inventory levels continue to sink to the bottom-of-the-barrel levels.
Before going further, do note that SK Hynix disclosed its earnings for the third quarter of 2025 earlier this week, showing that its operating profit soared by a whopping 62 percent during the just-concluded 3-month period, driven by the complete "sell-out" of its HBM products.
As mentioned previously, the rip-roaring demand for HBM products is reducing the available wafer capacity for other DRAM and NAND products, reducing their supply in the process. We noted in a recent post that the global average delivery times for DDR5 are now quite stretched, currently hovering between 26 and 39 weeks.
Coming back, SK Hynix announced at its earnings call that it has fully booked its DRAM and NAND capacity through 2026, with HBM4 set to ship by the end of 2025.
Now, Morgan Stanley is out with a fresh note, assessing that "that the spread of AI servers is significantly stimulating demand for commodity memory (DRAM and NAND), rapidly drawing down industry inventories and supporting the ongoing price uptrend."
According to SK Hynix, its DDR5 capacity is now down to just around 2 weeks, which is an effective "produce-and-ship" level. Moreover, its NAND inventory is currently hovering at between 4 and 5 weeks of supply.
Do note that SK Hynix is currently the lead supplier of HBM products, having cornered 64 percent of the global market. Micron is at a distant second place with a 21 percent market share, and Samsung is in third place with a 15 percent share.
Morgan Stanley went on to note:
"The recent unexpected spike in commodity DRAM and NAND demand has laid the groundwork for a severe supply shortage in 2026, and that the stronger market conditions could last through 2026."
As for what this paradigm shift means for smartphones, the roaring demand for HBM is cornering an ever greater share of the overall DRAM capacity, squeezing out the production of products such as LPDDR5X, which is a high-performance, low-power version of standard Dynamic Random Access Memory (DRAM) that is typically used in smartphones, tablets, and thin laptops. This reduced supply is then driving up the price of LPDDR5X.
This situation echoes the claims of Xiaomi's President, Lu Weibing, who recently noted in a Weibo post that Xiaomi "cannot change the trend of global supply chains, and the rise in storage costs is much higher than expected and will continue to increase."
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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