Samsung and SK hynix, which control over 70% of the total DRAM output, are stating that their strategy towards the ongoing 'memory boom' will focus on profitability.
DRAM Supply Constraints Are Expected to Last Beyond 2028, As Drastic Production Increase Might Lead to "Oversupply"
Memory shortages are a significant concern for multiple industries, but particularly for consumers, who are being affected the most. RAM prices have skyrocketed over the past few weeks, to the point where they are now almost 'unaffordable', and this supply constraint mainly comes from DRAM demand being at its highest-ever. According to a report by the Korean media outlet Hankyung, the largest DRAM suppliers, including Samsung and SK hynix, have issued their verdict on the 'memory supercycle', stating that shortages are expected to persist for several quarters ahead.
Rather than rapidly expanding facilities, we will pursue a strategy of maintaining long-term profitability. We will minimize the risk of oversupply through a capital expenditure (CAPEX) strategy that balances customer demand and pricing.
- Samsung
The idea of DRAM production scaling up requires several resources, not just the time involved. Samsung and SK hynix have experienced a challenging DRAM cycle during the COVID era and beyond, which is why production lines are currently constrained. This is due to the drastic reduction in DRAM production that was implemented to combat the lack of demand a few years ago. And now, as Samsung mentions, if DRAM companies invest heavily in increasing capacity, it could eventually lead to an 'oversupply' situation once the AI hype fades out.
Suppliers are estimating that DRAM shortages could persist until 2028, and manufacturers are entering into 'short-term' contracts to ensure that price increases are reflected more quickly in customer quotations, which is why 'long-term' profitability is a key factor for firms like Samsung and SK hynix. According to this report, consumers should note that the DRAM situation isn't expected to improve, at least in the next quarter or two, which means that products like RAM and GPUs will remain under supply constraints.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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