Memory shortages set to peak in 2027 as AI boom strains supply beyond 2030, warns SK Hynix CEO

Memory makers are slaves to the boom-bust rollercoaster, and the AI boom is the wildest ride of all

It's a good time to be in the memory business. As the AI datacenter business booms, SK Hynix and Micron's revenues have tripled in the last year, and Samsung's has roughly doubled. But while the trio have the AI revolution to thank for their good fortune, the deck is stacked for a reversal. Such is the memory business historically. Today, sky high demand for high-bandwidth memory (HBM), DDR5, and NAND flash memory needed for GPU servers has devoured any remaining capacity, leading to shortages that have driven up prices on everything from consumer electronics to AI infrastructure. You can't even buy a budget smartphone these days. The big three memory vendors are now in the process of investing hundreds of billions of dollars to bring new fab capacity online. In June, South Korean President Lee Jae Myung announced a $576 billion investment led by SK Hynix and Samsung to bolster chip production and shore up AI supply chains. On Thursday, Micron said that it would invest up to $3 billion to strengthen the US semiconductor supply chain, and according to recent reports, the Idaho-based chipmaker is also working to boost production across its Singapore, Taiwan, and Japan sites. Unfortunately, it's a slow process. Semiconductor manufacturing is among the most complex and resource-intensive industries in the world, and building a new DRAM or NAND flash wafer fab is not a trivial endeavor. Before the first chip can roll off the production line, financing must be secured, a location must been selected, permits must be won, and tens of millions of dollars of support facilities ranging from power conditioning and air handling to the ultra-pure water filtration systems must be deployed. Even after the clean rooms are completed, hundreds of millions of dollars of specialized lithography, wafer transport, and test equipment must be installed and validated. And once everything is ready to be powered on, it can take months to dial everything in and bring yields to acceptable levels. This process often takes years even without delays. So while there are a handful of new memory fabs already under way, anything SK, Samsung, or Micron starts today will take at least three years to bring online, and even longer to ramp production. That means memory prices are going to stay high for the foreseeable future. A recent IDC report warns that we may not see relief from the RAMpocalypse until at least 2028. That's great news for memory makers, whose revenues will stay inflated. But it's a big problem for AI startups and model devs, who will be paying higher infrastructure prices until that happens. OpenAI and others have spent the last four years or so and hundreds of billions of VC capital developing ever more capable models, agents, and tools. It's no longer a matter of whether the technology works, but rather whether the benefits justify continued investment at current or higher levels. Sooner or later, these startups will have to turn a profit, and sky high memory prices certainly aren't helping to find anything resembling a margin in the cost per token. The question now is whether or not the memory vendors can bring new capacity online before the great AI houses exhaust their VC-subsidized runway and the music stops. Historically, memory is a commodity, with wild swings in pricing characterized by boom and bust cycles. Memory vendors therefore rely on boom cycles to finance fabs, knowing full well that, once they come online, the additional capacity could end up cratering prices. As we reported late last year, the AI boom has changed this dynamic dramatically. Where we should have expected memory prices to fall across 2025 and 2026, we've seen the exact opposite as AI infrastructure consumes every bit of DRAM and NAND it can get its hands on. But if the anticipated demand for AI falls short, everyone loses and memory vendors will find themselves at the bottom of a bust cycle to end all bust cycles. On a bright note, the sky-high price of memory will no longer factor into why you can't afford a new laptop or smartphone. ®

SK Hynix CEO Warns 2027 Will Be Memory's "Worst Year" Ever, With Shortages Set To Outlast The Decade

SK Hynix CEO has warned that memory shortages will be at their worst in 2027 as it celebrates its trading debut on Nasdaq in Times Square. Memory Supply Won't See Any Sign of Relief Beyond 2030 As SK Hynix Signals 2027 To Be The Worst Year In Terms of Shortages Well, memory shortages have gripped all aspects of the tech industry, and it seems to have become the norm these days. As the supply crunch continues, the CEO of SK Hynix, one of the three largest DRAM producers, has said that things are about to get much worse for the memory market. ○ 25 Years of Challenges and AI Leadership Through HBM Innovation * Just 25 years ago, the company faced its most difficult moments in history -- including the risk of bankruptcy -- yet fought through the crisis with everything it had. The resilience and determination forged in those days have been the driving force behind the SK hynix of today. * Beginning in 2012, the company joined SK Group and began shaping the future together. Even when the future of advanced memory was uncertain, SK hynix recognized the need for a new technology -- HBM -- and became the first in the world to make it a reality. * Through relentless innovation, HBM has come to stand at the very heart of the AI revolution. * Today, building on its technology leadership spanning HBM, DRAM, and NAND Flash, SK hynix provides the core memory technologies that power AI infrastructure around the world. Talking to Reuters at the commemoration of SK Hynix's Nasdaq Trading Debut of its ADR, CEO Kwak Noh-jung stated that the memory industry will see its "worst-ever" supply shortages in the coming year (2027). SK Hynix has also forecasted that, given the current market demand, they will fall way short of fulfilling the market demand, and that will continue beyond 2030. SK Hynix Chief Executive Kwak Noh-jung said the global memory industry is heading for its worst-ever supply shortage in 2027, forecasting that demand for memory will continue to exceed the company's ability to produce it well into the next decade despite aggressive capacity expansion. "We forecast that next year will be the worst year in the industry's history from the supply perspective," via Reuters The comments from SK Hynix are in line with what Samsung and Micron executives have already said. Samsung has warned of 2027 being the worst year in terms of shortages and that things will continue this way till 2028 and beyond. Meanwhile, Micron has said that the current shortages are only the "first innings" and that both DRAM/NAND supply will be tight, as they are only able to meet 40-50% of the total market demand in the coming years. Heightened demand from AI customers and multi-year agreements further put pressure on the market. The big three DRAM makers have already prioritized premium DRAM segments such as HBM and LPDDR5X, while commodity memory such as DDR5, DDR4, and entry-level LPDDR RAM has taken a back seat. While these have boosted the profits of SK Hynix, Micron, and Samsung, they have devastated the consumer segment, which is facing the worst kind of price hikes that are affecting all sorts of components and platforms, including PCs, Smartphones, Consoles, etc. Focus on premium memory has also paved the way for Chinese DRAM and NAND makers to go all-in on production to meet the demands of domestic customers. Names such as CXMT (DRAM) and YMTC (NAND) are doubling their production capacities. SK Hynix, like Samsung and Micron, is also preparing to embark on a multi-year and multi-billion dollar expansion plan with new fabs and facilities being laid out across South Korea. SK Hynix is also considering the construction of Fabs in the US, Japan, and Southeast Asia, though the final plans are yet to be cemented. Micron recently started construction of its new facility that will be put towards DRAM production. Follow Wccftech on Google to get more of our news coverage in your feeds.