Samsung Electronics has ambitious plans to begin producing new types of memory chips. They will jointly construct a new manufacturing factory located in South Korea’s Pyeongtaek, and start operating by 2028. The world’s demand for Dynamic Random Access Memory (DRAM) is through the roof. The surge is creating extreme supply shortages and pushing prices up sky-high. The company plans to solve all this with some combination of unique technology and a ramp-up of new factories.
This announcement comes as the DRAM market is currently booming with never before seen demand. This has caused memory supplies to get diverted from other uses. Soaring demand for DRAM, especially for artificial intelligence (AI) data centers, has made prices shoot up drastically as well. The key to that has been Samsung’s strategic decision to cut its production by 50 percent this year. This initiative was taken to ensure that prices would not fall below the cost of production responding to market fluctuations.
The Current State of DRAM Supply
Industry analysts estimate that the current global supply of semiconductor manufacturing facilities infrastructure is around 90,000. More recently market expansions have accounted for that significant and growing 20 percent bump. Though positive, this expansion is still not enough to meet the overwhelming and unlimited demand for DRAM. Expanding new manufacturing capabilities is a monumental task. It costs upwards of $15 billion to build a new fabrication plant. This heavy financial burden discourages the private sector from investing in new fabs even with booming demand.
Mina Kim, an industry expert, outlines two primary methods to tackle supply challenges within the DRAM sector: “There are two ways to address supply issues with DRAM: with innovation or with building more fabs.” Constructing a new facility is a time-consuming process of its own that further complicates things. This usually means it takes 18 months or more to finish the build and reach full production capacity.
Samsung’s recent, and extreme, cut in production is the latest reminder of how precarious the DRAM market can be. Samsung is intentionally cutting production in order to control supply. This tactic protects against sharp price drops that might otherwise put the business at risk of losing money. Even those measures will only afford temporary relief in a market accustomed to breakneck speed of demand expansion.
Innovations in DRAM Technology
Beyond growing their production capacity, companies like Samsung are taking bold steps to improve DRAM technology itself. Samsung chip researchers have achieved a successful 16-high stack of DRAM dies. As exciting as their inventive use of hybrid bonding techniques seems, memory performance may be about to experience a revolution. The up-to-date specifications for High Bandwidth Memory (HBM4) enable quite the upgrade. As of now, you can die stack up to 16 DRAM dies, rather than the current maximum of 12 dies.
The news release accompanying the announcement of Samsung’s B300 chip last month is measuring up to this new wave of innovation. This chip contains eight HBM chips, each one made up of stacked DRAM dies. HBMs are stacked vertically on each side of the processor, creating a denser and more efficient packaging alternative. This type of design has allowed for a highly-integrated combination of the graphics processing unit (GPU) and memory in a single component.
As demand for advanced memory solutions only increases, companies are looking to break ground in other ways. Shawn DuBravac, another industry analyst, notes that relief from current supply shortages will likely stem from incremental capacity expansions and advancements in packaging technologies. He states:
“Relief will come from a combination of incremental capacity expansions by existing DRAM leaders, yield improvements in [advanced packaging], and a broader diversification of supply chains.”
The Future of DRAM Pricing
When it comes to the DRAM market, one of the other major pricing dynamics has always been in the spotlight for industry participants. And even with targeted production cuts intended to stabilize prices, experts caution that price corrections won’t happen overnight. Mina Kim emphasizes this point by stating:
“In general, economists find that prices come down much more slowly and reluctantly than they go up. DRAM today is unlikely to be an exception to this general observation, especially given the insatiable demand for compute.”
As companies continue to operate in this difficult environment, there continues to be doubt about when and how prices will find a certain level with ongoing demand pressures. As the company’s data center business continues to demonstrate, staggering growth is the defining theme. Its revenue increased elevenfold, from approximately $1 billion in late 2019 to a breathtaking $51 billion in the fiscal quarter ending in October 2025. This meteoric rise to prominence further underscores the pivotal role that DRAM serves as the backbone to support such advanced computing technologies.
Our current market landscape is a clear representation of the aggressive competitive strategies employed by firms like Micron Technology. Notably, this company has tripled its production capacity in record time, exceeding growth at every turn. This alarming trend elicits concerns about the ability of new competition to come in and create downward price pressure or at least stabilize prices from increasing.