That brutal memory chip shortage that’s been hurting the automotive and other industries is expected to last at least through 2028. Surging demand for DRAM, especially in new AI data centers, exacerbates the AI crisis. Compounding this is the dual challenge of ramping up production capacity desperately needed to scale quickly. Currently, nearly 2,000 new data centers are either planned or under construction globally. This rapid shift in the demand for data storage solutions has forced memory chip prices to record high levels.
Samsung Electronics has recently achieved significant technical breakthroughs that will likely shape the future landscape of DRAM manufacturing. In 2024, the company showed that it could fabricate a 16-high stack of memory chips via hybrid bonding methods. This innovation is a sign that the production of 20 dies is not impossible, pointing to possible upside in supply. Challenges still persist, as companies continue to face an uphill battle to increase manufacturing capacity while demand continues to skyrocket.
The Demand for DRAM and Its Effects
Dynamic Random-Access Memory (DRAM) is crucial for the seamless performance of graphics processing units (GPUs). It continues to enable other accelerators common in AI data centers. Due to the overwhelming success and demand for DRAM over the past several years, it has drawn attention and resources away from other memory usages. This surge in demand has added to existing supply troubles, as many manufacturers have struggled to match the speed at which this new afflux of consumption has grown.
The new specification of High Bandwidth Memory (HBM4) allows up to 16 DRAM dies stacked in a single package. Most HBM chips produced today feature 12 dies per stack. The B300 model version utilizes 8 HBM chips. Each chip houses a tower of 12 DRAM dies, foreshadowing the increasing complexity and capacity requirements of today’s computing systems.
“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.” – Mina Kim
Expansion Challenges in Memory Chip Production
The need for expanded DRAM fabrication capacity is immediate. Most new fabrication plants (fabs) need huge investments, sometimes even surpassing $15 billion, and are reluctant to increase their capacities due to economic uncertainties. This reluctance has created a bottleneck in the market as companies scramble to meet the needs of an expanding digital infrastructure.
Right now, the expansion of global data centers is booming, with a forecasted 20 percent growth in supply through the industry. Even under all this expected growth, the pressure on memory chip production is continuing to mount. As industry experts have noted, fostering innovation is critically important in overcoming supply challenges.
“There are two ways to address supply issues with DRAM: with innovation or with building more fabs.” – Mina Kim
Shawn DuBravac emphasizes that relief will eventually come from incremental capacity expansions by existing DRAM leaders and improvements in advanced packaging techniques. A deeper diversification of supply chains will be partly effective to reduce some of the heat currently facing the market.
Future Outlook for Memory Chip Production
Looking further down the line, Samsung intends to start output from a new plant in Pyeongtaek, South Korea, by 2028. This move will help address the significant and persisting shortage of memory chips that’s been causing headaches for the transportation sector. As alluring as this prospect is, industry leaders are wary of raising expectations beyond where they need to be.
“There’s no relief until 2028.” – Intel CEO Lip-Bu Tan
Firms continue to wrestle with supply chain headaches and inflationary pressures. Because of this, it’s anyone’s guess as to when consumers will see a more meaningful reduction in memory chip prices. That one-two punch of strong demand and tight supply will help ensure that prices remain high in the near term at least.