The international memory chip industry is in deep trouble, especially when it comes to Dynamic Random-Access Memory (DRAM). The need for data storage is growing at an exponential rate. This boom is driven by the explosive growth of data centers and incredible technological progress. Firms such as Samsung are turbocharging the effects by massively increasing production capacity. At the same time, industry experts are cautioning that we may not see relief from this latest shortage until 2028.
That’s why companies are pouring a staggering $3.3 billion into servers, data storage and network equipment. They’re all sprinting to catch up to the currently sky-high demand for DRAM. CloudHQ NVIDIA’s data center business is growing like a weed. Revenues have exploded from roughly 1 billion dollars in late 2019 to a staggering $51 billion by October 2025. Such explosive growth is not coincidental, but is instead tied directly to the rising importance of memory chips for high-performance computing applications.
The Current State of DRAM Demand
The demand for DRAM has hit record levels, pulling supply from other DRAM applications. This lack of availability has resulted in soaring prices, raising alarm bells for producers and shoppers across the country. The new High Bandwidth Memory (HBM4) standard allows up to 16 stacked DRAM dies. By comparison, today’s HBM chips typically only use 12 dies. This divergence is a testament to the smart equipment manufacturers’ continuous pursuit of more performance and efficiency demanded by the market.
Samsung’s latest breakthroughs in memory chip technology might be able to help counteract many of the unfortunate phenomena. The company has demonstrated its capability to produce a 16-high stack with hybrid bonding in 2024, suggesting that innovations in design and manufacturing could help meet the pressing demand. Samsung later promised that it would be possible to reach a configuration with 20 dies. It’s a potentially game-changing development that would drastically alter the market landscape going forward.
“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.” – Shawn DuBravac
The incorporation of HBM chips into processors is yet another wrinkle in this changing landscape. These chips are often bonded on each side of a processor, enabling a smaller and more efficient footprint in an overall design. To date, the B300 model recently released uses eight high bandwidth memory (HBM) chips, each made up of a stack of 12 DRAM dies. The DRAM tower is about 750 micrometers thick. The engineering in these components speaks to the unique art of performance vs size.
Challenges Ahead for Manufacturers
Even with all the tech innovations coming down the pike, this industry has some serious challenges ahead. As Thomas Coughlin points out, just setting up new fabrication plants can carry considerable sunk cost obligations of $15 billion or more. As a result, companies can be discouraged from investing in or growing their domestic manufacturing operations because of these financial burdens. This reluctance can only exacerbate the ongoing shortage as demand continues to far exceed supply.
Economists note that price reductions in the memory chip market tend to occur at a slower pace than price increases. According to Mina Kim, “In general, economists find that prices come down much more slowly and reluctantly than they go up. DRAM today is no exception to this rule of thumb, particularly in light of the seemingly insatiable appetite for compute. This feeling highlights just how difficult it can be to avoid price increases while trying to navigate an unpredictable and highly combative market.
“There are two ways to address supply issues with DRAM: with innovation or with building more fabs.” – Mina Kim
As companies like Samsung prepare to ramp up production at new facilities, such as the planned plant in Pyeongtaek, South Korea set to start operations in 2028, the industry anticipates gradual improvements in supply. Intel CEO Lip-Bu Tan emphasizes the long wait for relief: “There’s no relief until 2028.”
The Future Outlook
When we take a step back, almost 2000 new data centers are in the planning or building stages all over the world. This fast-paced growth is an indicator of the robust, long-term demand for memory chips. Most importantly, it points to the pressing need to address the current supply chain challenges. As companies work toward bridging the gap between supply and demand, incremental improvements and diversifications in production will be essential.
Needless to say, industry experts are cautiously optimistic about what these advancements mean for the future of memory technology. As noted by Shawn DuBravac, incremental capacity expansions by existing players and advancements in yield improvements through innovative packaging will play vital roles in shaping the market’s future.
“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.” – Shawn DuBravac