Today, the global memory chip market is facing the most profound headwinds in memory’s history. Revenue from DRAM (Dynamic Random Access Memory) is on fire and blowing the doors off supply. Major players in the industry, particularly Samsung and Micron, are adapting their strategies to address this crisis, but experts warn that relief may not come until 2028. And with almost 2,000 new data centers either planned or in construction around the globe, the need for expanded production capacity is certainly urgent.
To make up for the shortfall, Samsung has already committed to building a new fab in Pyeongtaek, South Korea by 2028. This new facility is expected to increase DRAM capacity and ease some of the market’s strain. Examples of the company’s recently taken bold moves to fight inflation-rich price increases. To manage costs largely due to runaway demand, in 2023 they halved production to 50% of capacity.
The increasing need for data storage and processing power has triggered a significant diversion of memory supplies. That dramatic shift in regulations drastically exacerbated the shortage that was already swelling. The economic effects are just as serious. Seemingly every tech company is riding the wave, most notably NVIDIA, whose data center business revenue has grown from under $1 billion in late 2019 to an anticipated $51 billion by October 2025.
Demand Surges Amidst Supply Constraints
The demand for DRAM is through the roof, fueled mainly by the focus on cloud computing, and more specifically, data centers. Today, there are nearly 2,000 new facilities planned or under construction worldwide. All of this increase brings the urgent need for memory chips to a head more than ever. Analysts expect investors to focus about $3.3 billion on servers, data storage and network equipment as a result. This funding is intended to prepare for the coming big expansion.
Even with these investments, the global supply of facilities remains scarce, with only ~9,000 total in existence around the world. If expansions move ahead as expected, they have the potential to add 20 percent more supply to the global market. This process will take some time to play out. It generally takes a minimum of 18 months to build a new semiconductor fabrication plant … just to build the facility. It frequently costs more than $15 billion to bring it online.
As businesses work to catch up with demand, many are looking to new technologies and solutions. Researchers at Samsung have successfully demonstrated a new hybrid bonding technique capable of producing a 16-high stack of DRAM dies in 2024, surpassing current technologies which accommodate only 12 dies. This visionary progress would finally enable multi-die configurations of up to 20 dies.
“There are two ways to address supply issues with DRAM: with innovation or with building more fabs.”
Manufacturers are increasing capacity and adopting new technologies to keep up with booming consumer interest. Relief at the pump, experts say, may take a while to come. “In general, economists find that prices come down much more slowly and reluctantly than they go up,” remarked Mina Kim.
Increasing DRAM prices have further impacts beyond the immediate supply limitations. They affect all areas, for example, computing, automotive, and consumer electronics sectors, all of which rely heavily on memory chips. Samsung’s decision to cut production reflects a strategic move to maintain profitability amid declining prices that threaten to dip below manufacturing costs.
“DRAM today is unlikely to be an exception to this general observation, especially given the insatiable demand for compute.”
Intel CEO Lip-Bu Tan weighed in on the industry’s outlook:
This stark forecast underscores the challenges faced by manufacturers as they work to scale production effectively while managing operational costs.
“There’s no relief until 2028.”
So, even as the short-term outlook seems grim, hope remains within the industry that there are multiple avenues to memory chip shortage relief. Shawn DuBravac, Chief Economist & Executive Director of IPC, stressed the need for incremental capacity expansions to complement new innovations in advanced packaging techniques. He stated:
Future Prospects and Innovations
As companies invest in new technologies and production capabilities, the landscape of the memory chip market may begin to shift. Micron believes that its data center business can grow to $51 billion in revenue. It will hit this milestone two years later than NVIDIA, underscoring just how cutthroat the industry can be.
“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 rapidly developing and emerging standards HBM (high-bandwidth memory) bring promising opportunities for inventive breakthroughs too. The new HBM4 standard allows for configurations of up to 16 stacked DRAM dies. This is a big breakthrough over what’s out there.
The evolving standards for high-bandwidth memory (HBM) also present opportunities for innovation. The new HBM4 standard allows for configurations that can accommodate 16 stacked DRAM dies, a notable improvement over existing technologies.