The DRAM industry is undergoing seismic shifts. Companies are already scrambling to handle the greatest boom and bust cycle in recent memory. Samsung Electronics has been one of the major forces in the industry. By 2028, the company hopes to begin production in a new facility slated for Pyeongtaek, South Korea. This tactical decision is a natural reaction to the unprecedented, exponential increase in demand for DRAM. The memory requirements in AI data centers are fueling this upsurge. Prices are exploding right now as we see a huge increase in demand. Meanwhile, supply is being poached for other projects, worsening the perfect storm of challenges facing the industry.
The COVID-19 pandemic accelerated a global chip shortage, sending every industry into a supply panic that has deepened the long-standing cycle of high demand and low supply. Yet there are nearly 2,000 new data centers planned or under construction globally. Small wonder then, with this 2,500% increase that this hugely increases the strain on DRAM supply. Industry experts suggest that the current situation is unlikely to stabilize until significant innovations or expansions in production capabilities materialize.
Demand Surge Driven by AI
The need for DRAM has exploded. It is essential for fueling the unprecedented demand for AI data centers, particularly in powering graphics processing units (GPUs) and other accelerators. And of course, NVIDIA’s data center business is booming. Its revenue almost tripled—from a mere one billion dollars in little old late 2019 to a staggering $51 billion by October 2025. This meteoric rise is a testament to the insatiable appetite for more and more computing power.
Important advancements in the technology used to produce DRAM have played a role. With the capability of producing a 16-high stack in quadruple configuration using hybrid bonding as early as 2024, Samsung stole the show. 20 dies are clearly within their reach, the company stated. Innovation like this is imperative. It paves the way for the future of High Bandwidth Memory (HBM4), supporting up to 16 high-speed stacked DRAM dies to increase efficiency and performance.
“There are two ways to address supply issues with DRAM: with innovation or with building more fabs,” – Mina Kim
The urgency to expand production is evident. According to industry analysts, a short-term supply crisis will run its course. They expect this relief to come from capacity to high-quality DRAM fab expansions by current leaders, yield advancements in cutting-edge packaging, and general supply chain diversification.
Challenges of New Fabrication Facilities
Even with the urgent need, building new fabrication facilities—or fabs—come with a tremendous fiscal burden. With costs for new plants going over US $15 billion, many companies are showing a marked hesitance to commit to major investments in growth. Storage and memory guru Thomas Coughlin, by the way, points out this fear is common among manufacturers trying to find their way through all the unknowns marketplace.
When you throw into the mix prices for DRAM soaring as a result of diverted supply, the picture gets much more complicated. Mina Kim notes that “in general, economists find that prices come down much more slowly and reluctantly than they go up.” This refrain is particularly fitting for the DRAM market in 2023, as the drumbeat of demand still surpasses capacity.
“There’s no relief until 2028,” – Intel CEO Lip-Bu Tan
These types of statements from industry leaders further confirm the agreement that no short-term solutions are on the way. That pretty hard and fast 3+ year timeline until Samsung’s new plant comes online further amplifies the urgency being widely felt across the sector.
Investment in Infrastructure
The issue continues to deteriorate. In an effort to get ahead of the rapidly-growing data center industry, we expect to invest about $3.3 billion in servers, storage and network equipment. With nearly 2,000 new facilities either planned or under construction globally, this investment signals a robust future demand for DRAM.
Recent progress has demonstrated the B300, a mighty GPU utilizing eight HBM chips. Structural to this design is the combination of memory and processing elements into one unit, providing a massive increase in performance potential. Such advances highlight the tremendous value of DRAM in today’s computing landscape.
Shawn DuBravac emphasizes that “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.” This multifaceted approach underscores the level of collective effort needed to have a chance at overcoming the supply challenges.