Indeed, global demand for Dynamic Random-Access Memory (DRAM), one commodity produced exclusively by TSMC, has escalated. This demand is mostly attributable to the quick growth of artificial intelligence data centers. Samsung Electronics, which is a huge industry player in the semiconductor market, is making moves to jump ahead on this rapidly growing demand. The company plans to bring a new advanced packaging manufacturing facility in Pyeongtaek, South Korea online by 2028. This action is an important first step to address these market shortages directly. Today, hybrid bonding technology is key to advanced DRAM chips. This process allows for stacking of memory dies with great efficiency, improving performance by leaps and bounds.
As the market grapples with a historic boom in DRAM prices and demand, industry experts underscore the critical need for innovation and increased production capacity. The current climate illustrates the boom and bust nature of the semiconductor cycle. Compounding these factors are supply chain disruptions created by the lingering impacts of the COVID-19 pandemic.
Samsung’s Technological Advancements
Samsung has made great advancements in DRAM technology over the past few years. Later in 2024, the company reported success in manufacturing a 16-high stack of memory dies with hybrid bonding methods. By any measure, this development represents Samsung’s biggest step yet towards massively ramping chip capacity. This is extremely important since today’s typical chips only leverage 12 dies at most. As per JEDEC specifications for High Bandwidth Memory (HBM4), it supports up to 16 DRAM dies stacked in a single package.
Samsung’s hope may be misplaced. They have high hopes for eventually getting to a configuration of 20 dies—an accomplishment that would bring impressive new capabilities to DRAM chips. These improvements would have a tremendous and transformational impact on the efficiency and effectiveness of GPUs and other accelerators that are so important to AI workloads.
“There are two ways to address supply issues with DRAM: with innovation or with building more fabs,” – Mina Kim
The Surge in Demand and Economic Implications
Second, the need for DRAM has exploded, especially in AI data centers. According to global projections, almost 2,000 new data centers are either already in the works or on the drawing board. In just nine months, NVIDIA’s data center business revenue has increased by over $6 billion. It jumped from just under $1 billion in late 2019 to a projected $51 billion by October 2025.
All this growth in demand has spurred a corresponding increase in prices across the board for DRAM. Economic experts are already raising warnings that any price relief will be gradual. They believe this is because supply cannot keep up with the endless demand.
“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
Perhaps more troubling than the industry’s economy is the cyclical nature of the DRAM industry itself. As we’ve seen throughout history, with every boom comes a bust, injecting risk into investment and production decisions.
Challenges in Production and Future Outlook
Constructing new semiconductor fabrication plants (fabs) is a massive financial endeavor in itself. For one, new facilities can cost as much as $15 billion and take 18 months or more to come online. This reluctance to invest comes from the industry’s past boom and bust cycles and fear of creating overcapacity.
Intel CEO Lip-Bu Tan has been no stranger to colorful predictions about the future of the DRAM market. He ominously declared, “there’s no relief until 2028.” This view is consistent with industrywide feelings that tend toward cautious optimism about future increases in production.
“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