The DRAM market bubble continues to inflate, with major enterprise buyers reportedly ready to subsidize manufacturing expansion expenditure to secure stable memory supply.
The DRAM sector has long been trapped in repetitive boom-and-bust cycles marked by alternating shortages and oversupply. Analysts including IDC argue that AI is triggering an industry supercycle. As AI structurally reshapes the memory market, the current upward cycle will be prolonged, with demand projected to outpace supply until 2028.
The global DRAM industry is an oligopoly dominated by three key manufacturers: Micron, Samsung and SK Hynix, which jointly control market pricing. This market structure mirrors the hard disk drive sector, where only three vendors—Seagate, Toshiba and Western Digital—operate. Among them, Seagate and Western Digital take the leading position, restraining new factory construction to deliberately limit capacity and maintain pricing power.
Fueled by AI, the surging demand for GPU-mounted high-bandwidth memory (HBM) has delivered substantial profits for memory vendors. Accordingly, the top three DRAM producers are prioritizing high-margin HBM production while phasing out low-profit consumer-grade DRAM and products built on outdated process nodes. A statistical chart released by Nomura Asset Management clearly demonstrates the trio’s overwhelming market dominance.
Current robust DRAM consumption is mainly driven by large language model (LLM) training workloads. Market momentum is expected to persist, as AI inference and intelligent agent reasoning applications will further sustain rising memory demand.
Although the three leading DRAM manufacturers plan to invest heavily in new fabrication capacity, they remain cautious about over-expansion. Once supply balances with market demand, continuous wafer output from newly built fabs will trigger price declines. Unlike conservative suppliers, enterprise customers are facing supply shortages and have an urgent need for immediate DRAM procurement.
Jukan, a South Korean semiconductor industry analyst, revealed that SK Hynix has received funding proposals from large clients. These buyers intend to cover part of the fab expansion and equipment procurement costs, in exchange for dedicated production lines and fixed pricing to lock in long-term DRAM supply.
Jukan pointed out that this emerging cooperation model breaks the traditional memory boom-bust pattern. The industry is increasingly regarding AI-driven consumption growth as permanent structural expansion, rather than a temporary market upswing.
Nevertheless, Semianalysis holds a different view, doubting the termination of cyclical fluctuations. It noted that price slumps could bring fatal risks to memory manufacturers during market downturns. Once market prices reverse, vendors have already poured billions of dollars into immovable fab infrastructure. Declining demand will lower equipment utilization, leave high fixed costs uncovered, and rapidly erode cash flow. This leads to shrinking gross margins, poor capital returns and mounting balance sheet pressure.
Semianalysis defined the current uptrend as an AI-inflection-driven cycle, emphasizing that such growth cannot be permanently sustained. Historical data shows previous memory supercycles typically peaked and reversed within one to two years. High profitability usually triggers massive capital expenditure, rapid capacity expansion and excessive bit output. Combined with the cyclical nature of terminal consumption, overcapacity and subsequent market corrections are inevitable.
The ongoing DRAM supercycle is predicted to peak around 2028. Product prices will keep climbing before new production capacity is officially launched. Barring unforeseen disruptive incidents, Micron, Samsung and SK Hynix will maintain exceptionally high profit margins in the interim period.
Beijing Qianxing Jietong Technology Co., Ltd.
Sandy Yang/Global Strategy Director
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