AI Is Keeping DRAM Prices High — Here’s Exactly When the Market Finally Loosens Up

The AI boom has transformed the memory chip market into one of technology’s hottest — and tightest — segments. As hyperscale data centers race to build AI infrastructure, demand for high-bandwidth memory (HBM) has exploded, driving DRAM revenue sharply higher while keeping supply under intense pressure.

That imbalance isn’t likely to disappear anytime soon. TrendForce projects HBM wafer input at the industry’s three largest manufacturers will account for 22% of total DRAM wafer input by the end of 2026, rising to 30% by the end of 2027. Every wafer devoted to HBM is one that can’t be used to produce conventional DRAM, keeping supply constrained and prices elevated.

For investors expecting a quick cooldown, the data points to a slower path. While new capacity is coming, meaningful relief is unlikely before 2028.

AI Demand Has Reshaped the DRAM Cycle

Cloud providers and enterprises are reserving HBM capacity years in advance, prompting manufacturers to prioritize these premium chips over traditional DDR5 memory.

TrendForce estimates HBM will account for about 9% of total DRAM bit supply in 2026 before climbing to 13% in 2027. Because HBM requires more advanced manufacturing and consumes more wafer capacity than conventional DRAM, production of standard memory remains constrained.

According to Counterpoint Research, Samsung controls roughly 38% of the global DRAM market, followed by SK Hynix (NASDAQ:SKHY) at 29% and Micron Technology (NASDAQ:MU | MU Price Prediction) at 22%. Their recent earnings strength has been driven largely by AI demand.

Unlike previous boom cycles, manufacturers have resisted aggressive expansion. Industry capital spending is expected to rise from $53.7 billion in 2025 to $61.3 billion in 2026, but most of that investment is dedicated to HBM rather than broad DRAM capacity. Some forecasts suggest supply could still meet only about 60% of projected demand by the end of 2027, helping keep prices elevated.

More Capacity Is Coming — But Gradually

Relief will come from both manufacturing advances and new production facilities. The industry’s transition to the 1c DRAM process promises faster performance and better efficiency while increasing manufacturing output. Samsung and SK Hynix are accelerating 1c conversions, while Micron is also adopting the new technology.

At the same time, Samsung and SK Hynix have committed a combined 800 trillion won (about $518 billion) to four new memory facilities expected to begin production in 2027 and 2028. Micron is expanding in Idaho and New York with a similar timeline.

However, new fabs rarely reach full production quickly. Equipment installation, qualification, and yield optimization typically mean it takes 12 to 24 months before facilities operate at peak capacity.

That helps explain why analysts remain bullish on pricing. Bank of America estimates SK Hynix may achieve only about one-sixth of its originally planned capacity additions by 2028, while UBS believes the DRAM market may not return to balance until the second quarter of that year.

Key Takeaway

The DRAM market will eventually loosen, but the process looks set to be gradual. Current forecasts suggest meaningful supply-demand balance won’t emerge until the second half of 2028 as 1c manufacturing matures and new fabs ramp production.

That leaves Samsung, SK Hynix, and Micron with an extended period of favorable pricing and potentially strong profitability. Even after DRAM supply catches up, however, the investment case doesn’t necessarily weaken. As AI systems become larger and more memory-intensive, memory is expected to consume an increasing share of overall AI infrastructure spending. Morgan Stanley projects memory will account for roughly 40% of AI capital expenditures by 2030, suggesting today’s DRAM shortage could eventually give way to new bottlenecks elsewhere in the memory ecosystem.

AI demand isn’t disappearing, and new supply isn’t arriving fast enough to overwhelm the market. For long-term investors, the memory cycle still appears to have room left to run.

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