Recent reports from Goldman Sachs, Morgan Stanley, Cantor Fitzgerald, and other institutions indicate that the current global supply shortage of DRAM and NAND flash memory may persist throughout 2027, only gradually easing after new capacity reaches full production by the end of 2028. For the storage industry, this is expected to be a prolonged and highly certain super-boom cycle in recent years.
The rapid rise of the AI ??industry is the core driver of this prolonged shortage cycle in the storage industry. Currently, the DRAM memory capacity of a single AI training server is 8-10 times that of a typical commercial general-purpose server, and the NAND flash memory capacity is three times that of a traditional server. In 2026, approximately 66% of DRAM capacity will be prioritized for the AI ??server sector, reducing the available DRAM capacity for traditional consumer electronics to less than 30%, fundamentally shifting the industry's demand focus.
The severe mismatch between supply and demand growth rates has further solidified the industry's tight supply situation. Data shows that in the past two years, global annual demand growth rates for DRAM and NAND have reached as high as 45% and 38% respectively, but the overall industry capacity supply growth rate has only remained at 16%-17%, leading to a continuous widening of the supply-demand gap. Meanwhile, leading cloud service providers both domestically and internationally, such as Microsoft, Google, Meta, and Alibaba Cloud, have signed long-term supply contracts of 3-5 years to ensure the stable operation of their computing power businesses, locking in capacity and supply prices through prepayment of margin. This large-scale locking of inventory through long-term contracts has led to a significant contraction in the supply circulating in the spot market, further exacerbating the tight supply situation in the end-user market.
Goldman Sachs' report indicates that the global DRAM supply-demand gap will be 5.0%, 5.9%, and 3.9% in 2026, 2027, and 2028, respectively; the NAND flash memory supply-demand gap will be 4.4% and 4.6% in 2026 and 2027, respectively, narrowing slightly to 3.0% in 2028; and the HBM high-bandwidth memory shortage will be the most pronounced, with gaps of 5.4%, 6.0%, and 4.3%, respectively. Overall, 2027 is likely to be a year of acute supply-demand imbalance in the current memory industry.
Compared to the continuously surging memory demand, the industry's supply side is constrained by multiple rigid barriers, making it impossible to quickly release incremental capacity in the short term. This is the key reason for the prolonged shortage cycle. On the one hand, the three global memory giants—Samsung, SK Hynix, and Micron—have adjusted their capacity structure based on profitability considerations, allocating 80% of their advanced process capacity to high-value-added products such as HBM and DDR5, directly squeezing the supply of general-purpose DRAM and NAND capacity. On the other hand, semiconductor capacity construction requires at least 2-3 years, while the delivery cycle for core production equipment such as EUV lithography machines exceeds 18 months, further exacerbating the possibility of short-term capacity expansion in the industry.
Looking at the pace of new capacity rollout, the industry will remain in a capacity gap until 2028. Core new production lines, exemplified by Micron's ID1 plant, can only begin production by mid-2027 at the earliest. Furthermore, it takes 12-18 months for semiconductor production lines to ramp up production and achieve stable mass production, meaning full capacity and large-scale supply won't be achieved until 2028. Meanwhile, the industry's inventory buffer is essentially exhausted, with inventory levels at historically low levels, completely unable to offset the continuously expanding market demand. There are no conditions for a short-term recovery from the industry's shortage situation.
This persistent supply-demand imbalance has driven a three-year sustained upward trend in global memory prices. Related reports show that spot prices in the secondary market have already reflected the upward trend. In May 2026, DRAM spot prices saw a 40% quarter-on-quarter increase, and a further 15% quarter-on-quarter increase is expected in August of the same year, indicating a continued upward trend. It is anticipated that the pace of price increases will slow somewhat in 2027, but overall, the industry will maintain a high growth rate. The average year-on-year increase in DRAM and NAND prices is expected to be between 25% and 35%, while HBM, driven by its essential nature, will continue its strong performance, with a year-on-year increase of 44% to 50%.
This industry trend of both increased volume and price is driving the continued expansion of the global memory market. It is predicted that the total size of the global memory industry will reach US$1.21 trillion in 2027 and further approach US$1.4 trillion in 2028. Among them, HBM, as a core essential product for AI computing power, is expected to see its market size climb from US$56 billion in 2026 to US$168 billion in 2028. As a result, the valuation logic of the capital market has shifted from the traditional P/B ratio valuation model used in the industry to the mainstream P/E ratio valuation model for technology growth sectors. Based on this, institutions such as Cantor Fitzgerald have given Micron a target price of $1,500 and SanDisk a target price of $2,900, highly optimistic about the industry's long-term profit recovery and growth potential.
Overall, based on quantitative data from major investment banks and the pace of industry capacity rollout, before the full release of new capacity by the end of 2028, the global DRAM and NAND industry will maintain a structurally tight balance characterized by "high demand growth, limited supply, low inventory, and rising prices" for a long period.
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