Global Memory Market Faces Severe Supply Shortage and Price Surge
The memory market is currently experiencing a significant supply shortage, leading to dramatic price increases across key product categories. According to Team Group general manager Gerry Chen, contract prices for major DRAM types have surged by 80% to 100% as of December. This sharp escalation marks the onset of a multiyear upcycle in memory pricing, with the most pronounced effects anticipated in the first half of 2026, once distributor inventories are exhausted.
Rising Costs Impacting OEMs and Device Manufacturers
The ongoing memory shortage is already impacting the system bills of materials (BOM) for original equipment manufacturers (OEMs). The proportion of memory costs in PC and notebook BOMs has climbed from the mid-teens to the mid-20s or higher, depending on device configuration. DDR5 and SSD prices have, on average, doubled or even tripled, while overall DRAM prices have soared by 171.8% year-over-year. These increases are putting significant pressure on manufacturers, especially in cost-sensitive segments such as mainstream PCs, notebooks, and Chromebooks.
Cloud Providers Secure Supply, Squeezing Consumer Markets
Cloud service providers are proactively securing memory allocations for 2026 and 2027, further tightening supply for consumer and mainstream devices. Despite their purchasing power, even leading hyperscalers are unable to secure all the DRAM they require. Tier-1 U.S. and Chinese cloud providers have filled their order books to approximately 70% capacity, effectively eliminating the safety stock that many buyers previously relied upon.
AI Demand Drives Shift in Memory Production
The root cause of the current shortage lies in a significant shift in industry demand. Much of the manufacturing capacity has pivoted toward high-bandwidth memory (HBM) used in AI accelerators, reducing the wafer output available for commodity DRAM and 3D NAND. Expanding production capacity for memory chips is a complex process that typically takes several years, making substantial relief unlikely before late 2027 or 2028.
Strategic Adjustments and Market Outlook
In response to these market dynamics, Team Group plans to prioritize strategic AI customers and adjust its product mix accordingly. While mainstream consumer devices face the brunt of the shortage, specialized sectors such as gaming, industrial, defense, and medical equipment are expected to be less affected. As the industry navigates this challenging period, stakeholders across the supply chain are closely monitoring developments and adjusting their strategies to manage ongoing volatility in memory pricing and availability.
