How and When the Memory Chip Shortage Will End

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• HBM generally costs three times as much as other types of memory and constitutes 50 percent or more of the cost of the packaged GPU.

  80% confidence

• 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. New fabs will help at the margin, but the faster gains will come from process learning, better DRAM stacking efficiency, and tighter coordination between memory suppliers and AI chip designers.

  80% confidence

• DRAM is a highly cyclical industry with huge booms and devastating busts. With new fabs costing $15 billion or more, firms are extremely reluctant to expand and may only have the cash to do so during boom times. Building a fab and getting it up and running can take 18 months or more, practically ensuring that new capacity arrives well past the initial surge in demand.

  80% confidence

• Micron predicts the total market for HBM will grow from $35 billion in 2025 to $100 billion by 2028, a figure larger than the entire DRAM market in 2024, reached two years earlier than previously expected. Demand will outstrip supply substantially for the foreseeable future.

  80% confidence

• There are nearly 2,000 new data centers either planned or under construction globally, representing a potential 20 percent jump in global supply from the current approximately 9,000 facilities.

  80% confidence

• DRAM prices have risen 80-90 percent so far this quarter (Q1 2026).

  80% confidence

• After a recovery began in late 2023, all the memory and storage companies were very wary of increasing their production capacity again, resulting in little or no investment in new production capacity in 2024 and through most of 2025.

  80% confidence

• Companies will spend $7 trillion on data centers by 2030, with $5.2 trillion going to AI-focused data centers, of which $3.3 billion will go toward servers, data storage, and network equipment.

  80% confidence

• 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, especially given the insatiable demand for compute.

  80% confidence

• There are two ways to address supply issues with DRAM: with innovation or with building more fabs. As DRAM scaling has become more difficult, the industry has turned to advanced packaging, which is just using more DRAM.

  80% confidence

• There will be no relief in the DRAM market until 2028.

  80% confidence

• The origins of today's DRAM cycle go back to the chip supply panic surrounding COVID-19. Hyperscalers bought up huge inventories of memory and storage to avoid supply-chain stumbles and support the rapid shift to remote work, boosting prices.

  80% confidence

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