Analysts Refute Memory Oversupply Fears! DRAM and HBM to Remain in Short Supply Until at Least 2027

Amid growing market concerns that memory chipmakers' recent aggressive capacity expansions could lead to oversupply and hurt pricing, memory-related stocks have weakened. However, multiple analysts interviewed indicate that the real concern at this stage is not overcapacity, but rather ongoing supply tightness.

According to a report by Seeking Alpha, its analyst Bohdan Kucheriavyi stated that the industry's current challenge is precisely the opposite.

SK Hynix (SKHY-US) CEO recently warned that 2027 could be the tightest supply year in memory industry history. Micron Technology (MU-US) management echoed similar views in its latest earnings call, stating outright that demand across nearly all product categories already exceeds its supply capacity through 2028.

Micron forecasts quarterly revenue to reach $50 billion, while SanDisk (SNDK-US) expects its performance to nearly double quarter-on-quarter—both signals indicating that existing capacity is far from sufficient to meet market demand.

To address the supply gap, Samsung Electronics plans to expand its production capacity by approximately 50% this year. SK Hynix also intends to multiply its infrastructure investment and recently raised $26.5 billion through a Nasdaq listing.

Additionally, South Korea’s chip industry plans to invest at least $880 billion to expand semiconductor production and data center infrastructure. Meanwhile, Micron announced it will invest over $250 billion in the U.S. by 2035.

Notably, most of the new capacity will begin production starting in 2027. However, if AI infrastructure investments begin to cool by then and new fabs come online simultaneously, memory prices may struggle to maintain current highs.

Historically, once the memory industry enters a downturn, price declines tend to be extremely sharp.

Yet, this cycle differs significantly from past ones due to manufacturers holding take-or-pay procurement contracts and receiving billions of dollars in advance payments from customers.

These mechanisms provide memory makers with a level of protection unseen in previous cycles. While such contracts may mitigate the impact of future downturns, they cannot entirely eliminate industry cyclicality.

Investment research firm Pythia Research notes that despite aggressive capacity expansion by memory manufacturers, current investment levels still lag behind the strong AI-driven demand. It forecasts that DRAM and NAND will remain in deficit at least until 2027.

The firm also points out that High Bandwidth Memory (HBM) requires significantly more wafer capacity than traditional DRAM, further constraining supply and delaying the emergence of oversupply risks.

However, the situation may shift around 2028. As a new wave of fabs comes online, AI infrastructure spending could begin to slow.

At that point, DRAM and HBM supply-demand is expected to remain relatively tight, but NAND, with faster expansion and fiercer competition, will face higher risks of oversupply.

Analyst Jaden Mealy highlights that the real issue today is supply shortage, primarily due to suppliers maintaining strict capacity discipline. Companies like SK Hynix and Samsung are showing rare restraint in avoiding massive capacity expansions to preserve profitability and prevent a sharper downturn after the current boom.

Mealy argues that the market’s true concern lies in future capacity scale. Capital expenditure plans announced by various players are massive and generally based on the assumption that AI demand will grow steadily through 2027–2028. However, actual demand may slow.

Ultimately, it depends on how the market perceives the trajectory of AI demand—a factor no one can currently predict with certainty. If AI infrastructure investment continues at high levels, current capacity remains tight and investments are justified. But if the market believes AI investment has already overextended, today’s expansions could indeed trigger a cliff-like reversal for the memory industry by 2027–2028.