Chip makers warn of a looming scarcity in DRAM and SSD
Chip producers are warning of a scarcity in DRAM, NAND and doubtless HBM reminiscence chips as a result of demand from cloud suppliers is outstripping provide. The issue is compounded by the Trump administration’s latest ban on Chinese language factories manufacturing these elements.
The most important part producer, Samsung, introduced final week within the Korean press that it was going to give attention to the manufacturing of DRAM chips to the detriment of NAND at its Pyeongtaek and Hwaseong factories in South Korea, which till now have manufactured each sorts of part.
The rationale given is that RAM is receiving the very best demand from prospects. This explosion within the want for DRAM stems from the excessive volumes of reminiscence required in servers to load synthetic intelligence (AI) fashions, the dimensions of which – usually many tens of gigabytes – far exceeds that of conventional net functions. And that is simply to cowl inference wants – that’s, using pre-trained AI by companies.
The strain on DRAM manufacturing will have an effect on inner HBM recollections within the GPUs designed for AI coaching. These are the identical circuits in each circumstances – they’re etched on the identical chains. The distinction lies in the best way they’re assembled on a communication bus. The HBM bus may be very giant, as a result of it’s designed to interface instantly with the pins of a computing chip, whereas the bus for DDR5 chips is smaller, to accommodate a portion of the connections behind a chipset.
60% on DDR5 costs and 100% by the top of 2026
Demand for extra reminiscence in servers is at present so nice that the value of DDR5 DRAM elements has rising by 60% on wholesale markets this month. Costs are set on the finish of every month by producers in response to demand. Unusually, nonetheless, Samsung has delayed publication of its newest costs by a fortnight to take inventory of the state of affairs.
In accordance with Tobey Gonnerman, head of reminiscence wholesaler Fusion Worldwide, quoted by Reuters, “Most server producers and datacentre operators now have to just accept they may not get their reminiscence elements on time, and that costs for premium entry to shares are already… excessive”.
A 32GB DDR5 chip is buying and selling at $239, up from $149 on the finish of September. A 16GB chip now prices $135 and a 64GB chip $1,194.
One specific level is that Samsung, like its competitor and compatriot SK Hynix, has not too long ago overhauled its manufacturing traces to engrave recollections with larger finesse – era 1c at Samsung (between 11 and 12 nanometres) and era 1b at SK Hynix (between 12 and 13 nanometres). The issue is that the novelty of those processes has resulted in numerous manufacturing failures. At Samsung, solely 50-70% of the DRAM circuits engraved on a wafer are practical, in contrast with the standard 80%.
One other aggravating issue is Nvidia’s not too long ago introduced intention to make use of solely LPDDR5 reminiscence on its GPUs for inference by the top of 2026. The sort of reminiscence is extra vitality environment friendly than regular DDR5, which implies that Nvidia’s GPUs will eat much less energy. However LPDDR5 can also be extra difficult to fabricate. In accordance with Gonnerman, quoted by Reuters, the widespread use of LPDDR5 would imply doubling the value of reminiscence in servers.
In accordance with analysts, DRAM part costs are unlikely to stabilise earlier than mid-2027.
A scarcity of SSDs too
The truth that Samsung and SK Hynix are dismantling NAND manufacturing traces to put in DRAM manufacturing traces will create a scarcity of SSDs from the top of 2025 till the top of 2026.
The primary to sound the alarm was SSD producer Phison in its newest monetary report, revealed earlier this month. In accordance with its CEO Khein-Seng Pua, the value of a 1-terabit TLC NAND chip (it takes eight to make 1TB) is now buying and selling at $10.70 on the wholesale market, up from $4.80 this summer time. All of the SSDs that Phison can be producing in 2026 have already been offered and costs will proceed to rise till 2027.
Rival SanDisk additionally introduced that every one its NAND chip suppliers had elevated costs by 50% between October and November. SanDisk additionally identified that it had needed to wait an distinctive 15 days to acquire the up to date month-to-month costs.
In accordance with analysts, SSD manufacturing is not only affected by a possible drop in manufacturing at Samsung – it additionally has to answer rising demand from AI infrastructure suppliers, who now favor SSDs to HDDs to load tens of GBs of RAM extra rapidly from giant language fashions (LLMs).
Because of this, Transcend, Innodisk and Apacer Know-how, all three of which assemble NAND circuits into chips earlier than reselling them to SSD producers, have simply posted unprecedented monetary outcomes – with gross sales up 27%, 64% and 70% in a single 12 months, respectively.
In response to this sudden scarcity, server and PC producer Lenovo instructed Bloomberg that it’s stockpiling DRAM and NAND elements to produce all of the machines it intends to fabricate by the top of 2026. Media reviews counsel its rival Acer has despatched a delegation to purchase elements direct from Samsung’s factories, bypassing the standard wholesalers within the provide chain.
