Market research firm IDC held a webinar on the 8th titled 'Memory Market Outlook: When Will Supply Shortages End,' diagnosing that tight supply has pushed the memory market inflection point to after the second half of 2028. IDC's forecast shows DRAM supply shortage rates expanding to around 13% by Q4 2027, with NAND shortages of 3-4% continuing throughout 2027. The supply constraints stem from structural production changes where over 30% of DRAM capacity increases are allocated to AI products like HBM and SOCAMM, with significant volumes already locked in multi-year long-term supply agreements.
IDC Forecasts Memory Supply Shortage Deepening Through 2027
IDC's forecast in its webinar showed DRAM supply-demand fulfillment rates actually decreased compared to the firm's forecast from last March. DRAM supply shortage rates are projected to expand to around 13% by Q4 2027, while NAND flash shortages of 3-4% are expected to continue throughout 2027.
DRAM production growth rates are forecast to fall below demand growth rates both this year and next year, while NAND production is expected to generally keep pace with demand. IDC defined this year and next year as a historic high-growth period where supply shortages and rapid price increases overlap.
According to IDC, even when DRAM production capacity increases by nearly 10%, more than 30% of this is allocated to AI products such as high-bandwidth memory (HBM) and SOCAMM. Significant volumes are already secured through multi-year long-term supply agreements (LTA). Even with factory and equipment expansion, the surplus volume available for the general-purpose DRAM market is inevitably limited.
For NAND, aside from China's Yangtze Memory Technologies Corporation (YMTC) new fab, there is almost no large-scale capacity expansion. Even if big tech investment growth rates slow somewhat, the structure itself lacks sufficient supply to return to the general-purpose market.
HBM Production Consumes Over 30% of New DRAM Capacity
The center of demand is also shifting from mobile and PC to server and enterprise products. IDC forecasts that by 2030, server and HBM will account for over 60% of DRAM demand, and the proportion of enterprise SSDs in NAND will also expand rapidly.
As memory transforms from a component for consumer electronics to foundational infrastructure supporting AI data centers, a different cycle is emerging compared to the past when supply shortages were quickly resolved by new factory operations.
Jeffreys expects memory prices to rise significantly in the second half of this year and forecasts no clear downward trend until 2028. Gartner analyzes that general-purpose DRAM supply will tighten further as HBM absorbs a significant portion of production capacity increases. Counterpoint Research also suggests supply chain normalization will occur at the earliest in early 2028.
Micron Signs 16 Strategic Contracts Covering $100 Billion
Micron signed its first five-year Strategic Customer Agreement (SCA) last March, then increased contracts to 16 within three months. Among these, 14 contracts have cumulative revenue of approximately $100 billion at contractual minimum prices for the remaining contract period.
The signed contracts cover approximately 20% of Micron's DRAM volume and one-third of NAND volume during the contract period. Micron expects that when all planned contract signings are completed, more than half of total revenue will be subject to SCA application.
The contracts are 'take or pay' format where customers are obligated to purchase certain volumes. This shows the memory market, which was centered on quarterly price negotiations, is transforming into a structure that secures multiple years' worth of volume in advance.
This aligns with IDC designating LTA as an essential condition for securing stable volume. In a situation where supply is limited, customers who fail to sign long-term contracts may find it difficult to secure needed volumes even if prices rise.
Memory Manufacturers Shift Strategy from Pricing to Volume Control
A notable point is the 'decoupling' of price and supply-demand. IDC sees memory price increases approaching limits, with prices beginning to move independently from supply-demand fulfillment rates. Given that server DRAM contract prices have risen significantly each quarter this year, future growth rate moderation is a natural progression.
Even if some product prices fall below the previous month or quarter, if absolute prices remain at historic highs and supply shortages continue, this is difficult to interpret as a signal of industry reversal.
Manufacturer strategies are also likely to shift from price increases to volume control. Raising prices indefinitely could increase demand resistance from consumer device manufacturers for PCs and smartphones. Instead, manufacturers can maintain high profitability by adjusting supply volumes by product and customer, and prioritizing volume allocation to strategic customers with long-term contracts.
Variables remain. Big tech earnings announcements and AI investment plans from Google, Amazon, and Meta are watersheds for confirming demand sustainability. The possibility that high-priced memory increases cost burdens for consumer products and dampens demand cannot be ruled out.
However, price growth rate moderation and supply shortage resolution should not be viewed as the same thing. HBM's technical constraints, high wafer input volumes, and expanding long-term contracts continue to limit general-purpose memory supply.
IDC Vice President Kim Su-gyeom stated, "Memory cycles still exist, but they last longer than in the past and have stronger strategic characteristics. The inflection point of the memory market has been delayed by about a year and is expected to appear in 2028, followed by gradual adjustment."
FAQ
Q1: When does IDC forecast the memory market inflection point will occur?
A1: IDC forecasts the memory market inflection point has been pushed to after the second half of 2028, approximately one year later than previous projections, due to tight supply conditions.
Q2: What percentage of new DRAM production capacity is allocated to AI products?
A2: According to IDC, more than 30% of DRAM capacity increases are allocated to AI products such as HBM and SOCAMM, with significant volumes already secured through multi-year long-term supply agreements.
Q3: How many strategic customer agreements has Micron signed and what is their total value?
A3: Micron increased its strategic customer agreements to 16 within three months of signing its first contract last March. Among these, 14 contracts have cumulative revenue of approximately $100 billion at contractual minimum prices, covering approximately 20% of Micron's DRAM volume and one-third of NAND volume.
