Imbalance Between Supply and Demand in Storage Market Triggers Chain Reactions, Industry Structure Undergoes In-depth Adjustment
The explosive growth of the AI industry is reshaping the global storage market structure. The surging demand for HBM (High-Bandwidth Memory) and DRAM has led to price increases. Enterprises along the industrial chain, from upstream to downstream, have successively adjusted their strategic layouts, which has also caused chain impacts on the end-market.
The rise of Google’s 7th-generation TPU has become a key driver in the HBM market, with Samsung Electronics and SK Hynix emerging as core players in its supply chain. Among them, SK Hynix is expected to exclusively supply the 12-layer HBM3E for TPU 7e. This year, its share in Google’s TPU HBM supply is projected to exceed 50%, and the industry even optimistically anticipates its market share to reach 60%. As Google plans to adopt HBM4 for its 8th-generation TPU, Samsung’s HBM supply in 2026 is expected to double compared to this year. Additionally, the demand for customized chips from Meta and Amazon AWS has further amplified the growth potential of the HBM market.
In response to the strong demand, enterprises are accelerating their capacity expansion plans. Micron Technology intends to invest 9.6 billion US dollars in building an HBM wafer fab in Japan, with construction scheduled to start in May 2024 and shipments expected in 2028. The Japanese government will provide substantial subsidies for this project. SK Hynix, on the other hand, has adjusted the production lines at its Icheon plant to increase the capacity of standard DRAM by 10% year-on-year. It also plans to invest 106 trillion won from 2022 to 2027 to boost its production capacity.
The mismatch between supply and demand has driven a continuous surge in DRAM prices, with some products doubling in price. The supply of mainstream DRAM has contracted as major manufacturers have shifted production to DDR5 and HBM, creating a structural shortage. In contrast, demand from AI data centers and cloud computing has experienced explosive growth. Benefiting from this trend, Nanya Technology has seen its target price significantly raised to 180 yuan by institutions. Its product lines such as DDR4 and DDR5 have accurately met the market gap and are expected to continue to benefit from the industry’s prosperity.
However, the rising storage prices have also caused pain in the end-market. Sales of major motherboard manufacturers like MSI and GIGABYTE have dropped by 40%-50% year-on-year. The price of DDR5 has increased by 2 to 4 times compared to before, leading users to postpone their computer assembly or upgrade plans, and the growth expectation of the PC market has slowed down. The industry predicts that the demand for server DRAM will grow by 35% in 2026, while the supply will increase by at most 20%, which may further intensify the price uptrend.
Currently, the storage industry is shifting from simple capacity expansion to high-tech value-added fields such as process upgrading and high-layer stacking. Although the supply of DRAM is expected to achieve double-digit growth next year, the short-term supply shortage pressure remains difficult to alleviate, and the mass production plan of HBM4 may also be affected by resource allocation. This storage industry transformation triggered by AI is driving the industry structure into a period of in-depth adjustment.