Memory chip prices are set to surge again in the third quarter as AI demand keeps supply constrained. ADATA chairman Simon Chen confirmed DRAM contract prices will rise 20% to 30% and NAND Flash 35% to 40%, while UBS expects the shortage to persist through the first half of 2028.
Memory chip prices are set to surge again in the third quarter, with DRAM contract prices rising 20% to 30% and NAND Flash climbing 35% to 40%, extending an AI-driven upcycle that has already tripled annual revenue at some of the industry's biggest players.
"The memory makers have notified customers of another round of substantial price increases," Simon Chen, chairman of Taiwanese memory module maker ADATA Technology, said in a statement. "Both product lines have clear upward momentum, and the industry's expansion phase is still accelerating."
ADATA posted June revenue of NT$14.66 billion ($450 million), up 212% from a year earlier and a fourth consecutive monthly record. First-half revenue of NT$64.27 billion already surpassed the company's full-year 2025 total of NT$53.04 billion, underscoring the pace of the recovery.
The price hikes reflect a market where AI infrastructure buildout has created severe shortages across memory categories. High-bandwidth memory (HBM), the advanced stacked chips used in Nvidia's AI accelerators, remains the tightest segment, but the crunch has spilled into mainstream DRAM and NAND Flash used in phones, PCs, and data centers. SK Hynix, the dominant HBM supplier with more than half the market, has seen its stock rise sevenfold over the past year to a market capitalization of about $1 trillion. The company is slated to begin trading on the Nasdaq on Friday under the ticker SKHY.
Supply tightness expected to persist into 2028
Forecasts vary on how long the cycle will last, but all point to continued tightness. TrendForce projects Q3 DRAM contract prices will rise 13% to 18% quarter over quarter and NAND Flash 10% to 15%, with both ranges narrowing from prior quarters as consumer demand softens and prices reach historic highs. UBS is more bullish, forecasting Q3 DRAM prices will jump 32% — nearly double its earlier estimate of 17% — followed by an 18% increase in Q4. The bank expects DRAM supply to remain constrained through at least the first half of 2028.
Industry executives say the shortage reflects structural demand rather than a typical cyclical boom. Memory makers including Samsung, SK Hynix, and Micron are shifting capacity toward HBM and DDR5, tightening supply of older DDR4 and LPDDR4 chips. That has benefited second-tier players: Taiwan's Nanya Technology posted June revenue of NT$29.39 billion, up 621% from a year earlier, its eighth consecutive monthly record, as it emerged as a key DDR4 supplier. Winbond reported June revenue of NT$20.60 billion, up 190% year over year, with analysts expecting its DRAM average selling prices to rise 50% in the third quarter and 30% in the fourth.
The rally has also lifted Chinese A-share memory stocks. On July 9, shares of Youyan Silicon, Shenkeda, Tianshan Electronics, GigaDevice, and Yake Technology all hit the daily limit up, reflecting investor conviction that the pricing cycle has further to run.
Investment implications
For investors, the key question is whether the current pricing cycle is sustainable or destined for the sharp reversals that have historically defined the memory industry. SK Hynix and its peers are locking in multiyear contracts with customers, a shift from the quarterly or annual deals of the past, which provides greater revenue visibility. The company is spending up to $720 billion on new fabrication facilities in South Korea and building its first U.S. plant in Indiana, a $4 billion project scheduled for completion in 2028.
"The memory industry has always been boom and bust, and it will crash hard eventually," said Daniel Newman, CEO of Futurum Group. "But if AI demand stays elevated through 2027, current valuations look cheap." SK Hynix's annual revenue nearly tripled from 2023 to 2025, reaching about $65 billion, and analysts polled by LSEG expect that figure to more than triple again to roughly $235 billion in 2026.
Memory makers are racing to secure extreme ultraviolet lithography (EUV) machines from ASML, the sole supplier, at up to $400 million each. SK Hynix plans to spend about $7.8 billion on new EUV tools by the end of 2027. Even with that investment, new wafer production capacity is unlikely to come online before late 2027, according to Counterpoint research director MS Hwang, suggesting the supply-demand imbalance will persist for at least another 12 to 18 months.
This article is for informational purposes only and does not constitute investment advice.
