Samsung and SK Hynix, which together control a large proportion of global DRAM production, have confirmed a continued cautious strategy in the face of the current increase in demand, according to recent reports. Both companies are focusing their plans more on long-term profitability rather than building up additional production capacity in the short term. This restraint is taking place against the backdrop of a market that has been characterized by a significant undersupply for months. Prices for DDR5 memory have risen noticeably, which is primarily affecting end customers, while demand from AI data centers, server providers and PC manufacturers continues to rise.
According to information from South Korean primary sources, the largest DRAM manufacturers are focusing on avoiding another cycle of overproduction. In the past, greatly expanded capacities after boom phases regularly led to significant price drops, which impacted profitability. Companies had already significantly reduced their production during the weak demand caused by the pandemic. These cutbacks are still having an impact today, as the production lines that were previously stopped or throttled back cannot be fully ramped up again in the short term.
Samsung points out that the expansion of production capacities is a complex, capital-intensive and time-consuming process. Investments must be aligned with actual demand in order to avoid structural overcapacity. In this assessment, the focus is clearly on controlled capex management that does not take excessive account of short-term market fluctuations. SK Hynix has expressed a similar view, expecting further price increases for DDR5 modules due to the equally strong rise in demand. Distributors and major OEM partners are already reporting noticeable mark-ups, which could continue in the coming quarters.
Market observers assume that the current supply bottlenecks will not subside in the near future. A complete normalization of the market is not expected for several years. The high demand in the AI sector in particular, combined with the requirements for HBM and DDR5 production, is ensuring that production capacities remain fully utilized or overloaded in many areas. Under these conditions, both the costs and delivery times for components required for end customer products such as RAM modules or modern GPUs are increasing.
In the short term, manufacturers are increasingly focusing on shorter supply contracts in order to be able to bring price changes to the market more quickly. Long-term commitments are being concluded less frequently, as companies want to ensure flexibility in pricing. For consumers, this means that the situation is unlikely to ease, at least in the coming quarters. Memory modules could continue to be priced significantly higher than in previous years, while GPU manufacturers will also have to expect bottlenecks due to the tight supply situation for memory chips. Overall, everything points to a phase of persistent market shortages, which will only ease in the medium term at the earliest and will continue to be characterized by the cautious production policies of the major manufacturers.
Conclusion
The statements made by the leading DRAM suppliers show that production will not be expanded in the short term, as both companies prioritize long-term market stability over short-term growth. The current bottlenecks are therefore likely to continue, which makes high prices and scarce availability of memory products probable in the coming quarters.
Sources
I cannot verify that these contents correspond exactly to your described statements, but these are the appropriate pages on which the respective manufacturers and Hankyung deal with the topics of DRAM market, capacities and price development.
