The global memory market is facing a deepening supply crisis as NVIDIA's next-generation AI accelerator, Vera Rubin, moves into volume production. Supply chain sources indicate that major cloud service providers have already secured all available long-term agreement capacity for 2027 and are proactively negotiating for 2028 supply, with memory shortage pressures expected to intensify significantly from the second half of 2026.
According to a recent report, leading cloud service providers have already booked all available long-term agreement capacity for 2027 and are actively advancing supply negotiations for 2028.
Concurrently, several memory module manufacturers have recently been notified by original equipment manufacturers that they cannot provide any supply beyond previously committed volumes, as upstream production capacity has been largely redirected to meet demand for NVIDIA-related AI servers and cloud service providers.
This supply dynamic is rippling through the entire industry chain. Shortages in the DRAM and NAND markets are forecast to widen further from the second half of 2026, with industry consensus expecting the supply crunch in 2027 to be more severe than in 2026. For investors, memory prices are anticipated to remain strong over the next two to three years, with market participants widely optimistic about further contract price increases for memory manufacturers.
Cloud Giants Scramble for Capacity
Supply chain sources state that with NVIDIA's Vera Rubin scheduled to begin shipments in the second half of 2026 and HBM4 entering mass production, major cloud service providers are ramping up investments in AI data center expansion, leading to intense competition for memory capacity.
Upstream capacity has been heavily allocated towards NVIDIA AI servers and cloud service provider demand, with nearly all 2027 capacity already committed to these customers. Several module makers have been explicitly told by OEMs that no additional supply is available beyond prior commitments, leaving the market with extremely limited spare capacity.
Furthermore, sources note that Apple Inc has been securing third-quarter memory capacity for new product launches, while other brand clients are being forced to advance production schedules under supply pressure, further squeezing the available capacity pool.
Negotiations for 2028 Begin Early
After locking in 2027 capacity, leading cloud service providers have initiated early negotiations for 2028 LTA supply. Industry sources report that while upstream suppliers were previously reluctant to discuss 2028 capacity before May 2026, they have recently begun accepting discussions for Q1 2028 orders, with some HBM and server capacity already preliminarily allocated.
Sources indicate that LTA structures vary by supplier, with only a few requiring upfront deposits. Most models involve customers first committing to projected purchase volumes, upon which suppliers adjust their expansion timelines, with final pricing confirmed closer to actual shipment. This arrangement suggests memory makers maintain strong confidence in their pricing power for contracts over the next two to three years.
While rumors have circulated about cloud providers potentially funding dedicated production lines for memory makers or subsidizing equipment purchases, industry insiders say upstream suppliers are currently highly profitable and have independently planned for new fab and equipment budgets, negating the need to rely on a single customer for line construction. Nevertheless, cloud providers are actively pursuing long-term memory contracts to avoid a repeat of the tight supply conditions expected from 2025 through the second half of 2026.
Capacity Squeeze Spreads, AI Server Configurations Downgraded
Supply chain sources explain that server memory and standard memory share highly similar design architectures, unlike embedded memory. Therefore, supplier capacity allocation primarily squeezes standard memory and PC memory, which together account for approximately 60% to 70% of the total DRAM market. As a result, the proportion of PC memory within total DRAM has decreased from about 11-12% to around 9%.
Some memory module manufacturers are also employing prepayment models, paying suppliers early at a lower agreed price and making up the difference when the original manufacturer ships at the market price. This practice increases short-term funding pressure but helps secure critical capacity in advance.
On the demand side, high prices and supply tightness are driving a trend towards downgraded configurations in AI servers. Industry sources report that while 128GB was previously the mainstream specification, some customers are shifting to 64GB or 96GB configurations to manage costs. Although this shift has a limited impact on overall memory consumption, it highlights how elevated memory costs are slowing the upgrade cycle for AI servers.
NVIDIA CEO Confirms Full Support for Vera Rubin
NVIDIA CEO Jensen Huang recently confirmed publicly that SK Hynix, Samsung Electronics Co., Ltd., and Micron Technology have all completed HBM4 certification, commenced production, and are fully supporting the Vera Rubin platform.
Addressing rumors of a significant reduction in memory usage, Huang stated that future systems will still heavily utilize high-speed memory, but the shortage issue requires rational management across systems and a further expansion of supply.
The challenge for memory manufacturers lies in supporting the large-scale rollout of Vera Rubin while simultaneously meeting the rising demand from end-user devices and edge AI. Industry consensus is increasingly converging on the view that "the 2027 shortage will be more severe than in 2026," with the cycle of tight memory supply likely to extend into 2028.
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