The escalating wave of artificial intelligence infrastructure investment is rapidly reshaping the dynamics of the memory chip market. Latest projections indicate that inventory levels at Samsung Electronics and SK hynix have plummeted to less than ten days of supply, and with demand from AI servers continuing to climb, the global memory chip market could face even more severe supply constraints next year.
A report released on September 7 by KB Securities forecast that the memory chip market will experience its "tightest supply situation in history" by 2027, naming Samsung Electronics and SK hynix as top picks in the semiconductor sector. Kim Dong-won, head of research at KB Securities, stated that as of the third quarter of this year, memory chip inventories at both companies have already dwindled to below ten days of supply. This development goes beyond mere demand recovery; it increasingly suggests that the absolute quantity of available products in the market could become insufficient, potentially leading to a complete depletion of sellable memory chips next year.
Underpinning this supply shortage expectation is the massive capital expenditure by the world's largest cloud computing companies in artificial intelligence. KB Securities estimates that global hyperscalers will invest $1.3 trillion in AI infrastructure next year, marking a 60% year-on-year increase. As cloud-based AI services, token-based billing, AI agents, and model hosting gradually evolve into direct revenue streams, corporate incentives to invest in AI infrastructure are strengthening further. Within this investment cycle, the importance of memory chips is rising rapidly, with their share of total AI infrastructure spending expected to increase accordingly. KB Securities projects that memory chips will account for 40% of AI infrastructure investment this year, up from 14% in 2025, and will climb to 57% next year—a roughly fourfold growth within two years. Market research firm TrendForce offers an even more aggressive projection, anticipating this proportion could reach 68% next year.
Demand growth is not solely concentrated in high-bandwidth memory (HBM). With the large-scale deployment of AI servers, demand for server DDR5 and enterprise solid-state drives (eSSD) is also expanding quickly, implying that traditional memory products such as DRAM and NAND will face mounting supply pressure. KB Securities predicts that next year, bit-based demand growth for DRAM and NAND will outpace supply growth by more than ten percentage points. Given the lengthy production expansion cycles for memory chips, where supply cannot quickly match demand increases, the market's supply-demand gap could widen further. The firm noted that under this structural scenario where supply expansion struggles to keep pace with growing demand, the memory chip shortage may intensify.
Additionally, the capacity expansion of HBM4, the next-generation high-bandwidth memory, is identified as another factor constraining traditional DRAM supply. Since HBM4 requires more wafer capacity than conventional DRAM, ramping up HBM4 production will diminish the capacity available for manufacturing standard DRAM. KB Securities highlighted that HBM4 consumes three times the wafer capacity of traditional DRAM. The greater the increase in HBM4 output, the less capacity remains for standard DRAM, potentially exacerbating the supply shortage.
Despite stronger demand and tightening supply, the share prices of Samsung Electronics and SK hynix have experienced significant pullbacks. Over the past three months, both companies' stocks have fallen approximately 38% from their peaks. Following this adjustment, their price-to-earnings ratios have dropped to around three times based on next year's earnings expectations. KB Securities believes that current valuations already reflect substantial market concerns about the memory chip sector, and the tightening supply-demand balance could support both companies' future earnings. Kim Dong-won anticipates that over the next three years, Samsung Electronics and SK hynix are poised to achieve record profitability while continuing to execute large-scale shareholder return policies. With valuations at extremely low levels, both companies may be positioned for a new round of valuation re-rating.
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