Industry forecast data indicates that due to the persistently high investments from Cloud Service Providers (CSPs) in artificial intelligence infrastructure, the growth in supply of Dynamic Random-Access Memory (DRAM) and NAND flash memory is consistently failing to keep pace with expanding demand; the global memory market is projected to remain in a tight, supply-constrained state throughout 2026, thereby driving product prices higher. This market outlook stems from the tumultuous year memory manufacturers experienced in 2025. During this period, manufacturers began the year grappling with shocks from geopolitical uncertainties and lingering inventory surpluses, only to see the supply-demand dynamic tighten abruptly in the second half. Analysts believe that as AI servers claim an ever-increasing share of industry capacity, and suppliers pivot production towards higher-margin products, this state of imbalance is set to persist. Industry projections suggest DRAM bit supply growth for 2026 will be approximately 15% to 20%, while demand growth is expected to be faster, reaching around 20% to 25%.
The NAND flash market exhibits a similar trend, with bit supply growth projected at 13% to 18%, compared to demand growth of 18% to 23%. This supply-demand gap is most pronounced in server applications. Analysts anticipate that, driven by major cloud platforms continuing to ramp up investments in AI training and inference businesses, DRAM and NAND flash consumption in the server sector will surge by 40% to 50% year-on-year in 2026. The gradual phase-out of DDR4 is intensifying supply pressures for traditional products. Rapid production cuts on traditional DRAM production lines have become a core factor triggering the memory shortage. Leading suppliers are accelerating the retirement of DDR4-related production lines, reallocating wafer capacity to newer, more profitable products.
Industry sources indicate that by the second half of 2026, the share of wafer starts dedicated to DDR4 at Samsung Electronics and SK Hynix is expected to drop to low single-digit percentages, leading to a significant contraction in DDR4 market supply. This capacity reduction has directly fueled a strong rebound in DDR4 prices. Even as some segments gradually transition to the DDR5 platform, the spot price gap between DDR4 and DDR5 widened further in the fourth quarter of 2025, underscoring the persistent demand for this older specification. Market participants estimate that DDR4 supply will continue to fall short of demand by approximately 10% throughout 2026, a situation that will support high price levels at least until the second half of 2026.
Memory suppliers in the Taiwan region are already benefiting from this market shift. Nanya Technology has further solidified its position as the world's largest DDR4 supplier, while Winbond Electronics is increasing capital expenditure to expand production capacity. According to industry sources, Winbond plans to raise the monthly capacity of its Kaohsiung plant from about 14,000 wafers to between 24,000 and 25,000 wafers. The squeeze on DDR5 capacity by High Bandwidth Memory (HBM) is further exacerbating memory supply pressures. Industry forecasts show that HBM3E capacity from SK Hynix, Micron Technology, and Samsung Electronics is essentially fully booked.
Currently, SK Hynix's HBM4 product has passed customer validation, and the industry expects other competitors to quickly follow suit with their own HBM4 plans, which will further squeeze capacity allocated to standard DDR5. Concurrently, the adoption of higher-capacity DDR5 RDIMM configurations in AI servers and next-generation Central Processing Unit (CPU) platforms is prompting suppliers to focus more energy on enterprise and AI-related products. Market estimate data indicates that the contract price for Samsung's 64GB DDR5 RDIMM modules rose from approximately $265 in the third quarter of 2025 to about $450 in the fourth quarter; by the first quarter of 2026, prices may approach $480, with potential for further increases thereafter.
Analysts point out that, excluding HBM, prices for traditional DRAM products increased by nearly 50% or even more in the fourth quarter of 2025. This upward price trend is expected to continue into the first half of 2026, and given the scale of the supply-demand gap, the room for price declines in the second half of 2026 appears very limited. In 2026, demand for 128GB and larger DDR5 memory modules, as well as SOCAMM2 configurations utilizing LPDDR5X specifications, is expected to capture a larger share of DRAM capacity. Furthermore, HBM4 production will not only consume more wafers but also involve more complex yield control, factors that will intensify the structural supply pressures in the memory market.
As memory manufacturers suspend public price quotes and continue to raise product prices, buyers in non-AI sectors and the consumer market face the dual challenges of rising procurement costs and scarce availability. Capacity expansion struggles to alleviate supply constraints in the NAND flash sector. Although Kioxia and Yangtze Memory Technologies (YMTC) are constructing new production bases, industry sources state that these new capacities are unlikely to contribute significant output until the second quarter of 2026 at the earliest, offering little substantive impact on the market supply situation in the short term.
The explosion of AI inference business is also reshaping the demand structure of the NAND flash market. In 2025, capital expenditure on inference-related infrastructure surpassed that for training, and this investment is forecast to grow further in 2026, thereby accelerating demand for enterprise Solid-State Drives (SSDs). North American cloud service operators show growing appetite for high-capacity SSDs ranging from 128TB to 256TB, prompting manufacturers to shift from Triple-Level Cell (TLC) NAND flash technology to Quad-Level Cell (QLC) technology to balance cost and storage density. Large-scale capacity reservations by CSPs have already driven a sharp increase in NAND flash prices.
Market estimates indicate that NAND wafer prices surged by approximately 95% to 100% quarter-on-quarter in Q4 2025, leaving some buyers struggling to secure stable supplies even when willing to pay premium prices. Analysts expect the supply shortage and price increase trend for NAND flash to continue into 2026, although the pace of price hikes may moderate. Memory module manufacturers face pressure and margin challenges. The tight supply situation is forcing memory module makers to adopt limited shipment strategies, prioritizing orders from strategic customers. While rising Average Selling Prices (ASPs) support revenue growth, continuously climbing raw material costs are squeezing manufacturers' profit margins and intensifying competition for chip supply among them.
ADATA Technology suggests that the polarization within the memory module market may intensify in 2026, with some manufacturers securing stable chip supplies while others continue to face shortages. Industrial memory supplier Innodisk points out that cloud AI business will be the core growth driver for the market in 2026, and the accelerated deployment of AI inference and edge computing applications may benefit manufacturers already positioned in AI-related product lines. Controller chip maker Phison Electronics revealed that it has secured some chip supply for 2026 during the industry's off-season, but this capacity still falls short of market demand. Phison expects the memory market's supply-demand imbalance to persist for several years and plans to reduce shipments to the retail market, concentrating resources on higher-value-added enterprise customers.
Analysts caution that numerous risk factors remain, including challenges in implementing production technologies for high-end memory products and potential volatility in Cloud Service Provider capital expenditure. Looking ahead to 2026, under the dual forces of AI-driven robust demand and structural supply constraints, pricing power in the memory market will remain firmly in the hands of memory chip manufacturers.
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