The three dominant DRAM manufacturers have fully allocated their entire 2027 production capacity ahead of schedule, as the AI boom pushes the memory market into an unprecedented structural shortage cycle.
Industry insiders have revealed that Samsung Electronics, Micron, and SK Hynix have distributed all of their DRAM and High Bandwidth Memory (HBM) capacity for 2027, covering both long-term contract customers and smaller buyers. Concurrently, the NAND flash production for 2027 from Samsung Electronics, Micron, and SanDisk has also been fully pre-sold, with Kioxia and SK Hynix expected to complete their allocation by the end of August 2026 at the latest.
These developments mean customers who have not yet secured capacity face a "zero inventory to buy" situation in 2027, while the priority given to cloud service giants and AI powerhouses continues to squeeze the supply available for consumer electronics like smartphones and PCs. However, as major capacity is gradually allocated, the industry expects price increases in 2027 to be more moderate than in 2026, though supply tightness and end-user cost pressure will not ease significantly in the short term.
AI Demand Dictates Allocation
The AI wave is the core driver behind this capacity sellout. The major memory makers have recently signed 3-to-5-year long-term agreements with key clients, shifting the memory market from a traditional commodity cycle into a persistent seller's market. The chairman of ADATA Technology has confirmed that the three major manufacturers' 2027 capacity was already sold out, with HBM and AI server-related applications accounting for about 70% of DRAM capacity. With total production capped, memory makers are prioritizing the needs of cloud service providers and AI firms, directly reducing quotas for smartphone and PC manufacturers. Industry estimates suggest that the actual capacity available to buyers is often only 60% to 70% of their original targets, and the DRAM quotas for phone and PC makers in 2027 are expected to be significantly lower than in 2026. The chairman of SK Group recently stated that AI semiconductor demand in 2027 could surge by 60% to 100% compared to 2026, with overall storage demand growing by 50% to 60%, likely widening the supply-demand gap and leading to the most severe shortage and imbalance in history.
NAND Supply Reversal Uncertain, Enterprise Demand Sustains
Compared to DRAM, the NAND flash market has more suppliers, giving buyers more room for negotiation. There are doubts about a potential NAND supply reversal in 2027, as some believe new capacity coming online combined with weak consumer demand could lead to a looser supply-demand balance in the second half of 2027, raising price pressure. However, industry insiders are cautious about this view. They point out that enterprise solid-state drive demand will remain strong in 2027, and supply tightness could persist into 2028, making it unwise to overestimate the impact of new capacity expansions. The ADATA chairman also noted that robust enterprise storage demand is tightening supply for both NAND flash and hard drives.
Deposit Model Replaces Traditional Ordering
The capacity allocation model has undergone a structural shift. With the supply shortage extending into 2026, multiple cloud service giants and brand manufacturers are scrambling to secure capacity at any cost, locking in future production early and adopting the prepaid deposit model demanded by memory makers. Capacity allocation covers not only large customers with long-term agreements but also smaller buyers who received allocations in 2026 but may not have secured long-term contracts. Insiders note that some companies are still unaware that July and August represent the critical window for capacity allocation, with many keeping quiet to avoid increased competition that could reduce their own share.
High Prices Become the Norm, But Growth Slows
Despite ongoing supply tightness, the price trajectory may differ from 2026. The industry generally believes that since major capacity is already allocated, final prices for DRAM and NAND will be determined closer to actual shipment dates, with price increases in 2027 likely to be more moderate compared to the exponential jumps of 2026. However, "high prices becoming the new normal" will be a lasting trend. Memory makers, holding the power of capacity allocation, are expected to maintain strong upward pricing pressure, with overall market tightness and end-user cost pressure unlikely to ease significantly in the near term. For companies that have not yet locked in capacity, the main risks in 2027 will be being forced to accept higher procurement costs or facing a passive supply position.
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