Samsung Electronics forecast that the memory supply shortage driven by expanded investment in AI (artificial intelligence) infrastructure will continue through 2028. The company explained that despite increased investment across the semiconductor industry, it is difficult to boost production volumes in the short term because building new factories and securing equipment takes time. Next year's HBM (High Bandwidth Memory) supply has already been sold out.
At its Q3 earnings announcement conference call held on the 29th, Samsung Electronics stated, "Unprecedented strong memory demand will continue into 2027 due to accelerating competition in AI infrastructure construction and the spread of personal AI agents," adding, "We expect tight supply conditions to persist through 2028."
Samsung Electronics explained, "While overall capital expenditure is expected to increase significantly next year, it will be difficult to translate this into increased production by 2028 due to various factors." A substantial portion of the investment is being used to secure new production space, and rising construction costs and equipment prices are also inflating the scale of investment. The company also cited lengthening equipment lead times as a factor constraining supply expansion.
The production of next-generation HBM is also making it difficult to expand memory supply. As HBM4E (7th generation) and HBM5 (8th generation) feature larger chip areas than previous generations, expanding HBM production reduces the capacity available for general-purpose DRAM supply. Samsung Electronics plans to proactively secure cleanrooms while flexibly introducing equipment by monitoring changes in demand.
In the HBM business, the company is pursuing sales expansion and the transition to next-generation products simultaneously. Samsung Electronics stated, "Q3 HBM4 revenue increased more than threefold compared to the previous quarter, and its share of total HBM revenue expanded to approximately 60%." The company also noted that it has already achieved its goal of securing an HBM market share on par with its overall DRAM market share.
Supply negotiations for next year have also been concluded. The company explained, "The supply volume for 2027 HBM has been sold out following negotiations completed at target price levels that reflect our product competitiveness," adding, "We continue to receive requests for additional supply from major customers." Samsung Electronics plans to begin mass production of HBM4E in the first half of next year and significantly increase production volumes in the second half.
Long-term supply contracts are expanding. The company has currently signed contracts with 10 major customers and is conducting negotiations with another 10 key customers. Customers seeking long-term contracts are broadening from large cloud companies and server manufacturers to mobile, automotive, and network firms. Samsung Electronics emphasized, "The likelihood of achieving our target of securing long-term supply contracts covering 60% to 70% of production capacity by 2030 is becoming increasingly tangible."
AI demand is also spreading to NAND flash. The company explained that the surge in 'Key-Value (KV) cache,' which is data temporarily stored during the computational processes of agentic AI, is driving increased demand for high-performance, high-capacity server SSDs (Solid State Drives). The spread of cloud-based personal AI agents is also boosting demand for high-capacity QLC (Quad-Level Cell) SSDs.
Strong demand has been reflected in prices as well. In the third quarter, Samsung Electronics' average selling price for DRAM rose by approximately 20% and NAND by the high teens percent compared to the previous quarter. While anticipating potential adjustments in some mobile and PC market demand next year, the company expects investment in AI server infrastructure to accelerate. Accordingly, it plans to strengthen its sales mix centered on HBM, high-performance DDR5 (Double Data Rate 5), and high-capacity server SSDs.
The foundry (semiconductor contract manufacturing) business is also expected to maintain its growth momentum driven by expanding AI demand. Samsung Electronics stated, "The number of 2-nanometer order projects this year is expected to more than double compared to the previous year," adding, "Next year, the share of HPC (High-Performance Computing) revenue is expected to expand to over 50% of the total."
The company is also pursuing domestic and overseas investments to expand supply capacity. Samsung Electronics explained, "The pace of capacity expansion for advanced processes is currently not keeping up with actual demand growth," noting that it is expanding new fab investments in the United States and domestically. The Taylor plant in the U.S. has begun operating the cleanroom and bringing in equipment for its first fab, and the company is also reviewing plans to expand production capacity, including the construction of additional fabs.
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