Tech giant counts record piles of cash while buyers face years of elevated prices
Samsung Electronics is warning that the current memory supply crunch will deepen next year and persist through 2028, a shortage that keeps padding its own record profits at the expense of enterprise customers and consumers. The Korean conglomerate said agentic AI has added to demand already generated by model training, driving an "unprecedented rise" in requirements for AI servers and other computing infrastructure.Memory makers continue to prioritize production of components for AI servers, leading to a shortfall of the mainstream memory types needed for PCs, smartphones, and other devices.
The industry continues to invest in new capacity, but the lead time from starting construction of a fab to producing wafers exceeds three years, according to Samsung's EVP of Memory, Jaejune Kim, meaning that any significant ramp in supply capacity will take considerable time.
"So we believe it will be unlikely to see any significant increase in incremental supply through 2028," Kim told analysts on a call to discuss the firm's calendar Q2 financial results for the period ended June 30."Based on the incoming requests that we have been seeing from the customers, unmet demand from this year is likely to carry over into the following year, contributing to tighter supply conditions going forward. The supply constraints are expected to become even more severe in 2027 than 2026, reinforcing our view that the supply shortage will persist through 2028."Kim said visibility further ahead is limited, although rising token processing by AI agents is expected to keep pressure on memory chip demand over the medium to long term.Like rival SK Hynix, Samsung has also cut deals with customers to ensure long-term supply stability. "Customers who want to secure substantial AI service infrastructure are increasingly approaching us for multiyear supply," Kim told analysts."These multiyear arrangements actually are aligned with our objective of hedging our mid- to long-term risk. And so we have been engaging in discussions with customers, prioritizing those who can guarantee committed future captive demand."In other words, customers willing to sign up for years of memory purchases move to the front of the queue. Everyone else can take a number and get in line.
