Memory versus artificial intelligence: why DRAM and NAND prices are rising

Samsung has informed its partners of new memory prices. Already in the fourth quarter, LPDDR4X, LPDDR5, and LPDDR5X will rise in price by 15–30 percent. 

NAND for data storage, including eMMC and UFS, will increase in price by 5–10 percent. Other giants have taken similar steps. Micron raised its prices by 20–30 percent, and SanDisk by more than 10 percent.

The main driver of this process is the explosive interest in devices with artificial intelligence. Smartphones, laptops, and powerful PCs require significantly more memory. Add to this the seasonal holiday sales, and we have a market that simply cannot keep up with demand.

Production cannot keep up

Citigroup analysts have calculated that a global shortage is already forming. DRAM production is lagging behind demand by almost two percent. The situation with NAND is worse — the shortage is over four percent. Morgan Stanley predicts that by 2026, the gap could grow to eight percent.

The transition of manufacturers to the new DDR5 and HBM standards adds to the problem. This reduces the volumes of DDR4 and LPDDR4X. In July, the average price of DDR4 jumped 50 percent and exceeded DDR5 for the first time. Samsung initially wanted to phase out production of older chips in 2025, but demand forced the company to abandon this plan.

Who wins and who loses

For manufacturers, the price increase means a return to profitability. However, enthusiasts and ordinary users are forced to pay more for upgrades and new devices. Today, Samsung controls more than a third of the DRAM and NAND market, which means that the price of memory worldwide depends on its decisions.