Preface:

The memory industry is undergoing a disruptive restructuring that touches the very foundation of the sector: It is bidding farewell to the red ocean competition of homogeneous commodities and accelerating into the core battleground for strategic resources that will determine the fate of the digital industry in the AI era.

A Fragmented Pricing System

In the final week of March, China's domestic memory market witnessed extreme price fragmentation.

The spot price of Samsung's 32GB 2266-spec DDR4 memory plunged from a high of RMB 2,100 to RMB 1,320 in a single day, with monthly losses exceeding 30%.

DDR3 prices were halved, while overseas retail markets also saw declines. Mainstream 32GB DDR5 kit prices fell nearly 30% in a month, with some models experiencing single-day drops exceeding RMB 100.

Yet amid the spot market panic selling, the upstream supply chain moved in the opposite direction.

Samsung Electronics completed second-quarter DRAM contract price negotiations with key clients by the end of March. Building on a 90%-95% quarter-on-quarter increase in first-quarter contract prices, second-quarter prices rose another ~30%.

TrendForce's latest forecast indicates that overall DRAM contract prices will still increase by 58%-63% quarter-on-quarter in Q2 2026, while NAND Flash contract prices will rise by 70%-75% quarter-on-quarter.

The spot market's collapse, the historic surge in original contract prices, and tech giants' Crazy shopping spree (frenetic stockpiling) have created an extreme market divergence never seen before in DRAM's history.

Spot prices serve as the market's [barometer]. When spot prices rise continuously and channel inventories deplete rapidly, original manufacturers raise contract prices during quarterly negotiations; the reverse is also true.

Based on this transmission logic, the industry has established a stable quarterly price adjustment mechanism.

Original manufacturers and major clients determine next quarter's supply prices based on current market supply-demand dynamics and future expectations, with price adjustments typically kept within ±10%.

Even in years of severe industry volatility, single-quarter adjustments rarely exceeded 30%.

But recent market behavior has broken this pattern. While spot prices collapsed by over 30%, the contract market not only held firm but pre-locked nearly 60% of the second quarter's price increase.

As consumer-grade memory prices continue to plummet, enterprise-grade DRAM and HBM for AI servers are still rising against the trend, with some models surging over 200%.

While distributors offload inventory, North American cloud leaders like Google, Microsoft, and Amazon are competing to sign long-term agreements with original manufacturers extending through the end of the decade, willing to pay 50%-60% premiums over smartphone makers to secure production capacity.

Spot market price fluctuations no longer influence original manufacturers' pricing decisions, suggesting the underlying logic of traditional price regulation systems has been shaken.

The Collapse of Three Decades of Rules

For the past thirty years, consumer electronics have remained the core demand driver for the DRAM industry, with PC and smartphone shipments determining industry cycles.

Even during cloud computing's golden decade, server DRAM demand never exceeded 30% of total demand, with consumer electronics remaining the industry's foundation.

The AI boom has rewritten demand structures, with DRAM usage per AI server reaching 8-10 times that of ordinary servers.

Goldman Sachs reports that server DRAM demand (including HBM products) will grow 39% year-on-year in 2026, accounting for 53% of global DRAM demand and officially becoming the industry's largest demand source.

This demand rigidity far exceeds past levels. For cloud providers, memory serves as the core foundation of AI computing power—a shortage of a single memory chip could delay entire data center deployments.

Under such circumstances, price fluctuations are no longer the primary procurement consideration; securing stable supply is a matter of survival.

While original manufacturers previously needed to consider consumer electronics' price sensitivity when controlling cyclical price increases, they can now ignore consumer market price fluctuations and continuously raise contract prices as long as AI clients accept higher prices.

Structural supply-side contractions have further amplified original manufacturers' pricing power.

According to Omdia, total DRAM production capacity among Samsung, SK Hynix, and Micron will reach approximately 18 million wafers in 2026, representing only ~5% year-on-year growth.

This increase falls far short of explosive market demand growth, with nearly all of the 5% capacity expansion allocated to high-margin HBM and server DRAM sectors.

HBM profits per unit are ten times those of ordinary DDR4, leading the three major manufacturers to unanimously adopt a [abandon low, pursue high] strategy.

As of Q1 2026, over 70% of advanced process capacity among the three major manufacturers has been allocated to HBM and server DRAM products.

This structural capacity tilt has directly caused market fragmentation.

Original manufacturers no longer plan capacity to meet industry-wide demand but prioritize maximizing profits, rendering price regulation based on industry-wide supply-demand balance meaningless.

Anti-Cyclical Gameplay: Essentially About Resource Positioning

However, this round of tech giants' operations—locking in multi-year production capacity at historic high prices during an industry upcycle through premium payments and upfront capital—represents classic anti-cyclical behavior.

For tech giants competing in AI, memory chips are no longer ordinary production materials but core strategic resources determining the survival of their AI businesses.

Capital expenditures on data center infrastructure among hyperscale cloud providers are expected to reach approximately $650 billion in 2026, up 80% year-on-year, with most funds allocated to AI computing infrastructure.

For companies like Microsoft and Google, a one-month delay in AI data center commissioning could mean billions in lost revenue and irreparable market share.

In comparison, a few percentage points' increase in memory procurement costs is insignificant.

Their willingness to pay premiums and upfront payments essentially represents exchanging manageable cost increases for absolute supply chain certainty to safeguard their AI businesses.

While [price priority] once dominated procurement strategies—buying low during cycle troughs to reduce costs—[volume priority] now reigns supreme, with stockpiling at cycle peaks to ensure supply.

Another core logic behind giants' anti-cyclical stockpiling is using financial advantages to squeeze competitors' living space (survival space) and build supply chain moats.

Global DRAM production capacity will reach only 18 million wafers in 2026, with over 70% already locked in by leading cloud providers through long-term agreements.

Only about 100 top-tier global buyers possess the capability to sign long-term agreements with original manufacturers, including leading cloud service providers, automotive companies, and consumer electronics giants.

Through anti-cyclical stockpiling, giants have firmly grasped global DRAM production capacity in their hands.

The Matthew effect amplifies indefinitely in this game, with leading enterprises locking in competitive advantages at the supply chain level through financial strength, while smaller players struggle to survive or are forced to exit the market.

Long-Term Demand Breaks Traditional Cycle Expectations

UBS research predicts that AI-driven HBM demand will continue cannibalizing DDR production capacity, coinciding with traditional server replacement cycles and surging memory demand. The global DRAM market's supply-demand gap will persist through Q4 2027.

New capacity from the three major manufacturers won't arrive until H2 2027 at the earliest, with mass production from Samsung's Pyeongtaek P5 facility and SK Hynix's Yongin semiconductor cluster not expected until 2028.

This means the DRAM market's supply-demand gap will not only persist but widen over the next 2-3 years.

The capacity giants are locking in at current high prices may actually become low-cost sources in the future.

Their anti-cyclical operations appear to violate traditional cycle patterns but actually represent a new industry cycle forecast from a longer-term perspective.

In this transformation, Samsung, SK Hynix, and Micron emerge as the biggest beneficiaries.

They not only wield absolute pricing power but have achieved complete control over industry production capacity and resource allocation, enabling absolute command over prices and profits.

Leading end-user giants like Microsoft, Google, Apple, and Amazon have secured stable supply for the next 2-3 years through premiums and upfront payments.

When industry-wide supply shortages occur, these leading enterprises won't face material shortages and can proceed with AI data center construction and terminal product launches as planned.

This supply chain advantage will ultimately translate into market competitiveness, further solidifying their industry leadership positions.

Conclusion: The Outcome of This Transformation Remains Unclear

If the AI investment boom continues, current supply tightness may persist through 2027 or longer.

If AI demand falls short of expectations, the massive capacity being built now could trigger a sharp correction after 2028.

Regardless of the scenario, one certainty exists: The DRAM market will never return to its predictable, low-volatility equilibrium.

In an environment where uncertainty becomes the norm, adaptability will matter more than predictive capability.

Pricing logic shifts from cost-based to resource-based pricing, with price ceilings determined not by production costs but by the commercial value of AI businesses.

Long-term agreements, upfront payments, and capacity lock-ins will become standard in the future memory industry.

The market structure shifts from synchronized gains/losses to structural differentiation. The high-end memory market for AI computing power will feature strong demand rigidity, high profits, persistent capacity shortages, and long-term price resilience.

The general-purpose memory market for consumer electronics will see demand fluctuate with macroeconomic conditions, capacity squeezed by the high-end market, and prices exhibiting pulsed volatility.

The two markets will follow completely independent trajectories, even experiencing price divergences. The industry-wide synchronized gains/losses of the past will never recur.

Of course, this game isn't without risks. If commercialization of AI large models progresses slower than expected and cloud providers' capital expenditures contract, the long-term agreements locked in now will become heavy cost burdens, triggering another round of price collapses.

UBS calculates that if market prices fall 60% from current highs over the next three years while long-term agreements only permit 30% price reductions, leading cloud providers will face $4.5-6 billion in excess procurement costs annually.

Meanwhile, overseas giants' full pivot toward high-end AI memory markets has left ample consumer-grade market space for domestic memory manufacturers and given domestic terminal manufacturers momentum to accelerate supply chain localization.

This global memory industry transformation is becoming a critical window of opportunity for domestic memory breakthroughs.

Sources Referenced: Counterpoint Research: "2026 Global Smartphone Market Supply-Demand and Shipment Outlook", UBS: "Global Semiconductor Supply Chain Restructuring in the AI Era", KB Securities (South Korea): "Global Memory Industry Q1 2026 Tracking Report: Persistently Tightening Supply-Demand Dynamics", Digitimes: "DRAM Spot Price Tracking and Supply Chain Research", Nikkei Asia: "Memory Chip Giants Implement Order Review Mechanisms", Morgan Stanley: "AI Infrastructure Investment and the Semiconductor Supercycle"