Global memory deficit set to prolong Korean chip supercycle through 2028
Global memory deficit is set to extend the boom for Samsung and SK hynix through 2028 as supply constraints tighten.
The global memory deficit is deepening, creating a prolonged boom for South Korean semiconductor giants Samsung Electronics and SK hynix. Recent projections suggest that supply constraints are expected to persist well into 2028, significantly extending the current industry supercycle.
Micron signals tightening supply and massive demand
The outlook for a sustained boom gained significant momentum following reports from US-based Micron Technology. The manufacturer revealed that over 75 per cent of its planned production for fiscal 2027 is already fully committed to buyers. Even more telling is the shift in buyer behavior, with enterprise discussions already moving toward securing inventories for 2028.
Micron's Chief Executive, Sanjay Mehrotra, highlighted that demand has strengthened significantly since the previous reporting cycle. He noted that supply-demand conditions for memory and storage are expected to become "much tighter" throughout fiscal 2027 and 2028 compared to the levels seen in 2026.
To secure access to critical silicon, customers are moving toward multi-year commitments. Micron has expanded its long-term roster to 26 strategic customer agreements—up from 16 in June—with some covenants running as far out as 2031. These financial pledges are expected to account for over 35 per cent of the company's total revenue through 2030, providing high confidence in its medium-term financial trajectory.
South Korean giants secure long-term contracts
South Korean industry leaders have been signaling these tightening dynamics for some time. Samsung Electronics previously indicated that supply deficits would likely endure through 2028. The company has already entered agreements with five major data-centre operators and is in advanced talks with five others, aiming to lock in 60 to 70 per cent of its forward capacity under contract.
Similarly, SK hynix has concluded parallel five-year supply agreements with approximately 10 major clients, positioning itself to benefit from the long-term scarcity.
Shift to HBM drives price increases
The supply pressure is not limited to a single product type. While high-bandwidth memory (HBM) for AI accelerators is a major driver, the shift in manufacturing is impacting the broader market. Fabricators are redirecting advanced dynamic random-access memory (DRAM) wafer capacity toward HBM manufacturing lines. This shift has restricted the availability of standard DRAM across several key segments, including:
- Servers
- Personal computing
- Mobile devices
This reduction in standard DRAM availability is driving up aggregate price baselines across the industry.
Surging profit projections for Samsung and SK hynix
The favorable pricing environment has significantly lifted earnings projections for South Korean manufacturers. Market consensus compiled by FnGuide suggests a massive surge in operating profits:
- Samsung Electronics: Projected operating profit of 110.3 trillion won (USD 81.1 billion), a 23 per cent increase over the prior quarter. This would mark the company's first time exceeding 100 trillion won in operating results.
- SK hynix: Projected operating profit of 78.1 trillion won (USD 57.3 billion), representing a 29 per cent quarterly advance.
Combined, the two manufacturers are estimated to reach an operating total of 188.3 trillion won (USD 138.2 billion), an increase of roughly 38 trillion won (USD 27.89 billion) compared to second-quarter results.
However, some financial institutions remain more cautious. DS Investment & Securities offered a more conservative estimate, projecting operating profits of 104 trillion won for Samsung Electronics and 70 trillion won for SK hynix, citing potential factors like domestic currency appreciation and moderating memory price growth.