Memory chip makers experienced a wave of rising demand, boosting pricing power and profit forecasts in the historically volatile sector. Rather than a one-off shortage that requires correction, analysts are increasingly seeing this demand as evidence of a “supercycle” in the industry. They believe this could take years, especially if large companies adopt artificial intelligence more quickly than they currently expect. “Increasing demand for AI accelerators and inference hardware can dramatically boost revenue for semiconductor companies. If adoption exceeds forecasts, chipmakers could see unexpected gains in memory, logic and networking,” Seaport Research Partners analyst Jay Goldberg wrote in a note Wednesday. Traders have caught wind of rising demand for memory chips and pushed shares of these companies higher over the past week. Chipmaker Micron Technology rose nearly 38%, posting its best weekly performance since 2008. MU YTD Mountain Micron, YTD The Roundhill Memory ETF (DRAM), whose components include Micron, SK Hynix and Samsung Electronics, rose more than 30% this week. DRAM YTD Mountain Roundhill Memory ETF, YTD Ready for a Production Surge Samsung Electronics, which recently joined the trillion-dollar valuation club, is pushing forward construction of a new mega-fab plant by six months as part of a supercycle that could extend beyond 2027, analysts said. The company is expected to begin construction of the facility, known as P5 Fab 2, at its semiconductor campus in Pyeongtaek in July. “Beyond simply responding to current demand, the move reflects an intent to consolidate market dominance during the multi-year AI semiconductor boom,” Roth analysts wrote in a commentary on Tuesday. As Reuters reported last week, South Korean memory chip maker SK Hynix is fielding offers from major technology firms to invest in specific production pipelines to boost memory chip production. AI processors require high-bandwidth memory such as DRAM and NAND to handle workloads, as well as large amounts of memory to pass data back to the processors. DRAM is typically faster and less stable, while NAND is slower and more reliable, but both types of memory are crucial for AI. In March, Micron completed the acquisition of a factory in Taiwan from Powerchip Semiconductor Manufacturing Corporation (PSMC), a move that could “give Micron more flexibility for future DRAM and HBM nodes,” Roth said. “By the end of 2028, Micron’s wafer production could be much larger than expected,” Roth analysts said. Limited supplies lead to higher prices. The storage shortage is leading to rising downstream costs, which are putting a strain on hyperscalers. “Beyond the June quarter, we believe storage costs will have an increasing impact on our business, and we will continue to evaluate that. And as we’ve said before, we’ll be exploring a number of options,” outgoing Apple CEO Tim Cook said on the iPhone maker’s April 30 earnings call. “We…manage the complex PC market dynamics influenced by memory prices,” Microsoft CFO Amy Hood said during the company’s recent earnings call. It could take months for supply constraints to normalize and the impact on prices could be huge by the middle of this year. Krish Sankar, an analyst at TD Cowen, estimates that DRAM and NAND prices could be around 180% higher by mid-2026 than in the third quarter of last year. This pressure on downstream margins caused by cost increases reflects the expansion of upstream margins of the memory component manufacturers themselves. This year, gross margins are expected to be 76.9% for Micron, 70% for SanDisk, 65.8% for TSMC and 55.3% for AMD, according to data from FactSet. Next year, the sector’s pricing power is likely to strengthen. Micron forecasts a gross margin of 81% and SanDisk forecasts a margin of 82%.
