Samsung warns of global memory shortage amid rising AI demand

Rising artificial intelligence workloads are driving unprecedented demand for memory chips, while supply constraints and slow capacity expansion could deepen shortages, impact pricing, and reshape the global technology and smartphone markets through 2027.

Samsung has signalled mounting pressure in the global memory chip market, cautioning that supply shortages could intensify over the next few years as demand continues to surge, particularly from artificial intelligence (AI)-driven applications. The warning was shared during the company’s latest earnings discussion, where executives highlighted a widening imbalance between supply and demand.

The company noted that demand for memory, especially DRAM and NAND, is being fuelled by rapid adoption of AI across industries. However, increasing production capacity remains a complex and time-consuming process, limiting the industry’s ability to respond quickly. As a result, inventory levels are currently tight, with supply falling short of customer requirements. In an unusual shift, customers are reportedly securing orders much earlier than in previous cycles, with some already booking capacity for 2027.

Supply constraints and rising cost pressures

Samsung indicated that based on current order trends, the gap between supply and demand is expected to widen further over the next two years. This is likely to keep pricing under pressure and affect availability across the broader technology ecosystem.

Industry estimates suggest that supply constraints could persist until 2027, with global production potentially meeting only a portion of total demand. A key factor behind this imbalance is the growing focus on high-bandwidth memory (HBM), which is increasingly used in AI infrastructure and offers higher margins. This shift has diverted manufacturing capacity away from conventional memory used in smartphones and personal computers.

At the same time, the cost of memory has risen sharply, with prices witnessing significant increases in early 2026. This trend is expected to have a cascading impact on device manufacturers, particularly in the smartphone segment, where memory components account for a growing share of production costs.

Smartphone business faces margin pressure

The rising cost environment is already weighing on Samsung’s mobile division. TM Roh, who leads the company’s mobile experience business, has indicated that sustained increases in memory prices could push the smartphone unit toward losses, despite steady demand and strong flagship sales.

The company is responding by focusing on cost optimisation across its product portfolio while continuing to invest in AI-led innovation. Samsung also outlined plans to expand its premium offerings, including advancements in foldable devices and new categories such as AI-powered wearable technologies.

Looking ahead, Samsung expects 2026 to remain challenging due to geopolitical uncertainties and rising input costs. However, it remains focused on leveraging AI integration and operational efficiency to sustain growth, particularly in its high-end product segments.