The DRAM module market has surged by 59%, and the supply shortage is unlikely to be alleviated before 2028.

As demand for AI servers reshapes the landscape of the entire memory market, the DRAM module sector — where DRAM chips are packaged onto substrates to form finished products — recorded nearly 60% growth last year. Meanwhile, ChangXin Memory Technologies (CXMT) is leveraging the capital generated by the industry boom to nearly triple its committed equipment investment, which has intensified the pressure faced by South Korean manufacturers.

According to data from TrendForce, the global DRAM module market reached $21.217 billion last year, up 59% from the previous year. In contrast, the market is projected to grow by only 7% in 2024, meaning the current growth rate is more than eight times that figure. Over the same period, the total global DRAM market size is estimated at $165.7 billion.

A DRAM module is a memory component that packages multiple DRAM chips on a single substrate, designed for installation in personal computers or servers. In the AI era, as the number of servers processing massive volumes of data surges, demand for high-capacity, high-speed DRAM modules has risen accordingly. The supply chain operates as follows: chips produced by Samsung Electronics and SK Hynix are packaged onto substrates by specialized module manufacturers such as Kingston, ADATA, and Ramaxel, who then sell the finished products.

The top five memory module vendors collectively hold a 77% market share. Kingston continues to lead with a 62% share, followed by ADATA at 6% and Ramaxel at 4%.

Memory module manufacturers are rapidly expanding their product lines, extending from PC-oriented memory products to the industrial and enterprise-level server sectors. TrendForce points out that DDR5 became the flagship product of memory module manufacturers in the second half of last year, and continuous expansion of server-grade products is expected to drive long-term demand. As the product lines of high-capacity DDR5 and RDIMM for AI and general-purpose servers keep expanding, the growth foundation of the DRAM module market is shifting from consumer-grade applications to enterprise-grade applications.

Leading in the First Half, Robust Server Demand in the Second Half

The demand drivers in the first and second halves of the year are completely different. In the first half, advance procurement driven by tariff concerns and DRAM makers' planned phase-out of DDR4 production pushed up demand. Memory module manufacturers increased inventory to hedge against supply disruption risks, while PC makers and consumer electronics companies also accelerated their procurement.

In the second half, cloud service providers (CSPs) in North America and China increased server DRAM orders to secure the computing resources required for agentic AI services. As DRAM manufacturers prioritize production capacity for server-grade products, supply for PC and consumer applications has tightened, driving even larger growth in module manufacturers' shipments and revenues in the second half.

TrendForce forecasts that even as new fabs start to ramp up production meaningfully in the second half of 2027, a meaningful supply contribution will not materialize until 2028. Server DRAM contract prices are expected to rise quarter by quarter from the second half of this year through the second half of 2027, though the rate of increase will gradually slow down.

The growing demand for AI servers is a positive for both Samsung Electronics and SK Hynix. AI servers require high-bandwidth memory (HBM), high-capacity DDR5, and other standard server DRAM. Samsung Electronics posted record-high memory business performance in the second quarter and plans to expand sales of HBM4 and DDR5 in the second half. SK Hynix has signed long-term supply agreements with around 10 customers, including several key strategic clients.

CXMT Triples Its Investment Commitments — Another Player Benefiting From the Memory Boom

The dividends of the upward memory market cycle are not only flowing to South Korean companies. ChangXin Memory Technologies, China's largest DRAM manufacturer, disclosed in its half-year report that as of the end of June, the unfulfilled committed amount for long-term asset acquisition and construction stood at 52.44389 billion yuan (about $7.8 billion), up 206.2% from 17.12939 billion yuan (about $2.6 billion) at the end of last year. The amount of commitments for long-term asset acquisition and construction refers to the contracted amount not yet reflected on the balance sheet, essentially representing the scale of investment contracts to be executed in the future.

Construction of existing production lines is also nearing completion. The first and second phase production lines in Hefei and the production line in Beijing are 96% to 98% complete, with the planned construction of the three production sites almost finished. While expanding production capacity, CXMT is also supplying the latest mobile DRAM to smartphone manufacturers and is in talks with major customers on long-term supply agreements.

Cash flow generated during the boom provides impetus for reinvestment. CXMT recorded an operating profit of 117.14439 billion yuan (about $17.5 billion) in the first half of the year, reversing the loss in the same period last year. Its disclosed operating profit margin was 77.9%, higher than that of Samsung Electronics' semiconductor division (68.3%) and SK Hynix (74.4%) over the same period. Operating cash flow in the first half totaled 131.15567 billion yuan (about $19.5 billion), roughly 31 times the figure in the same period last year.

Investment in technology R&D is also expanding. R&D expenditure in the first half (including R&D costs capitalized as assets) reached 6.85948 billion yuan (about $1 billion), up 87.4% year-on-year. The total 66.60067 billion yuan (about $9.9 billion) raised through the July listing and the exercise of the over-allotment option will be used for existing production line improvements, DRAM technology advancement, and next-generation R&D.

Milestone progress has also been made in process technology. On September 20, ChangXin Memory Technologies announced at the World Manufacturing Convention in China that its fifth-generation DRAM technology platform has entered mass production. The company stated that based on the 8Gb capacity standard, the number of chips per wafer is at least 50% higher than that of the fourth generation. Two 24Gb LPDDR5X products using this process have also entered mass production. Earlier, the company announced on the 7th that its next-generation low-power DRAM, LPDDR6, has started mass production and is applied in Xiaomi's foldable phone "18 Fold".

According to TrendForce data, CXMT's global DRAM revenue share rose to 9.5% in the second quarter, up 1.9 percentage points from 7.6% in the first quarter. Its year-on-year revenue growth rate reached 99.3% over the same period, far outpacing the overall market growth rate of 59.5%. In the first half of the year, LPDDR products accounted for 52.0% of total revenue, while DDR products accounted for 46.2%.

A semiconductor industry insider said: "CXMT is working to convert the capital accumulated during this boom into a production base that can maintain competitiveness in the next cycle. If they can secure good yields for the new process and obtain long-term orders, their business stability will be significantly improved even if DRAM prices fall in the future." The person added: "This will make it harder for South Korean companies to defend commodity prices for DRAM."

NAND Market Also Faces Shortages — eSSD Is the Key Variable

Following DRAM, the NAND flash market is also facing supply shortage forecasts. Citi predicted in a global semiconductor report that as artificial intelligence shifts from the "post-training fixed parameters" mode to "continuous learning", demand for enterprise solid-state drives (eSSD) will surge. Continuous learning requires AI systems to retain existing training data while absorbing new information during operation, creating demand for long-term storage and fast retrieval of massive historical datasets.

Citi forecasts that eSSD demand will grow 52.9% year-on-year in 2027, while the NAND market will face a supply gap of 6.1% and 5.5% in 2027 and 2028 respectively. Although the supply gap in 2026 is expected to be only 0.8%, analysis shows that memory manufacturers are prioritizing new production capacity for DRAM and HBM, meaning NAND supply growth cannot keep up with demand growth.

NAND flash demand is projected to grow 29% in 2027 and 33% in 2028, while supply growth over the same period is expected to be only 21% and 25% respectively. The industry average NAND wafer production capacity is projected to grow by only 3.2% by 2027 to 1.46 million wafers per month, while Samsung Electronics' NAND capacity is expected to decline by 4.7%.

Global memory capital expenditure is projected to reach $80.4 billion by 2027, up 46.5% year-on-year. Of that total, DRAM accounts for $58.6 billion and NAND accounts for $21.8 billion. HBM bit demand is projected to grow 62% to 75.157 billion Gb by 2027, and 69% to 126.99 billion Gb by 2028.

This article is from the WeChat official account "Tech Business", authored by Tech Business, and published with authorization from 36Kr.