Former Samsung President Warns: Memory Prices May Fall in Second Half of Next Year

Kyung Kye-hyun stated at a National Academy of Engineering of Korea forum that CXMT and YMTC are significantly expanding capacity. As memory supply increases sharply in the second half of next year, a market shift may occur, or at the latest by the first half of 2028.

According to bidding documents and industry data, CXMT plans to expand production by 50,000 to 60,000 wafers in 2026, with an equipment procurement budget of approximately $5 billion to $6 billion; YMTC launched a bid for equipment piping and installation for its Fab 2 on May 14.

The memory industry is currently in a historic boom cycle. SK Hynix's first-quarter operating margin reached as high as 72%, while Samsung's semiconductor division saw quarterly profits surge approximately 48-fold year-on-year. The core driver of this growth is the supply shortage of HBM and high-end DRAM, whereas South Korean manufacturers have been extremely restrained in expanding production.

Data from Omdia shows that Samsung and SK Hynix’s DRAM production growth in 2026 will be only about 5% to 8%, far lower than the growth in demand. UBS further noted that AI-driven HBM demand continues to crowd out traditional DDR capacity, with the global DRAM supply-demand gap expected to persist until the fourth quarter of 2027.

On one hand is the strongest supply-demand gap in nearly 30 years, and on the other is Kyung Kye-hyun's warning about oversupply. Both hold true and may seem contradictory, but in fact, they reflect logic on two different levels.

The current severe DRAM shortage is mainly due to South Korean manufacturers being constrained by capital expenditures and remaining extremely restrained in production increases. In contrast, Chinese manufacturers are not subject to such constraints in terms of expansion intent or funding and are entering a fast track for concentrated capacity release.

With CXMT’s new capacity set for concentrated release between the second half of 2027 and 2028, the supply-demand gap could quickly reverse if AI demand growth slows down by then.

Kyung Kye-hyun also pointed out that there is greater uncertainty on the demand side. If tech giants like Amazon and Microsoft see a lower return on AI capital expenditures, they may cut investments. He stated that after 2028, not only will memory chip prices face pressure, but demand itself could shrink.

Furthermore, he highlighted structural risks in South Korea's semiconductor industry, noting that while it holds a 70% global share in DRAM, its share in chip design is only 1.5%. It is extremely difficult for South Korea to compete with both the U.S. and China in hardware and software simultaneously. He urged South Korea to transform into a 'deep tech manufacturing nation' and build independent capabilities in system semiconductors and sovereign AI.

Separately, reports indicate that the Samsung labor union plans to launch an 18-day general strike on May 21, involving over 41,000 members. With labor and management still in negotiations, this strike could cause short-term disruptions to the global supply of HBM and high-end DRAM, pushing up spot prices. If the strike triggers panic stockpiling by downstream customers, it may instead pull forward demand from the second half of 2026 and 2027, accelerating the arrival of a price inflection point.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.