Transcend's Chung-Won Shu: DRAM and NAND Flash May Remain in Short Supply Until 2028

Chung-Won Shu, Chairman of Transcend, stated that current memory demand is not the short-term cyclical boom seen in the PC and smartphone eras of the past, but rather a transformative shift on par with the steam engine or the electricity revolution. He asserted that DRAM and NAND Flash will inevitably face shortages not only this year and next, but the tight supply situation could continue all the way through 2028.

Shu analyzed that the core driver of the shortage is the massive AI investments by the four major U.S. cloud service providers. He noted that these companies' total spending in the AI sector will reach as high as $700 billion in 2026, and could continue to increase in the future. These cloud providers are also proactively paying deposits to memory manufacturers for deliveries two to three years out, securing supply at almost any cost.

On the supply side, DRAM and NAND supply are extremely tight. Major manufacturers have discontinued DDR4 and MLC NAND. Meanwhile, DDR5 is in short supply due to significant production capacity being shifted to HBM. Although the three major DRAM makers have invested heavily in capacity expansion, new output will not begin to come online until 2027 at the earliest. Supply and demand are not expected to approach balance until 2028, and the short-term shortage is unlikely to ease soon.

Regarding pricing, Shu noted that memory manufacturers are raising prices almost every month, with single-quarter increases of 40% or monthly hikes of 15%. He expects prices will continue to rise, though whether end applications can absorb the sustained price increases requires close monitoring.