Samsung says the memory chip shortage will get worse in 2027

Samsung, one of the world's biggest makers of memory chips, says the shortage is not going away soon. In its third quarter results on Thursday, Oct. 29, the company said it expects demand for memory to "far exceed" supply in 2027. The reason is a rush by companies to build AI infrastructure.

What Samsung said

Samsung expects spending on AI infrastructure to reach "a historic level" as companies compete for AI leadership. Jaejune Kim, who leads memory at Samsung, said on the earnings call that demand growth kept outpacing the company's efforts to raise production. Samsung plans to keep focusing its supply on AI uses, where demand is strong.

Kim also said investment in AI servers should speed up next year. He pointed to hyperscalers, the very large companies that run huge data centers, and to AI companies building their own data centers.

The numbers

• Memory sales rose 16% from the prior quarter and 427% from a year earlier.
• Total revenue was 195.3 trillion South Korean won, about $146.5 billion.
• Operating profit was 107.4 trillion won, about $80.5 billion.
• Samsung says it is the first global tech company to post a quarterly operating profit above 100 trillion won.

Samsung said memory prices rose across all uses because of AI server demand. It plans to sign multi-year contracts for its products to hold its place in the market.

Why it reaches you

Memory chips are in phones, computers and the servers behind online services. When supply is tight, prices stay high. That can raise costs for families buying devices and for businesses that buy equipment or pay for online services. The material does not say how much any product will cost, so those effects are possible rather than confirmed.

An Oct. 8 report said chips have been short for more than a year. It said the shortage is expected to last into 2027 and perhaps through 2028.

What is not known yet

Nobody can say yet whether the AI spending boom will hold. On Friday, Oct. 30, the Nasdaq fell 3%. It has lost more than $1.2 trillion in market value since the start of October, as traders worry whether companies' AI investments will pay off. If spending slows, the memory squeeze could look different than Samsung expects.