AI drives record-breaking performance, but Samsung is starting to worry: Could supply and demand for memory reverse in 2028?

Driven by the wave of AI demand, Samsung Electronics' semiconductor division is expected to achieve a record-best performance this year. However, the world's largest memory chip maker has already started preparing for the next cyclical downturn.

According to sources, the management of Samsung Electronics' DS (semiconductor) division is working with business support teams to analyze the possibility of a reversal in the global memory semiconductor market around 2028.

The core logic is: As major manufacturers continue to expand production, by around 2028, the production capacities of Samsung, SK Hynix, and Micron will collectively leap to a new level, and at that time, the supply-demand balance will face the risk of a reshuffle.

This internal assessment reflects the deep contradictions in the memory industry—the investment boom in AI infrastructure is driving demand, but at the same time, it has significantly increased the uncertainties in demand forecasts. If overinvestment encounters slowing demand, it will backfire in the form of massive losses, an experience Samsung is familiar with.

AI boom drives HBM demand, expansion direction undisputed this year

Currently, the memory market is enjoying a cycle of demand outstripping supply. Large technology companies like Nvidia, AMD, and Broadcom have robust needs for high-bandwidth memory (HBM), which is expected to continue into next year. For both Samsung Electronics and SK Hynix, HBM now accounts for more than half of overall DRAM sales.

The two companies are allocating more of their capacity to HBM, resulting in shortages of regular DRAM for smartphones, PCs, and servers. Against this backdrop, the necessity to expand DRAM and HBM supply this year is undisputed in the industry.

Samsung is advancing next-generation DRAM process conversions and expanding new production lines at its Hwaseong facility. The industry expects Samsung to continue the tenth-generation (1b) DRAM process transition this year, while focusing on the Pyeongtaek plant and expanding new lines to secure capacity for sixth-generation (1c) 10nm DRAM. SK Hynix is implementing active investment plans at key production bases in Icheon, Cheongju, and Yongin, with the newly built M15X plant constructing next-generation DRAM lines.

Concentrated capacity release in 2028, supply-demand reversal risks emerge

The core market concern is that the expansion plans of major global memory makers will be realized synchronously around 2028. Micron is expanding DRAM production lines in Singapore and the USA, and has been placing large orders for equipment since last year to enhance its HBM supply capabilities. Since it usually takes about two years to build production lines, from 2028 onward, Samsung, SK Hynix, and Micron's capacities are expected to jump to a new level.

The Yongin Semiconductor Cluster project led by the South Korean government is also an important variable. This cluster will become the core production base of Korea’s semiconductor industry, with infrastructure and factory construction progressing in phases. The industry expects that after the first phase investment in Yongin Cluster is completed, additional plant construction and mass production will be launched, and a second phase investment will further expand capacity around 2028.

Supply pressure in the NAND flash sector is even more pronounced. Unlike the DRAM market dominated by Samsung, SK Hynix, and Micron, NAND has more players, with Kioxia and China’s YMTC both continuously expanding their technology capabilities and capacity. If the current expansion pace continues, NAND supply could outstrip demand earlier than DRAM. In recent years, price competition in NAND has grown fierce, and both Samsung and SK Hynix are finding it hard to avoid losses.

Demand forecasts fail, Samsung strives to avoid repeating over-investment mistakes

The sudden arrival of this cycle has prompted the industry to deeply reflect on its forecasting capabilities. A person familiar with Samsung’s internal situation said, "Just last summer, neither Samsung nor SK Hynix could have foreseen today’s prosperity, which fully demonstrates how difficult it has become to predict the semiconductor market situation and investment plans." The person added, "That’s why Samsung’s business support team is carefully judging investment decisions, striving to match them with sufficient market verification and forecasting."

Analysts pointed out that after the AI boom, memory demand is irregular and supply cycles are shortening, making it increasingly difficult to accurately judge production scale and required investment. Samsung’s challenge now is: how to formulate contingency plans for unpredictable demand slowdowns while continuing large-scale investment in next-generation HBM production lines and advanced process conversions—enjoying today’s AI dividends while reserving enough buffer for the next downturn.

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