Storage supercycle intensifies: DRAM/NAND prices rose 20-30% quarter-on-quarter in Q3, with hyperscale customers signing contracts to accept price increases in Q1 of next year.

Storage supercycle intensifies: DRAM/NAND prices rose 20-30% quarter-on-quarter in Q3, with hyperscale customers signing contracts to accept price increases in Q1 of next year.

The memory chip shortage has not eased, and cloud providers have already secured higher-priced contracts for next year.

On September 19, according to the TrendFun trading platform, Bank of America Securities analyst Simon Woo released the latest memory industry research report. Channel research confirmed that the average price of DRAM will increase by 20-30% quarter-on-quarter in the third quarter of 2026, and NAND will increase by more than 15%. Furthermore, hyperscale cloud providers have already signed contracts to lock in higher DRAM prices in the first quarter of 2027.

Based on the continued shortage of memory supply and the intensified competition among OEMs and technology companies, Bank of America has raised its 2027-2028 average price forecast for DRAM by 8-12% and for NAND by 2-3% , but still believes that prices will fall by about 10% from the 2027 high in 2028, which is considered a "soft landing" .

In the longer term, Bank of America has raised its 2030 global memory TAM (market size) forecast from $1.8 trillion to $2.0 trillion, and predicts a CAGR of 21% for DRAM+NAND sales from 2027 to 2030.

Third-quarter price increases exceeded expectations, leading cloud vendors to lock in prices for next year in advance.

Channel research results show that memory prices remained strong in the third quarter.

A Bank of America report states: "The latest survey of memory chip manufacturers, spot market distributors, OEMs, etc., confirms strong average prices in the third quarter: despite the increased proportion of long-term contracts, the average price of most DRAM products still rose 20-30% quarter-on-quarter in the third quarter, with NAND prices rising by more than 15%. "

The fourth quarter is also expected to be strong. Analysts say, " Average prices are expected to see at least single-digit growth in the fourth quarter ."

More noteworthy is a new development: analysts wrote, "Hyperscale cloud vendors have signed new contracts agreeing to pay higher DRAM prices in the first quarter of 2027 than in the fourth quarter of 2026. " This means that buyers have proactively accepted the price increase and locked this expectation into the contracts.

Price forecasts for 2027-2028 have been revised upwards, but a soft landing is expected in 2028.

Based on the aforementioned supply and demand dynamics, Bank of America revised its previous forecasts.

Analysts said, "Given the ongoing memory supply shortage and more aggressive chip sourcing by some OEMs and large technology companies, we are becoming more optimistic about the first half of 2027."

Specific figures:

  • DRAM : Average price assumptions for 2027-2028 have been revised upwards by 8-12% ; the new forecast projects an average price of approximately $17.1 per 8Gb equivalent in 2027 and approximately $16.2 per 8Gb equivalent in 2028.
  • NAND : Average price assumptions for 2027-2028 revised upwards by 2-3% ; approximately $10.0/256Gb equivalent in 2027, and approximately $8.7 in 2028.

Meanwhile, Bank of America maintained its forecast for the second half of 2026 unchanged – “No adjustments will be made this time, given our previous optimistic outlook on average prices in the second half of the year.”

However, analysts also pointed out that "the average price is expected to fall by about 10% in 2028 (5% for DRAM and 13% for NAND)," interpreting this as "a soft landing before a new round of growth in 2029-2030, driven by more advanced AI and GPUs/ASICs with high-end memory."

Supply shortage is the core logic

Why are prices continuing to rise? Supply-side constraints are key.

Data shows that in 2026, the DRAM supply-to-demand sufficiency rate will be only about 79%, far below the 100% equilibrium line, and will not gradually recover to near equilibrium until 2027. The situation for NAND is similar, with the sufficiency rate at about 80% in 2026, and only recovering to about 102% in 2027.

The production cuts in PCs and smartphones are understandable. The report points out that despite the memory shortage, "the production cuts in PCs and smartphones year-to-date are not severe, with shipments down only about 10% year-on-year." This means that end-user demand has not collapsed significantly, and the supply-demand gap is mainly due to the strong demand for memory from AI servers.

On the server side, especially in AI servers, the demand for HBM (High Bandwidth Memory) has already accounted for more than 50% of total DRAM shipments. Analysts predict that the HBM market will reach $77.4 billion in 2026, a year-on-year increase of 124%, and will further expand to $152.8 billion in 2027.

The market size target for 2030 has been revised upward to $2 trillion, indicating a long-term supercycle.

Bank of America has raised its 2030 global memory market (DRAM+NAND) total size (TAM) forecast from $1.8 trillion to $2.0 trillion.

Analysts point out that global DRAM+NAND sales peaked at $0.17 trillion in 2018 (during the cloud computing boom), while the rebound in 2025 will only generate $0.21 trillion (due to a decline in NAND sales). Therefore, investors may question the $2.0 trillion forecast, as it represents a tenfold increase compared to 2018/2025.

Analysts have given five reasons to support this prediction:

(1) As of the third quarter of 2026, the annualized operating rate has exceeded US$1.0 trillion (US$278 billion; equivalent to US$1.1 trillion in the fourth quarter).

(2) The ASP or contract price will increase by 3-4 times year-on-year in 2026, while the sales volume will increase by more than 20%;

(3) Record ASP is sustainable, with limited price reductions by 2030 due to global supply shortages and strong demand for AI chips;

(4) Annual bit growth should remain in the high double digits from 2026 to 2030;

(5) As advanced AI solutions (HBM, SOCAMM, eSSD, etc.) gain market share, the structure should be improved.

Analysts also stated that they do not expect new GPUs/ASICs to be "downgraded" or have lower memory content; instead, they assume further increases, with Rubin Ultra reaching 1,000GB per chip, the new Rubin at 384GB, and the current at 288GB.

Analysts also predict that DRAM+NAND combined sales will grow at a CAGR of 21% from 2027 to 2030.

DRAM+NAND sales will reach $1.4 trillion by 2020, compared to $0.9 trillion in 2026, and continue into 2030—clearly indicating a long-term supercycle. This also implies a fair market capitalization of $10 trillion for the memory industry, based on a P/E ratio of 13, $2.0 trillion in sales, a 50% OPM, and a 25% tax rate.

In addition, Bank of America’s self-built “Memory Indicator” comprehensively tracks the year-on-year growth momentum of average price, revenue, spot price and exports.

Analysts say the index "remained at a record 180 in July, while the cycle median is 100, and the peak in 2017-18 was only 120." Bank of America expects data to remain strong in August and September, with South Korean semiconductor exports and monthly sales of Taiwan's Nan Ya Technology and Phison Electronics both showing year-on-year growth exceeding 100%.

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