Samsung, SK Hynix flag record supply squeeze in memory market as AI demand soars

Samsung Electronics and SK Hynix, South Korea’s two memory chip giants, are warning of a prolonged and severe global supply crunch, weeks after the two companies disclosed increased investments in their China wafer fabs to meet surging artificial intelligence demand.

During Samsung’s first-quarter earnings call on Thursday, the company said its order fulfilment rate had plunged to a “record low”. In a rare move, customers worried about shortages were already pre-booking memory capacity for 2027, according to company executives.

Available supply was far short of customer demand, executives said, adding that production-ready capacity for the next-generation high bandwidth memory – the HBM4 – was fully booked.

The two South Korean chipmakers remain the largest beneficiaries of the memory supercycle. Explosive AI demand, especially from the rapid adoption of AI agents, has pushed Samsung’s earnings to record levels. Quarterly revenue jumped 69 per cent year on year to 133.9 trillion won (US$90.25 billion), while operating profit surged nearly eightfold to 57.2 trillion won.

Samsung’s warning of supply-demand imbalance echoes similar concerns from rival SK Hynix, which released its own record-breaking first-quarter results last week. Revenue soared nearly 200 per cent year on year to 52.6 trillion won, driven by structural demand for advanced memory chips.

SK Hynix’s first-quarter revenue soared nearly 200 per cent year on year. Photo: AP

Demand from major customers was increasing across the board – including HBM, dynamic random access memory and enterprise solid-state drives – while suppliers struggled to increase output, said Kim Woo-hyun, chief financial officer of SK Hynix, at the earnings call. He added that the current rising price cycle was expected to last longer than past industry cycles.

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