UBS: DRAM Shortage to Last Through Q1 2027

A recent report from UBS highlights a strong surge in memory prices, driven by accelerating AI demand and constrained production capacity. The investment bank forecasts that Q4 contract prices for DDR memory will climb 35% quarter-on-quarter, while NAND Flash contracts are expected to rise 20%, both surpassing earlier expectations.

UBS notes that client procurement is unprecedented, leaving inventory levels at historic lows. Server DDR memory stock can only cover 11 weeks of demand, PC and mobile DRAM supply is sufficient for just 9 weeks, and SSD inventory stands at only 8 weeks. This indicates that the market's current shortages are fueled by genuine demand rather than speculative hoarding.

AI server growth is a major factor driving this supply-demand imbalance, while traditional sectors like smartphones and PCs continue to contribute to rising memory demand. Based on these trends, UBS expects DDR contract prices to increase another 30% in Q1 2026, with NAND prices rising 20% over the same period.

Looking further ahead, UBS predicts the global DRAM market will remain supply-constrained until at least Q1 2027, as DDR demand is projected to grow 20.7%, far outpacing production. NAND Flash shortages are also expected to persist until Q3 2026. To secure stock, major clients are increasingly signing long-term agreements with memory manufacturers, with leading cloud service providers extending pre-purchase commitments through 2028.

On the market front, UBS expects SK Hynix to retain a dominant 70% share in the HBM4 segment. The bank also raised price targets for leading DRAM players: SK Hynix's target was increased from 710,000 KRW to 853,000 KRW, maintaining a "key buy" rating, while Samsung Electronics' target rose from 128,000 KRW to 154,000 KRW. UBS further noted that tight supply conditions are likely to boost Micron's DRAM market share.