AI drives performance to new highs, but Samsung is starting to worry: will the supply and demand for storage reverse by 2028?

The wave of AI demand is driving Samsung Electronics' semiconductor division to achieve its best performance in history this year, but the world's largest memory chip manufacturer has begun to prepare for the next cycle downturn. According to informed sources, the management of Samsung Electronics' DS (Semiconductor) division is working with the business support team to assess 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 capacity of Samsung, SK Hynix, and Micron will collectively leap to a new level, at which point the supply-demand balance will face the risk of reshuffling. This internal assessment reflects the deep contradictions in the storage industry—while the AI infrastructure investment boom is driving demand, it has also significantly increased the uncertainty of demand forecasts. Excessive investment, once faced with a slowdown in demand, will backfire in the form of huge losses, a lesson Samsung has learned firsthand. AI Boom Drives HBM Demand, Expansion Direction Uncontested This Year Currently, the storage market is in a prosperous cycle of supply not meeting demand. Major tech companies like Nvidia, AMD, and Broadcom have a strong demand for High Bandwidth Memory (HBM), which is expected to continue into next year. HBM now accounts for more than half of the total sales of DRAM for both Samsung Electronics and SK Hynix. Both companies are allocating more and more production capacity to HBM, leading to shortages of ordinary DRAM for smartphones, PCs, and servers. In this context, the necessity to expand DRAM and HBM supply this year is undisputed in the industry. Samsung is advancing the next-generation DRAM process conversion at its Hwaseong base and expanding new production lines. The industry expects Samsung to continue promoting the 10nm fifth-generation (1b) DRAM process conversion this year, while ensuring capacity for the 10nm sixth-generation (1c) DRAM through new line expansions centered at the Pyeongtaek factory. SK Hynix is also actively pursuing investment plans at its major production bases in Icheon, Cheongju, and Yongin, with the new M15X factory under construction for the next-generation DRAM production line. Concentrated Capacity Release in 2028, Supply-Demand Reversal Risk Emerges The core concern in the market is that the expansion plans of major global memory manufacturers will be implemented simultaneously around 2028. Micron is expanding its DRAM production lines in Singapore and the United States and has been placing large orders for equipment since last year to enhance HBM supply capacity. Considering that building production lines typically takes about two years, from 2028 onwards, the production capacity of Samsung, SK Hynix, and Micron is expected to collectively leap to a new level. The Longyin Semiconductor Cluster Development Project, led by the South Korean government, is also an important variable. This cluster will become the core production base of South Korea's semiconductor industry, with infrastructure construction and factory building being advanced in phases. The industry believes that after the completion of the first phase of investment in the Longyin cluster, additional factory construction and mass production will be initiated, and capacity will be further expanded through the second phase of investment around 2028. The supply pressure in the NAND flash memory sector is even more pronounced. Unlike the DRAM market dominated by Samsung, SK Hynix, and Micron, the NAND market has more participants, with Kioxia and China's Yangtze Memory Technologies continuously expanding their technological capabilities and production capacity. If the current pace of expansion continues, the point at which NAND supply exceeds demand may occur earlier than in the DRAM market In recent years, the price competition for NAND has become intense, and both Samsung and SK Hynix are facing pressure to incur losses. Demand Forecast Failure, Samsung Strives to Avoid Over-Investment Pitfalls The suddenness of this economic cycle has led the industry to deeply reflect on its demand forecasting capabilities. A person familiar with Samsung's internal situation stated, "Just last summer, neither Samsung nor SK Hynix could have predicted the current prosperous situation, which fully illustrates how difficult it has become to forecast the semiconductor market conditions and investment plans." The person added, "Because of this, Samsung's business support team is carefully evaluating investment decisions, striving to align them with sufficient market validation and forecasts." Analysts point out that after the AI boom, storage demand has shown irregularity, and the supply cycle has also shortened, making it increasingly difficult to accurately judge production scale and required investments. The challenge facing Samsung is how to continue advancing large-scale investments in the next-generation HBM production line and advanced process conversion while formulating contingency plans for unpredictable demand slowdowns—leaving enough buffer space for the next winter while enjoying the current AI dividends