<div id="readability-page-1">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.  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. The tight supply situation and favourable pricing environment were expected to persist, with strong conventional memory prices feeding into future HBM pricing, Goldman Sachs said in a research note on Wednesday. To address supply constraints, Samsung and SK Hynix are drastically increasing capital expenditure, anticipating substantial year-on-year increases in 2026. China, notably, is playing an increasingly important role amid their production expansion plans. The earnings call came after the companies in March disclosed moves to increase investments in their China wafer fabs last year. Samsung invested 465.4 billion won in its Xian chip plant in 2025, up 67.5 per cent from a year earlier, according to its filing in mid-March. SK Hynix also ramped up spending to 581.1 billion won and 440.6 billion won in its facilities in Wuxi and Dalian, respectively. Samsung, meanwhile, is reportedly considering a broad restructuring of its China business, sharpening focus on semiconductor and smartphone units while potentially exiting segments such as home appliances and displays, according to Chinese media outlet Yicai in early April, citing anonymous industry insiders. Beyond South Korea, other memory chipmakers in China and the US also saw revenue surge amid the supercycle, according to their earnings releases on Wednesday. China’s GigaDevice, the flash memory firm founded by CXMT co-founder Zhu Yiming, saw its first-quarter revenue and profit jump 119 per cent and 523 per cent year on year, respectively, while US data storage company Seagate Technology reported a quarterly revenue of US$3.11 billion, beating guidance. </div>

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<p>Samsung Electronics and SK Hynix are warning of a severe global supply crunch in the memory market due to surging AI demand. Samsung's first-quarter revenue rose 69% to 133.9 trillion won, while SK Hynix's revenue soared nearly 200% to 52.6 trillion won. Both companies are increasing capital expenditure to address supply constraints, with significant investments in their China wafer fabs. The current supply-demand imbalance is expected to persist, with rising prices for advanced memory chips.</p>

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