Unlike standard DRAM where products are standardized, HBM is less of a commodity. The complexity of manufacturing HBM—stacking multiple dice and advanced packaging—allows suppliers to differentiate on technology, yield, and thermal performance, giving them a competitive edge beyond just price.
The memory shortage is forcing real-world consequences as consumer electronics firms are already raising PC prices (Dell, Lenovo) and cutting smartphone sales forecasts (MediaTek). Companies are also delaying new product launches to avoid passing on higher component costs to consumers.
Producing specialized High-Bandwidth Memory (HBM) for AI is wafer-intensive, yielding only a third of the memory bits per wafer compared to standard DRAM. As makers shift capacity to profitable HBM, they directly reduce the supply available for consumer electronics, creating a severe shortage.
Unlike past cycles driven solely by new demand (e.g., mobile phones), the current AI memory super cycle is different. The new demand driver, HBM, actively constrains the supply of traditional DRAM by competing for the same limited wafer capacity, intensifying and prolonging the shortage.
Today's DRAM shortage stems from the post-COVID downturn. Expecting weak demand, memory producers became conservative with capital expenditures and didn't expand capacity. This left the industry unprepared for the sudden, explosive demand for memory driven by the AI boom.
The primary bottleneck for increasing DRAM supply is a "clean room constraint"—a physical shortage of space in existing fabs to install new manufacturing equipment. This limitation means that even with massive investment, significant new wafer capacity is unlikely to come online meaningfully before 2028.
With new factory capacity years away, the only immediate lever for increasing DRAM supply is "node migration." This involves shifting production to more advanced manufacturing processes (like 1B and 1C) that can produce more memory bits per silicon wafer. The speed of this migration is the critical factor for easing supply.
In a surprising market inversion, the price surge for commodity DRAM has become so extreme that its profit margins now exceed those of specialized High-Bandwidth Memory (HBM). This creates a strategic dilemma for producers, forcing them to balance short-term profits against long-term AI market position.
Despite investment, Chinese memory producers like CSMT are roughly 3-4 years behind Korean industry leaders. Their competitive impact is largely confined to China's domestic market (25% of global demand), where they supply low-to-mid-range products and aren't yet challenging leaders on the high-end global stage.