Samsung, one of the largest manufacturers of memory and storage in the world, has delivered bad news for anyone hoping the global component shortages will ease up soon. Samsung, which is responsible for about a third of the global memory supply, revealed in an earnings call that it expects the crisis to continue getting worse into next year.
As reported by TechCrunch, the Korean tech giant said supply will remain constrained in 2027, while demand will continue to rise. Samsung expects this to continue until at least 2028.
Samsung’s estimates are based on data from AI companies, which Samsung said have been “sharing their medium to long-term demand forecasts” in an effort to ensure they have a consistent supply.
As with other component manufacturers, Samsung then uses this data to essentially establish an order of customers, prioritising those where it has the highest margins, especially when they’re willing to sign long-term contracts for its chips. That certainty is part of what makes the current crisis worse, as commitments from customers, which are entire companies, not just singular people, ensure that manufacturers can keep their prices high and guarantee demand years in the future.
As most of the capacity is booked for the High Bandwidth Memory (HBM) needed for AI datacentres, the big three memory manufacturers – which includes Samsung – have very little dedicated to consumer-grade memory, which caused their prices to shoot up. That has, in turn, pushed up the prices of every consumer electronic device that uses these chips, including game consoles like the PlayStation 5, Xbox Series X/S and Switch 2 – all of which have gone up in price, and on several occasions in some cases. Valve’s Steam Machine also launched at a much higher price than Valve expected, and the company hinted it may even have to raise prices again.
With that said, It’s worth viewing Samsung’s claim in context. Samsung directly benefits from the current crisis, so it is in its best interest to keep it going as long as possible. Plus, this is an earnings call, where the company wants to appear very profitable for investors, which in this scenario is the only thing that matters.
Samsung, along with memory manufacturers SK Hynix and Micron have been accused of cartel-like behaviour. The big three are being sued in California for price fixing and stoking “supracompetitive prices”.
