The big picture: SK Hynix CEO Kwak Noh-Jung has warned that the global memory crunch is far from over. In a recent interview with Reuters, the executive predicted that 2027 will be the worst year ever for the industry from a supply perspective and that demand will continue to outpace supply even beyond 2030.
Speaking with the publication, Noh-Jung said SK Hynix is doing their best to solve the problem but acknowledged it'll be an uphill battle. "Our customer demand continues to go up, while our capacity has limitations," he said. With no slowdown excepted on the AI front anytime soon, demand for memory is expected to remain elevated for years to come.
SK Hynix debuted on the NASDAQ stock exchange last Friday, pricing its American Depositary Receipts at $149 each. The company generated around $26.5 billion from the offering – money that it plans to use to build additional production facilities to meet surging demand for its products.
Unfortunately, it will be several years before new factories come online which does little to quell today's needs. And by that time, it is anyone's guess as to what the AI industry will look like. If we are indeed on the verge of the AI bubble bursting as some believe, manufacturers may soon find themselves with far too much capacity and not enough buyers.
Indeed, the situation could quickly go from one extreme to the other. That would be bad news for memory makers and investors profiting from the ongoing AI boom, but a welcome change for RAM buyers and consumers dealing with soaring electronics prices.
The global memory market has a history of extreme volatility that it simply seems unable to effectively iron out. Just before the AI boom a few years back, memory prices had tanked following a freeze in demand.
The situation was so bad in early 2023 that Micron had announced plans to accelerate layoffs, reducing its workforce by 15%. At the time, shares in the memory maker were trading at $55.18. Today, a single share commands $930.33.