How is AI reshaping the storage chip landscape? The DRAM market is entering a new structural cycle driven by "computing power."

In June 2026, the memory chip market is playing out a rare structural split.

The same wafer fab is being devoured at a completely opposite pace by two entirely different worlds. In one world, AI server manufacturers are queuing with long-term contracts to secure supplies, with Micron’s HBM capacity already sold out for the entire 2026 year back in 2025; in the other, global smartphone shipments are plunging by 14% year-over-year— the largest annual contraction on record according to IDC.

This is not a cycle; it’s a rupture. Understanding the causes and trajectory of this rupture is the most important question for the semiconductor industry in 2026.

The Ironclad Supply: Why HBM’s Capacity Logic Is Uniquely Different

The demand for HBM isn’t just surging; it’s constrained by a supply rigidity determined by the structural features of manufacturing processes.

According to EE Times, the wafer area consumed by HBM3E is about three times that of standard DDR5. The reason is that HBM uses larger chip sizes and vertical stacking packaging, and the yield losses during stacking further amplify the demand for wafer capacity. With wafer start volumes limited in the short term by equipment supply and factory construction, each wafer allocated to HBM means one less for LPDDR5X or standard DDR5.

This isn’t a short-term bottleneck that can be solved with overtime. Micron’s management explicitly stated at the Morgan Stanley Technology, Media & Telecom Conference that AI demand growth still outpaces the company’s and the industry’s supply capacity, and the memory market is entering a multi-year cycle supported by structural shortages. The supply bottleneck is not only due to capacity constraints but also related to increased technical transition difficulties— as the new generation process nodes yield diminishing returns, combined with increased stacking layers and larger die sizes, the number of effective chips per wafer decreases, reducing supply elasticity.

As of Q1 2026, the capacity of the three major manufacturers— SK Hynix, Samsung Electronics, and Micron— is fully sold out for HBM. Micron’s management publicly confirmed that the company can only meet about 50% to 66% of actual customer demand. Feng Li, President of SEMI China, pointed out that although the three major fabs have shifted 70% of their new/additional capacity to HBM, the HBM capacity gap still reaches 50% to 60%. Mizuho Securities also said that when the supply gap will be filled “remains unclear.”

Demand Divergence: AI Computing Power Is Draining the Entire DRAM Pool

Supply rigidity is only half the story. The other half is the dramatic divergence on the demand side— AI computing power construction is consuming DRAM capacity at an unprecedented speed.

GuanZhi Consulting predicts that in 2026, global AI server shipments will reach about 3.7 million units, up 51.3% year-over-year. TrendForce estimates that global AI server shipments will grow by over 28% annually in 2026. This is not just an increase in shipments but an exponential leap in per-machine storage capacity. Data from GuanZhi shows that in 2026, DDR storage demand from AI servers will increase by up to 105% YoY, and HBM demand will grow by 110%, with both storage types maintaining double-digit growth rates.

From the demand share perspective, AI servers will account for over 40% of total DRAM shipments globally in 2026, significantly surpassing the share of consumer electronics and traditional servers. It’s projected that by 2027, DRAM capacity demand from AI servers will rise to 49%, nearly half of total industry demand. Another estimate suggests that 70% of DRAM chips produced in 2026 will be consumed by data centers.

The growth of the HBM market is equally astonishing. SEMI forecasts that the HBM market size will grow 58% to $54.6 billion in 2026, accounting for nearly 40% of the DRAM market. Yole Group data shows that the global HBM market was about $34 billion in 2025, expected to reach $46 billion in 2026, and could surpass $98 billion by 2030.

This shift in demand structure is causing the previously concentrated high-end HBM growth trend to spread across all DRAM categories. TrendForce data indicates that in Q1 2026, the overall DRAM industry revenue increased by 81% quarter-over-quarter to $97 billion, with contract prices for general-purpose DRAM rising rapidly— up 93% to 98% quarter-over-quarter. Spot prices for DRAM have risen by 52% since early January 2026, and Citibank projects that the average DRAM price will increase by as much as 200% in 2026.

The Outflow of Consumer Electronics: The Darkest Hour for Smartphones

As AI computing power doubles and consumes DRAM capacity, consumer electronics are being systematically squeezed out.

IDC’s latest forecast shows that global smartphone shipments will decline 14% YoY to 1.09 billion units in 2026, further worsening the 12.9% decline predicted in IDC’s February forecast. Counterpoint Research also estimates a similar trend— global smartphone shipments in 2026 will drop 13.9% YoY, reaching about 1.08 billion units, marking the lowest annual shipment volume since 2013. Looking at long-term trends, global smartphone shipments grew 6.2% in 2024, 2.1% in 2025, but will turn negative with a 13.9% decline in 2026, and are expected to decrease by 1.1% in 2027.

This is not merely demand weakness; it’s a direct consequence of HBM capacity being squeezed out. Because wafer capacity is prioritized for HBM and AI-grade DRAM, smartphone manufacturers face supply bottlenecks for mobile memories like LPDDR5X. Industry price data from TrendForce shows that in Q2 2026, global contract prices for mobile DRAM chips increased 78% to 83% quarter-over-quarter, with prices for LPDDR5X and similar memories potentially more than doubling YoY.

Cost pressures are reshaping the entire smartphone industry’s business logic. IDC data shows that the average global selling price of smartphones has risen to a record $550, a jump of $100 from 2025. Memory costs now account for roughly 30% to 40% of the material cost of smartphones, up sharply from 10% to 15%.

Faced with cost pressures, manufacturers are generally reducing shipments, raising prices, and focusing resources on high-end product lines. IDC predicts that in Q1 2026, high-end models priced above $800 will account for 60% of total shipments. However, price hikes further suppress replacement demand, creating a negative feedback loop. IDC expects that market recovery will only occur around 2028, once storage supply tightness eases.

The demand share of DRAM in the smartphone category is changing most dramatically, dropping from 43% in 2024 to 23% in 2027. Consumer electronics’ share in the DRAM product mix will continue to decline, with capacity further shifting toward AI computing power.

The Shift in Pricing Power: Who Is Leading This Game

The structural imbalance of supply and demand is causing a fundamental shift in pricing power.

HBM’s price per GB is over five times that of traditional DRAM. Micron continues to shift capacity from consumer memory to HBM, with gross margins rapidly recovering. Citibank projects Micron’s gross margin for fiscal 2026 to expand sharply from 39.8% in 2025 to 76.9%, and further to 82.9% in 2027.

This shift in pricing power is even beginning to influence capital expenditures of the world’s largest tech companies. Meta increased its 2026 capital expenditure forecast by 8% to $135 billion in April, with CEO Mark Zuckerberg citing rising memory and component prices as a main reason. Microsoft’s 2026 capex guidance is $190 billion, with $25 billion attributed to rising component costs.

However, the concentration of pricing power also introduces new risks. The memory industry is known for its intense supply-demand cycles. Once SK Hynix and Samsung’s new capacities ramp up heavily in 2026–2027, the price increase cycle could end earlier than market expectations. Citibank estimates the global DRAM supply gap in 2026 at about 5%, and this imbalance is expected to persist into 2027. J.P. Morgan’s latest report notes that excluding Chinese manufacturers, the global storage bit supply in 2026 will only grow 7% to 8%, mainly driven by process migrations rather than new wafer capacity.

Market Pricing Divergence: Micron’s V-Shaped Stock Price Fluctuation

Market opinions on the sustainability of this storage supercycle are sharply divided.

On June 22, 2026, Micron’s stock closed at $1,133.99, up $90.80 or 8.7% for the day. Year-to-date, Micron’s stock has surged over 260%, with a market cap surpassing $1 trillion. The three major players in the memory chip sector— Samsung Electronics, SK Hynix, and Micron— have all seen significant gains this year: Samsung up 174.96%, SK Hynix up 218.57%.

Wall Street analysts in mid-June raised their target prices for Micron en masse. Citibank’s target was raised 43% to $1,200. RBC Capital Markets increased its target from $525 to $1,200. TD Cowen characterized Micron’s role in AI infrastructure as “structural demand rather than cyclical,” raising its target from $660 to $1,500. Bernstein also raised its target to $1,300.

However, the median target price among 47 analysts covering Micron is only $840, about 15% below the current price. This internal divergence among institutions reflects the market’s ongoing uncertainty about the future of the storage cycle.

Micron will release its Q3 FY2026 earnings after the close on June 24, 2026. Market expectations are approximately $35.5 billion in revenue, up about 274% from $9.3 billion a year earlier; adjusted EPS is forecasted at about $19.72, a 932% increase from $1.91. Goldman Sachs’s more aggressive forecast projects revenue of $37.6 billion, gross margin of 83.4%, and EPS of $22.07.

This earnings report will serve as a key indicator of whether the AI investment boom is still accelerating.

Epilogue

Standing at June 2026, the picture of the memory chip market is no longer a simple cyclical fluctuation but a profound restructuring at the industry level.

AI computing demand is pushing HBM toward an almost “infinite demand, limited supply” pricing paradigm. Meanwhile, consumer electronics like smartphones are being squeezed out of capacity, bearing the dual pressures of cost pass-through and demand contraction. GuanZhi Consulting’s forecast shows that by 2028, AI servers will account for over 50% of DRAM industry demand, officially dominating the market. Conversely, smartphone DRAM demand share will shrink from 43% in 2024 to 23% in 2027.

Between these two worlds, there is no middle ground.