AI demand for siphoning capacity: Global DRAM sales in October surged 90% year-on-year, Is the shortage price increase cycle of storage chips just beginning?

According to Wells Fargo & Company citing the latest data from the Semiconductor Industry Association (SIA) in the United States, global semiconductor sales in October surged by 33% year-on-year, reaching a total of $71.3 billion. Among them, Dynamic Random Access Memory (DRAM) became the main driver of this growth, with sales skyrocketing by 90% compared to the previous year, reaching $12.82 billion. Major DRAM manufacturers include Micron Technology, Inc. (MU.US), Samsung Electronics (SSNLF.US), and SK Hynix. NAND flash sales also increased by 13% year-on-year, totaling $5.13 billion. "It is worth noting that SIA has made significant revisions to its estimate of NAND flash shipments in September - this could mean a decrease in price per GB (e.g. a 16% decrease compared to October?)," said Wells Fargo & Company analyst Aaron Rakers in an industry report. "However, based on current market dynamics, we believe this assessment is debatable." AI siphoning capacity, shortage may persist for several years In fact, while the industry sales data are impressive, Micron Technology, Inc. announced earlier a significant strategic adjustment: it will exit its "Crucial" consumer business, including the cessation of sales of related products in global retail and e-commerce channels. Behind the strong demand in the industry is an increasing supply shortage. Sumit Sadana, Executive Vice President and Chief Business Officer of Micron Technology, Inc., explained, "Data center AI-driven growth has led to a surge in demand for memory and storage. We have made the difficult decision to exit the Crucial consumer business in order to improve supply and support for large strategic customers in faster-growing areas." This move signifies that Micron is further tilting its resources and capacity towards the high-profit enterprise and commercial markets. Gerry Chen, General Manager of memory module manufacturer Ten Fei Technology, recently warned that there is a significant shortage in the memory market, with contract prices for key DRAM products in December already increasing by 80% to 100%. Chen sees this significant price hike as the beginning of a multi-year uptrend cycle and warns that the most serious impact will be evident in the first half of 2026 when distributor inventories will be depleted. Currently, the cost of memory in PC and laptop bill of materials (BOM) has risen from around 15% to 25% or higher. The fundamental reason for the shortage is the shift in demand structure. Currently, a large amount of industry capacity is shifting towards High Bandwidth Memory (HBM) used for AI accelerators, leading to a decrease in wafer production for standard DRAM and 3D NAND. Since it takes several years to build new capacity, substantial relief is unlikely to occur before the end of 2027 or 2028. Other data shows that in October, microprocessor (MPU) sales reached $5.98 billion, a 16% year-on-year increase, but shipment volume decreased by 4%, showing a "quantity-price deviation" trend; analog chip performance was stronger, with sales increasing by 18% year-on-year to $7.93 billion, and shipment volume increasing by 11%; microcontrollers (MCUs) sales increased by 18% year-on-year to $1.88 billion, and shipment volume increased by 21%; MOSFET power devices sales increased by 19% year-on-year to $1.02 billion.