The global demand for memory and storage driven by AI data centers and hyperscalers is causing a significant supply squeeze in NAND and DRAM, leading to expected price increases for SSDs and memory products over the next several years.

Major AI projects, such as OpenAI's agreement with Samsung and SK hynix for up to 900,000 wafers of DRAM per month, are contributing substantially to the shortages by consuming a large share of global memory production.

Storage markets are also feeling the pinch, with shortages of nearline HDDs pushing prices up and prompting some data centers to adopt QLC flash arrays, which further strains NAND supply chains.

Building new memory fabrication plants is costly and takes years, with geopolitical issues and supply chain constraints preventing rapid expansion, causing manufacturers to prefer selling existing stock at higher margins instead of risking overproduction.

After a downturn in 2022-2023, where prices fell below cost and inventories piled up, the memory industry responded with significant output cuts, leading to a sharp rebound in prices by early 2024.

The oversupply period in 2022 and early 2023 caused prices to hit historic lows, but manufacturers' drastic output reductions eventually caused prices to surge again by late 2023 and into 2024.

Market analysts predict that elevated prices for memory and storage components will persist into 2026, with enterprise customers prioritized and consumers facing higher costs and slower upgrade cycles.

The shortages are affecting both enterprise and consumer markets, with higher costs and longer lead times for storage upgrades, and seasonal price dips are unlikely soon, sustaining high prices into the near future.

The expansion of memory fabrication capacity is hampered by the lengthy and expensive process of constructing new fabs and supply chain issues for advanced materials, meaning shortages won't be quickly resolved.

Manufacturers are shifting focus and capital expenditure towards high-margin products like HBM and advanced nodes, diverting resources from mainstream DRAM and NAND production, which could cause shortages to last up to a decade.

This strategic shift towards high-margin products is exacerbating supply constraints, with industry experts warning that NAND shortages could persist for up to ten years due to reduced investment in mainstream memory production.

In 2024, prices for consumer SSDs and DRAM modules surged significantly, with SSDs like Samsung's 990 Pro and Western Digital's SN850X increasing by over 40%, and DRAM prices expected to rise by 38-43% by late 2025.