The Storage Revolution Amid the AI Boom: Price Hikes Have Become the “New Normal”—Your Phone and Computer Are About to Get More Expensive!

“We will continue to raise product prices, as the entire industry is experiencing sustained price increases.” This statement by Antonio Neri, CEO of Hewlett Packard Enterprise (HPE), captures the most accurate portrayal of the current storage industry. In the first quarter of 2026, the increase in standard DRAM contract prices surged from the年初’s forecast of 55% to 90%–95%, while NAND Flash price hikes were also revised upward from 33% to 55%–60%.

This is not merely a cyclical fluctuation; it is a structural transformation driven by AI demand. As hyperscale cloud providers engage in frenzied procurement of storage products, the entire industry has undergone a fundamental shift.

01. AI Reshapes the Storage Landscape

In the past, the storage industry followed a cyclical pattern of “prosperity inevitably giving way to decline.” However, this time the situation is entirely different. Demand for AI servers has grown exponentially, fundamentally reshaping the global supply-and-demand dynamics for storage chips.

A single AI server requires eight times as much DRAM and three times as much NAND as a conventional server. This surge in demand has prompted storage giants to recalibrate their strategies, shifting more advanced-process capacity toward high-margin HBM (high-bandwidth memory) and premium DDR5 products while proactively scaling back consumer-grade lines such as DDR4.

Samsung Electronics’ first-quarter 2026 earnings guidance indicates that sales are expected to rise by 67% to 69% year over year, while operating profit is projected to surge by an astonishing 754% to 757%. Analysts attribute this robust performance primarily to a sharp surge in demand for memory chips.

SK Hynix stated candidly at an investor conference: “The memory market has shifted to a seller’s market, with prices expected to continue rising through 2026. The company’s inventory is only about four weeks’ worth, making it difficult to meet all customer demand.”

02. Supply-Demand Imbalance Behind the Price Increase

Behind the sharp rise in storage prices lies a deep-seated supply-demand imbalance. SK Hynix identifies two key factors: first, the surging real-world demand for memory driven by large AI models and high-performance computing has far exceeded industry expectations; second, the expansion of cleanroom capacity—essential for semiconductor memory manufacturing—has been sluggish, constraining capacity ramp-up and resulting in supply growth that fails to keep pace with demand.

AI is driving the continuous expansion of the storage market, which has now become the largest segment of the semiconductor industry—and demand still outstrips supply. Amid this supply-demand imbalance, HBM capacity is expected to face a shortfall of 50% to 60% by 2026, ensuring that price increases will remain the dominant trend.

In its latest report, Goldman Sachs states that the global memory market will experience one of the most severe supply shortages in history during 2026–2027, with significant widening gaps between supply and demand across all three major segments: DRAM, NAND, and HBM. Notably, the supply shortage in 2026 will be the most acute in the past 15 years.

03. Consumer Electronics Under Pressure

The AI boom has prompted major memory manufacturers to aggressively expand HBM production capacity, leading to tight supply of mainstream memory used in smartphones, PCs, and servers. This has triggered panic buying among some buyers, driving up prices for memory products, including DRAM, by a substantial margin.

Compared with high-end models, the sharp surge in DRAM prices has a more pronounced impact on entry-level and mid-range devices, particularly in terms of pricing. Taking an entry-level smartphone as an example, DRAM now accounts for 35% of the total bill of materials (BOM) cost, while NAND flash memory has also risen by 19%, bringing the combined share to over 54% of the device’s overall cost.

This cost pressure has already been passed on to the upstream segments of the supply chain. MediaTek and Qualcomm have begun significantly cutting production of 4-nanometer mobile chips, with the reduction in capacity equivalent to 20,000 to 30,000 wafers—roughly 15 million to 20 million smartphone chips.

To address this situation, Qualcomm has partnered with leading Chinese DRAM manufacturers to develop custom DRAM chips aimed at salvaging orders; these chips will be used exclusively in smartphones sold in the Chinese mainland market.

04. The Industry’s “New Normal”

South Korea’s SK Hynix, one of the leading storage-chip manufacturers, has revealed that the entire memory industry is undergoing a structural transformation: corporate customers, including hyperscale data-center operators, are increasingly opting for long-term contracts rather than the one-year agreements that were once the norm.

Micron also stated that, to secure storage supply over the next several years, its customers are currently very willing to enter into long-term supply agreements. Last month, Broadcom CEO Hock Tan disclosed during the earnings call that the company has already finalized supply arrangements through 2028.

A senior executive at Seagate, one of the leading HDD manufacturers, has stated that rising memory prices are likely to become the “new normal” for the industry in the coming years. This assessment is backed by market data: according to the latest figures from TrendForce, consumer electronics memory prices in the first quarter of 2026 rose by more than 60% compared with the fourth quarter of 2025, with NAND flash prices posting a quarter-on-quarter increase exceeding 70%—the largest single-quarter surge in recent years.

05. Future Outlook

Market forecasts indicate that the supply shortage of AI storage chips will not begin to ease significantly until as late as 2027. Recently, Gajus Shen, CEO of Synopsys, the global leader in chip design automation tools, sounded the alarm, warning that the tight supply and price increases for storage chips driven by the AI infrastructure boom could persist through 2027.

Although major memory chip manufacturers are planning to expand capacity, it typically takes at least two years from the initiation of investment to the actual commissioning of new production lines, which means the supply shortage is unlikely to ease in the near term. Research from securities firms corroborates this view: most of the additional capacity is expected to come online in 2027 and beyond, resulting in a structural mismatch in 2026 where demand grows rapidly while supply expansion lags behind.

Ongoing supply constraints are driving a sharp rise in memory chip prices, with some analysts dubbing this cycle a “supercycle.” Research firm Counterpoint forecasts that memory prices could experience several significant price hikes between the fourth quarter of 2025 and the second quarter of 2026.

In March, Yee Jiun Song, Meta’s Vice President of Engineering, expressed concern about securing the necessary HBM when announcing a new in-house AI chip: “We’re worried about HBM supply, but we’ve already secured supply sources to support our planned expansion.”

This AI-driven storage revolution is reshaping the cost structure of the entire electronics industry. From smartphones to personal computers, from data centers to consumer electronics, a wave of price increases has become inevitable. For ordinary consumers, this means higher costs when purchasing electronic devices in the future; for the industry as a whole, it signals the dawn of a new era—storage is no longer a peripheral component subject to cyclical fluctuations, but rather an indispensable core infrastructure of the AI era.