Memory shortage could outlast new fab wave, leading tech bank says

Wedbush Securities, the US investment bank, has backed Phison's chief executive in warning that memory chip shortages could run for several years, even after a wave of new factories opens.

The broker said it agreed with KS Pua that memory capacity is not being added fast enough to match the build-out of computing power for artificial intelligence (AI).

That creates some probability that shortfalls last beyond the first wave of new fabs, the industry term for chip fabrication plants, due to open in late 2027 and 2028.

History argues the other way.

New fab capacity typically causes memory cycles to reverse and market fundamentals to deteriorate, Wedbush noted.

The broker said every investor and memory customer was struggling with that equation when trying to work out how the market will behave after 2027.

Compute outpacing memory

Wedbush pointed to the speed of compute builds, covering both AI accelerators and central processing units (CPUs).

It expects CPU builds to grow in the high double digits next year, potentially continuing through 2028.

The broker also agreed with Pua that recent comments from Acer, and a dip in PC and consumer demand, have little bearing on expectations.

Data centre requirements have become the single dominant factor in demand for DRAM (dynamic random access memory, the working memory used in computers and servers), it said.

'Only Acer isn't suffering'

Pua told DigiTimes that he tells himself every day the memory shortage will ease tomorrow, but that AI demand has opened a gap between supply and demand that could take many years to close.

Phison is a Taiwanese company that designs controllers for NAND flash memory chips, and it buys memory and turns it into modules and system products.

The row with Acer began when Acer chairman Jason Chen claimed memory was not in short supply, with DDR4 chips even oversupplied.

Pua hit back at a pre-IPO event for AAEON, an Inventec subsidiary, saying money could not always buy DRAM and that "it seems only Acer isn't suffering".

The two sides are looking at different markets.

Acer buys the DDR4 and DDR5 chips used in consumer electronics, while Phison sees structural shortages in high-bandwidth memory and server DRAM.

DRAM prices have risen almost sixfold in a year, according to ComputerBase, the German technology site.

Pua has been sounding the alarm for months.

In February he warned that shortages could last until 2030 or longer, and said suppliers were asking for three years of prepayment for memory capacity.