Citi: Global memory chip shortage to continue into 2027 - demand will once again outstrip supply

According to Citi's forecast, the global memory chip market will remain in deficit next year as well. The bank raised its supply growth forecasts after Samsung Electronics and SK Hynix improved their expectations regarding the growth of chip production volumes. However, Citi estimates that the additional supply will not be sufficient to meet demand.

According to the bank's updated estimate, the supply-demand deficit in the DRAM market will reach 3.8% in 2027, compared to the previous forecast of 8.7%. For NAND memory, the expected deficit figure has been reduced to 3.3%, compared to the previous 6.1%.

Despite the improved forecasts, Citi believes that demand will continue to outpace supply growth. The main driver of this trend is high demand for server-oriented DRAM and enterprise SSDs (eSSD). The bank forecasts that demand in these segments will grow by 53% and 52%, respectively.

"We expect the memory chip deficit to continue in 2027," Citi notes.

For DRAM, the bank forecasts 24% supply growth and 28% demand growth in 2027. According to Citi's estimate, the volume of memory bits supplied by Samsung will increase by 22%, while SK Hynix's figure will rise by 28%. Hynix's growth will mainly be supported by the expansion of 1c nanometer production capacity.

At the same time, Citi slightly lowered its demand growth forecast for DRAM, as it expects an 11% decline in demand for smartphone memory.

In the NAND memory market, the bank projects 22% supply growth and 26% demand growth. The demand forecast was reduced from the previous 29%, driven by weaker-than-expected demand for consumer NAND products. Nevertheless, demand for enterprise SSDs is expected to remain strong, as the amount of memory required per server continues to increase.

Along with the supply expansion, Citi also raised its forecast for capital expenditure (CapEx) growth in 2027. The bank expects capital investments from DRAM manufacturers to grow by 55%, and from NAND manufacturers by 35%.

According to Citi's estimate, the current supply-demand satisfaction rate in the memory market is approximately 70%. This situation has been maintained despite recent concerns that memory bit supply growth from Samsung and SK Hynix in the fourth quarter could turn out higher than expected.

In the bank's view, manufacturers are not seeking sharp price increases, but rather aiming to ensure revenue predictability through long-term agreements (LTAs). Citi believes that this approach will contribute to the continuation of the deficit.

Looking at the longer-term perspective, the bank also links the growth in demand for memory chips to the development of artificial intelligence. Of particular importance is the continuous improvement of AI systems and the potential spread of Personal AI, which will further increase memory requirements.