Current Market Trends and Factors Influencing the NAND and DRAM Markets
Surging Demand Driven by AI
The primary growth catalyst for both NAND and DRAM markets is the explosive rise of Artificial Intelligence (AI). As companies build and expand AI data centers, the demand for high-performance memory and storage hardware has surged.
AI data centers require high-bandwidth memory (HBM), high-speed storage, and advanced processing chips, substantially expanding the total addressable market for memory manufacturers.
Micron Technology, for instance, has sold out its HBM for 2026, indicating strong AI-related demand.
Physical AI, such as robotics, is also anticipated to become a significant future demand driver for the memory industry.
Supply Shortage and Price Increases
Massive demand and a global supply shortage have created a favorable pricing environment for manufacturers of both DRAM and NAND.
Memory chipmakers are diverting manufacturing capacity to meet the demand for AI servers, squeezing supply for other applications like flash chips used in USB drives and smartphones.
Contract prices for a type of DRAM chip rose 313% in Q4 from a year earlier and are expected to rise a further 55-60% in Q1 2026. Overall DRAM prices are projected to increase by almost 60% year over year in calendar year 2026.
NAND Flash prices are expected to increase 33-38% QoQ in 1Q26. Client SSD prices are forecast to rise by at least 40% QoQ.
This supply-demand tightness is expected to support pricing strength through calendar year 2026 at a minimum.
Shifting Manufacturing Focus
Memory makers are prioritizing server applications, particularly those for AI.
DRAM suppliers are reallocating advanced process nodes and new capacity toward server and HBM products to support rising AI server demand, significantly limiting supply in other markets.
NAND Flash suppliers are focusing on profit maximization and shifting supply from client SSDs to data center SSDs. Enterprise SSDs are projected to become the largest segment in 2026 due to increased AI infrastructure in North America.
Impact on Specific Segments
Server DRAM prices are projected to surge by more than 60% QoQ in Q1 2026 due to U.S.-based CSPs locking in capacity and strong purchasing trends.
Despite weaker notebook shipments, PC DRAM prices are set to rise sharply as suppliers tighten supply to PC OEMs.
Mobile DRAM supply remains tight, with contract prices expected to increase further.
Graphics DRAM demand has softened, but supply constraints from DDR5 capacity sharing similar process technologies have led to continued price increases.
Summary
The NAND and DRAM markets are currently experiencing a significant upswing, often referred to as a "memory supercycle," driven primarily by the insatiable demand from the Artificial Intelligence (AI) sector. This robust demand, coupled with a global supply shortage, is leading to substantial price increases across various memory products. Memory manufacturers are strategically shifting their production capacities towards higher-margin AI-related products, such as HBM and enterprise SSDs, further tightening supply for other applications and sustaining the upward pricing trend throughout 2026. The long-term fundamentals appear compelling, but the rapid pace of the rally and potential future increases in supply are factors to consider.
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