A recent warning from former Samsung Electronics President Kyung Kye-hyun suggests the current memory chip super-cycle could face a downturn starting in the second half of 2027.
This isn't just a guess; it's a conclusion drawn from a clear cause-and-effect story unfolding in the market. The narrative begins with the explosive demand for AI, which has pushed memory prices, especially for HBM (High Bandwidth Memory), to record highs. This boom has led to a situation where major manufacturers like SK hynix have already sold out their entire 2026 production capacity.
Naturally, this intense demand and high profitability are triggering a massive supply response. There are three key drivers behind this expansion. First, the 'Big 3'—Samsung, SK hynix, and Micron—are fast-tracking the development and mass production of next-generation HBM4 chips. Second, Chinese companies like CXMT and YMTC are aggressively expanding their production capacity, backed by significant funding and plans to double their output. Third, this investment frenzy is visible in the data: global semiconductor equipment sales hit an all-time high in 2025. The equipment purchased in 2025 and 2026 will directly translate into new production capacity starting in 2027.
Stock markets have already priced in much of this super-cycle. The stock prices of SK hynix, Samsung, and Micron have surged dramatically over the past year. However, we've recently seen a correction, with share prices dipping. This suggests that investors are beginning to factor in the risk of a future supply glut and the potential for a market downturn.
In essence, Kyung's statement highlights an inevitable cycle in the semiconductor industry. The AI-driven boom of 2025-2026 is fueling the very investments that will likely lead to an oversupply and price correction in late 2027. While the market remains tight for now, the groundwork for a shift in market dynamics is already being laid.
- HBM (High Bandwidth Memory): A type of high-performance memory chip used in AI accelerators and GPUs, essential for processing large amounts of data quickly.
- Downturn: A period of decline in economic or market activity. In the semiconductor industry, it typically refers to a phase of falling prices due to oversupply.
- Capacity Expansion: The process of increasing a factory's production capability, often by building new facilities or installing more manufacturing equipment.