From Supercycle to Slowdown: Cracks Emerge in the Memory Market

The memory chip market in 2026 is showing increasingly contradictory dynamics. While manufacturers report record financial results, signs of cooling demand and rising price volatility are beginning to emerge. The most notable example is Samsung Electronics, which reported a 755% increase in operating profit, reaching $37.9 billion in the first quarter. Almost 90% of this total was driven by memory sales, and the company’s revenue jumped by 70% to $88.2 billion — surpassing the stock screener leader Nvidia by more than $20 billion and significantly outperforming market expectations.

The Device Solutions division, responsible for memory production, remains the primary driver of the business. Last year, it generated 57% of the company’s operating profit. The sharp increase in financial performance is largely attributed to the surge in DRAM prices. In the first quarter, the average selling price increased by 64% sequentially. If these dynamics persist, Samsung’s annual operating profit may reach $206 billion, effectively cementing its status as the main beneficiary of the AI boom in the memory segment.

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However, already in March, the market began sending reversal signals. Retail prices for DDR5 in the United States, Europe, and China declined after several months of growth, with some regions seeing drops of over 20% from peak values. In China, the price for 16 GB modules fell from about $189 to $145 in a short period of time. One of the factors was weakening expectations for strong demand from AI companies, which had previously been factored into valuations.

Technological advancements have exerted additional pressure. Google’s announcement of the TurboQuant compression method has sparked investor concerns about long-term memory demand. Although the technology does not eliminate the need for DRAM, it boosts resource efficiency and thus reduces the projected growth rate of consumption. Prior to the current recovery, Micron Technology shares had declined by a peak of 30% from their March highs, while Samsung and SK hynix stocks lost more than 20% during the correction period — displaying a level of volatility more common on a crypto heatmap.

Despite the recent decline in prices, long-term demand pressure from end markets remains intact. The AI boom has driven a sharp increase in memory prices, which has had a particularly strong impact on the consumer electronics segment. In entry-level smartphones, memory now accounts for 43% of the total component cost, making it the most expensive part of the device, overtaking even the processor. As a result, chip manufacturers, including Qualcomm and MediaTek, began reducing orders for contract manufacturing in response to declining demand.

The price increase has already led to a noticeable rise in the cost of devices. Prices for smartphones with 12 GB of RAM and a 256 GB drive have risen by about $94 compared to last year. This, in turn, leads to a structural change in the market. In the baseline scenario, global smartphone sales in 2026 will decrease by 10% to 1.135 billion devices, with a potential drop exceeding 15% in a bear-case scenario. The budget segment remains the most vulnerable, while devices priced above $600 demonstrate greater resilience.

The memory market is at a turning point. Manufacturers’ financial results remain record-breaking due to previously formed shortages and high prices; however, technological innovations, a correction in AI expectations, and end-demand pressures are beginning to limit the potential for further growth. Under these conditions, the key factor for the industry is less an increase in production volumes and more the balance between investments, pricing policy, and actual demand trends in end markets.

David Prior

David Prior is the editor of Today News, responsible for the overall editorial strategy. He is an NCTJ-qualified journalist with over 20 years’ experience, and is also editor of the award-winning hyperlocal news title Altrincham Today. His LinkedIn profile is here.