2026 began a multi-year shortage of memory and storage.
DRAM shortage
There is a global DRAM shortage happening as a result of memory manufacturers declining to build new fab capacity following the COVID-era glut of DRAM and the surprise demand coming from AI buildout. Given constrained manufacturing capacity, DRAM manufacturers have opted to focus their manufacturing on higher-margin HBM, leading DDR DRAM in very short supply.1
HDD shortage
There are no hard drives for sale in 2026. 2027’s manufacturing capacity is booking up, and 2028 is already showing signs of pressure.
Summarized from Heise,2
Tiang Yew Tan, CEO, Western Digital
We’re pretty much sold out for calendar year 2026. We have firm purchase orders with our top seven customers through calendar year 2026. We also have in place robust commercial agreements with three of our top five customers, two through calendar year 2027 and one through calendar year 2028.
William Mosley, CEO, Seagate
Our nearline capacity is fully allocated through calendar year 2026, and we expect to begin accepting orders for the first half of calendar year 2027 in the coming months. Further out, demand visibility is strengthening based on the long-term agreements in place with major cloud customers through calendar 2027. Additionally, multiple cloud customers are discussing their demand growth projections for calendar 2028, underscoring that supply assurance remains their highest priority.
HDD manufacturers, anticipating a long-term decline in sales due to flash, chose not to reinvest in fab capacity during the last cycle. Then AI demand arrived, and hyperscalers needed massive amounts of cold/warm capacity that hadn’t been planned for. HDD supply couldn’t meet demand, prices spiked, and while that’s a windfall for the manufacturers, new fab capacity takes years to materialize.
SSD shortage
Like HDD manufacturers, NAND manufacturers declined to build new fab capacity following the glut of NAND that occurred during the pandemic, when hyperscalers were stockpiling SSDs.1 Also like HDDs, when the demand from AI materialized, significant and unplanned demand put pressure on the world’s NAND capacity. However, the squeeze on HDDs also led to hyperscalers like Microsoft and Meta to turn to QLC NAND to shore up their capacity needs.
The result is that NAND capacity is doubly constrained. Part of this comes from unanticipated AI demand, and part of it comes from unmet HDD demand. New flash fabs are roughly two years out (late 2027, early 2028), so it is likely that NAND prices will not stabilize until then.
Khein-Seng Pua, the CEO of Phison, has been outspoken about how long he thinks the current NAND shortage will last.3
Khein-Seng Pua, the CEO of Phison
Severe memory supply-demand imbalance will continue until 2030 AI is a hard demand, causing extreme shortages of DRAM and NAND Flash. Foundries are demanding 3 years of prepaid payment (unprecedented in the electronics industry), with the seller’s market at an all-time high. Internal estimates from foundries suggest shortages will persist until 2030, or even potentially for a decade with no end in sight.
Falsehoods
Some people claim that the NAND shortage is the result of DRAM manufacturers focusing on HBM rather than NAND. This is not true, because one cannot interchangeably manufacture NAND wafers and DRAM/HBM wafers on the same equipment. NAND and DRAM shortages are both driven by AI demand, but their remedies will be independent of each other.
Footnotes
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AI data centers are swallowing the world’s memory and storage supply, setting the stage for a pricing apocalypse that could last a decade | Tom’s Hardware ↩ ↩2
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WD and Seagate confirm: Hard drives for 2026 sold out | heise online ↩
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DRAM & NAND Shortages Will Extend Beyond 2030, Warns Phison CEO, Citing an Industry ‘Structural Shift’ That Will Destroy Consumer Businesses ↩