Memory Chip Prices Could Fall 23% in 2028. Here's Why Wall Street Is Already Nervous
Memory chips have gone from one of the least exciting parts of a computer to one of the biggest winners of the AI boom. Data centers are buying up supply, prices are soaring, and manufacturers are struggling to keep up.
Then a Chinese chipmaker announced a new design that could make memory cheaper to produce, sending investors scrambling out of memory stocks.
The announcement behind the selloff
ChangXin Memory Technologies (CXMT), China's leading memory chipmaker, plans to introduce a new generation of DDR5 server memory by the end of 2026. The company says its 4F² architecture can pack more data into the same space than the widely used 6F² design.
President Cao Kanyu outlined the technology at an industry conference on October 10, raising questions about how quickly China could close the gap with Micron Technology, SK Hynix, and Samsung Electronics.
CXMT has historically lagged those competitors in advanced memory development, but its progress is becoming harder to ignore. According to HSBC, its share of the global DRAM market has climbed from roughly 4% to 10% in just a year.
Why investors got nervous
The concern isn't simply that China has developed a better memory design. It's what happens to prices if CXMT eventually produces enough chips to challenge the industry's biggest suppliers.
Lotus Asset Management CIO Hao Hong said investors are worried that additional capacity could trigger a price war. Those fears arrived alongside rising interest rates, stretched valuations, and growing concerns about the cost of building AI infrastructure.
Elon Musk added to the speculation by predicting on X that China would be producing substantial amounts of RAM in 2028. But analysts haven't broadly endorsed that timeline, and getting from a promising design to mass production is far from straightforward.
The supply threat has limits
Rosenblatt Securities analyst Kevin Cassidy doesn't expect CXMT's announcement to meaningfully change the supply-demand balance. Quilter Cheviot's Ben Barringer has raised a similar concern about manufacturing yields, or how many usable chips a new process can reliably produce.
That's an important distinction. Developing a denser memory cell is one achievement; manufacturing millions of them economically is another. CXMT also faces restrictions on access to advanced chipmaking equipment, which could complicate its expansion.
Even established manufacturers can't increase supply overnight. New semiconductor factories generally take three to five years to build and begin operating, meaning the industry's current shortages won't disappear simply because companies announce more capacity.
When memory prices could fall
Analysts do expect the shortage to ease eventually, although their forecasts suggest buyers may have to wait until 2028 for meaningful relief.
Counterpoint Research expects DRAM prices to decline around 23% in 2028 compared with 2027. Even after that correction, prices would remain roughly 230% above their 2025 levels.
Bernstein sees a steeper reversal, forecasting DRAM prices to rise 43.2% to $2.23 per Gb in 2027 before falling 52.9% to $1.05 in 2028. NAND flash prices could also retreat from around $0.30 per GB to $0.10 by 2028.
Long-term customer agreements could make this cycle different from previous downturns. Samsung has reportedly committed nearly 80% of its 2027 output to five major data center customers, while SK Hynix has secured contracts lasting roughly five years with more than 10 customers.
Those arrangements provide greater revenue visibility, although they don't eliminate the risk of weaker pricing once new supply reaches the market.
Consumers are already paying more
While investors debate what memory chips might cost in 2028, the shortage is making phones and computers more expensive today.
Samsung, SK Hynix, and Micron have been directing more production toward lucrative AI customers, leaving less memory available for consumer electronics. Smartphone sales fell 20% year over year in the third quarter, reaching a 14-year low, while IDC reported a 20.1% decline in PC shipments.
The price increases are becoming difficult to miss. Apple raised iPhone 18 Pro prices by $100, Samsung increased Galaxy S26 prices by the same amount, and Dell Technologies ($DELL) raised the price of its XPS 13 by $100.
Individual components have become even more expensive. A 32GB Crucial DDR5-6000 kit, containing two 16GB modules, has jumped from $89 last October to $549. Acer CEO Jason Chen expects PC prices to rise another 20% before easing in the second half of 2027.
The shortage is even influencing product design. Intel and Advanced Micro Devices are developing processors compatible with older DDR4 memory, giving computer manufacturers an alternative to increasingly expensive DDR5.
For memory-chip investors, CXMT's announcement is a reminder that today's extraordinary pricing won't last forever. But a potential breakthrough isn't the same as a flood of new supply, and the forecasts still point to another year of elevated prices before the market begins to cool.
