[Edaily SOYEON KIM Reporter JAEMIN SONG ] "The memory cycle has come to an end, and a new trend—the AI cycle—has emerged. We are now at the very beginning of the AI cycle."

Experts unanimously agree that, with the advent of the AI era, the “cycles” of boom and bust that once characterized the memory semiconductor market are disappearing. As the primary source of memory demand shifts from PCs and smartphones to AI data centers, the pattern of market cycles—which previously repeated every three to four years—is breaking down.

In particular, with the opening of the physical AI market—including autonomous vehicles and humanoid robots—many observers predict that memory demand will continue to rise over the long term. Furthermore, the expansion of long-term supply agreements (LTAs) with clients has reduced the risk of sharp price fluctuations seen in the past. This suggests that the record-breaking earnings streak of SamsungElectronics and SK hynix could extend beyond a temporary boom into a phase of structural growth.

◇ “At the Beginning of the AI Cycle… The Memory Boom Isn’t Over”

Kim Hyung-jun, head of the Next-Generation Intelligent Semiconductor Business Division (Professor Emeritus at Seoul National University), said in an interview with Edaily on the 29th, “I believe the memory cycle has disappeared.” He added, “In the past, when PCs and mobile devices were the main sources of demand for memory semiconductors, booms and busts repeated every three to four years in line with new product release cycles, but now data centers are the largest source of demand.”

In the past, the memory market experienced repeated cycles of price surges driven by rising demand, followed by price crashes caused by competitive capacity expansions by manufacturers and resulting oversupply. In fact, the industry enjoyed a super-boom from 2017 to 2018 due to increased demand for servers and mobile devices, but suffered a severe downturn in 2019 as a flood of newly added capacity hit the market. Demand for PCs and servers surged due to the COVID-19 pandemic, leading to another boom in 2020–2021; however, memory prices plummeted in 2022–2023 as slowing demand coincided with rising inventories. In this way, the market cycled through booms and busts every three to four years. However, analysts note that the market structure is changing from what it was in the past, as memory demand continues to expand, particularly driven by AI data centers.

Yoo Hoe-jun, Dean of the KAIST Graduate School of Artificial Intelligence and Semiconductors, emphasized, “The memory cycle is disappearing, and a new trend—the AI cycle—has emerged,” adding, “We are currently at the very beginning of the AI cycle; this is not the time to worry about a downturn.” Kim Yong-seok, Distinguished Professor at Gachon University’s College of Semiconductors, highlighted that the AI industry is still in its early growth stage. Professor Kim said, “Since the construction of AI infrastructure has only just begun, investment centered on data centers will continue for quite some time,” adding, “It is difficult to compare the current AI market with the slowdown in demand that occurred in the past when the PC or smartphone markets entered their maturity phases.”

◇ Memory Demand to Continue with Physical AI and On-Device AI

Experts also viewed the “AI peak” theory raised by some as an overreaction. Professor Kim Hyung-jun predicted, “Now that AI has emerged, there’s no going back. The pace of technological advancement will only accelerate from here,” adding, “Once Physical AI takes off beyond data centers, demand for memory will accelerate even further.” Professor Kim Yong-seok remarked, “As AI technology expands into physical AI and on-device AI, AI semiconductors will be embedded in various products used by general consumers.” He added, “In this process, demand for not only High Bandwidth Memory (HBM) but also existing memory types like DDR is likely to increase further.”

The expansion of long-term supply agreements (LTAs) is another change from the past. SamsungElectronics has signed LTAs with 10 major global customers and is currently in negotiations with an additional 10. SK hynix has signed LTAs with 14 companies and has secured more than half of its supply for next year and the year after. Lee Jong-hwan, a professor in the Department of System Semiconductor Engineering at Sangmyung University, assessed, “A situation like in the past—where oversupply occurs and prices plummet—is unlikely to arise for the time being,” adding, “Demand has already been secured for several years through LTAs.”

◇ Chinese Memory Is a Wild Card… Flexible Response Needed for Production Lines

However, the aggressive capacity expansion by Chinese memory manufacturers is cited as a wild card. With China’s CXMT joining the existing “Big Three” in memory to expand production capacity on a large scale, the possibility that the pace of future supply growth could outstrip demand cannot be ruled out. Professor Lee Jong-hwan pointed out, “Depending on how quickly Chinese companies enter the market and increase production, the existing supply shortage structure could be shaken,” adding, “Prices for general-purpose memory, in particular, could begin to fall.”

Professor Kim Hyung-jun said, “It could become a problem if Chinese companies aggressively increase supply, as they did in the electric vehicle battery market in the past,” adding, “SamsungElectronics and SK hynix need a strategy to proactively build factories while flexibly adjusting equipment installation and production line operations in line with market demand.”