Adata chairman predicts 10-year DRAM shortage, dismisses imminent AI bubble fears

Ongoing DRAM Shortage

Simon Chen predicts the global DRAM shortage will last another 10 years, driven by rising demand for memory in various technological applications. This projection follows a recent stock slump in Taiwanese markets, heightened by concerns surrounding TSMC's record quarterly performance and the overheated AI investment.

Future Demand for AI

Chen challenges the argument that cooling demand is evident based on Meta and other cloud providers utilizing spare compute capacity. He argues that AI will proliferate across sectors including business and government, creating long-term demand that defies short-term metrics of capital spending.

He notes potential expansions in areas such as driverless vehicles, smart homes, and low-Earth-orbit satellites, projecting tens of billions of connected edge devices, which will further intensify the demand for DRAM and memory products.

Market Dynamics and Capacity Expansion

Chen acknowledges actions by competitors to expand manufacturing capacity, such as SK hynix's $26.5 billion IPO aimed at HBM manufacturing. However, he asserts that these expansions will not result in an oversupply as major suppliers have learned from past price crashes caused by chaotic capacity expansions.

Chinese manufacturers face challenges due to restrictions on semiconductor equipment and long fabrication timelines, which limits their ability to impact market dynamics significantly.

Long-term Industry Outlook

Chen anticipates that memory prices and profits for module makers will continue to rise through the second half of the year as the market remains tight. Adata's strategy includes stockpiling inventory, with over NT$30 billion invested in chips by February, reflecting their preparedness for this drawn-out shortage.