The global memory semiconductor industry is experiencing unprecedented growth driven by increased demand for artificial intelligence (AI). Major companies are reporting operating margins exceeding 70%, and the funds generated from this boom are being reinvested into large-scale facility expansions. As Samsung Electronics and SK Hynix accelerate the establishment of domestic production bases, Chinese firms are also ramping up their investments, intensifying competition in the memory market.
On September 11, the Nihon Keizai Shimbun reported that the operating margins for six major global memory companies surpassed 70% in the second quarter of 2026. China’s ChangXin Memory Technologies (CXMT) led with an 82% margin, followed by Micron at 80%, SanDisk at 78%, SK Hynix at 76%, Kioxia at 74%, and Samsung Electronics’ semiconductor division at 70%.
This high profitability stems from a memory supply shortage triggered by AI demand. Samsung, SK Hynix, and Micron have prioritized their limited production capacity for high-bandwidth memory (HBM) and high-value DRAM for servers, resulting in a reduced supply of general-purpose DRAM used in PCs and smartphones. Additionally, the expansion of AI servers has increased demand for high-capacity DDR5 memory, leading to rising prices across all memory products. According to market research firm TrendForce, global DRAM sales reached $154.73 billion in the second quarter, a 59.5% increase from the previous quarter.
The funds generated from this boom are being directed back into facility investments. Samsung Electronics executed 28.1 trillion won in capital expenditures (CAPEX) in the first half of this year alone. The company plans to fully operate its P4 campus in Pyeongtaek by the end of the year and is accelerating the construction schedule for P5 Fab 2, following the start of construction on P5 Fab 1 in April. Investments in the Yongin National Industrial Complex are also gaining momentum, with plans to advance the operational timeline of the first of six fabs from 2030-2031 to 2029.
SK Hynix is also expediting its investment schedule for the Yongin semiconductor cluster. The company has shortened the completion target for four fabs, originally planned for 2045, to 2033. It plans to invest an additional 54.3 trillion won, including 35.2 trillion won for Yongin Fab 2 (Y2) and 19.1 trillion won for the Cheongju NAND production base M17.
As domestic companies expand their investments, Chinese competitors are also accelerating their efforts. Chinese DRAM manufacturers are increasing production capacity for general-purpose products, expanding their foothold in a market previously dominated by Samsung, SK Hynix, and Micron. CXMT, China’s largest DRAM manufacturer, plans to expand its current three DRAM factories to six.
As a result, CXMT’s wafer production capacity, currently at 300,000 wafers per month, is expected to more than double to over 600,000 wafers by 2030. Its global DRAM market share is projected to rise from 8% last year to 11% by 2028 and 15% by 2030. If Chinese companies secure a double-digit market share, it could alter the existing market structure dominated by the three major memory firms.
The ongoing expansions by these companies are seen as a variable for the future memory market. Currently, high profitability is sustained by the interplay of rising AI demand and supply shortages, but the key question is whether this demand will continue until new production capacities come online. Particularly, if production capacities of global companies, including those in China, increase simultaneously, the supply shortage could be alleviated quickly.
Market research firm Counterpoint Research noted, "According to a mega project led by the South Korean government, Samsung and SK Hynix are expected to double their DRAM production capacity, but the target date is 2031. Manufacturers are focusing their current high operating profits on advanced technology development and fab expansions while preparing for future downturns through long-term supply contracts (LTA)."
* This article has been translated by AI.
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