Global Memory Crisis Elevates Prices for Legacy RAM as AI Demand Surges

Taipei, Taiwan – The global memory market is experiencing an unprecedented crisis, driving up prices for older generation dynamic random access memory (DRAM) components as demand for advanced artificial intelligence (AI) hardware redirects mainstream production.

Market watcher TrendForce reports that buyers are increasingly turning to legacy products like DDR2 and DDR3 to secure supply, leading to significant price escalations.

The surge in demand for AI computing infrastructure has led memory chipmakers to prioritize the manufacturing of more profitable High Bandwidth Memory (HBM) and server DRAM silicon. This strategic pivot, aimed at powering advanced AI systems, has created a substantial shortage of conventional memory types required for personal computers, smartphones, and other consumer electronics.

Consequently, prices for mainstream DDR4 and DDR5 modules have climbed. The scarcity has prompted some hardware manufacturers to adjust memory specifications in new designs to manage system costs. TrendForce indicates that some designs originally slated for DDR4 are now incorporating DDR3 solutions, with certain DDR3-based products even transitioning to DDR2 to ensure component availability.

TrendForce projects that DDR2 contract prices will increase by approximately 55-60% during the second quarter of 2026, followed by an additional 35-40% rise in the third quarter. This sharp escalation reflects a market where customers are prioritizing supply reliability, even if it means adopting lower capacity configurations or older memory generations. While the report notes skepticism regarding widespread adoption of such old memory in modern PCs, the trend points to broader device categories.

Key suppliers of DDR2 components, including Taiwan-based Winbond and Elite Semiconductor Microelectronics Technology (ESMT), are responding to the shifting market dynamics. Winbond is gradually decreasing its DDR2 production to reallocate capacity towards higher-margin products such as DDR3, DDR4, and LPDDR4. Conversely, ESMT plans to maximize its DDR2 output within its allocated wafer capacity at PSMC, aiming to enhance profitability and mitigate the supply gap created by Winbond’s strategic shift.

Taiwan Implications

The reorientation of the global memory market has significant implications for Taiwan, a critical hub for semiconductor manufacturing and a key player in the supply chain for both legacy and advanced memory technologies. Taiwanese firms like TrendForce, Winbond, and ESMT are at the forefront of responding to these shifts. The increased demand for older DRAM benefits companies like ESMT that are able to pivot their production.

This dynamic underscores the strategic importance of Taiwan’s semiconductor industry in addressing global technology supply chain vulnerabilities. As major global players like South Korea’s SK hynix and the United States’ Micron plan long-term capacity expansions, the immediate market adjustments by Taiwanese firms highlight their agility in a rapidly evolving landscape. SK hynix aims to double silicon wafer output over the next five years, while Micron anticipates new capacity at its Virginia fabrication plant in 2027 and 2028, signaling future shifts in global supply.

The ongoing memory crisis affects not only device manufacturing costs but also broader economic stability by influencing production cycles and market competitiveness. The decisions made by Taiwanese component suppliers directly impact global electronics production, affirming their pivotal role in the tech ecosystem.