The Next Wave of the AI Boom: Memory Chips

Understanding the Memory Chip Market Opportunity

2026 is expected to see robust demand across leading-edge foundry/logic, DRAM/HBM, and NAND end markets as AI adoption rises rapidly. Further, supply is expected to be tight due to increased manufacturing complexity from next-generation technology inflexions. Both DRAM and NAND flash-memory chips may be entering a phase of structural demand growth, as data volume generated by AI inference jumps 5x every year. Without meaningful near-term capacity expansion, strong AI demand and tight supply can intensify pricing strength in 2026.

The HBM (High Bandwidth Memory) market is expected to grow 94% from $35 billion in 2025 to $68 billion in 2026. It is expected to expand to $132 billion by 2028, a 75% CAGR, vs. $17 billion in 2024. Given hyperscalers and neoclouds' rapid AI-infrastructure buildout, it is expected that the number of AI chips produced with HBM will increase 24% from 2024-28, to almost 22 million. Rising demand for more memory content and higher bandwidth as AI model sizes expand may also drive a 24% annual jump in HBM content per AI chip, resulting in 54% annual growth in aggregated HBM demand by 2028 to 8 billion GB from 1.4 billion GB in 2024. Pricing may increase to $16.60 per GB by 2028 from $12.06 per GB in 2024.

Further, the Wafer Fab Equipment (WFE) market could be one of the largest beneficiaries of the memory trend due to strong demand for memory and logic semiconductors used by AI data centres. Assuming the 2026 CAPEX to Semiconductor revenue ratio aligns with the 10-year average of 14.6%, the WFE market could reach $135.1 billion, an 11% growth YoY and to $158 billion by 2027.

Worldwide WFE Market Size

Global semiconductor capex in 2026 could increase by about 35% for NAND, 19% for DRAM, and around 6% for logic and other chips. Assuming NAND capital intensity stays at 32.5% in 2026, the same as in 2025, investment growth could match the 35% rise in NAND revenue. DRAM revenue might expand by about 40% in 2026.

AI chips will likely see continued memory-content expansion per chip, aiding pricing strength by keeping supply tight even as capacity among HBM suppliers increases rapidly. New generations of HBMs may also lead to pricing boosts that help rapidly expand the market. Demand for HBM chips is expected to continue growing to keep up with an increasing number of large language models for AI.

HBM: The Golden Opportunity

HBM (High Bandwidth Memory) is a specialized form of DRAM designed to feed GPUs and AI accelerators with data at extremely high speeds. It is built by stacking multiple memory dies vertically and placing them right next to the processor, allowing data to move through very wide pathways. This design prioritizes bandwidth and power eciency rather than cheap, scalable capacity. HBM exists because modern AI chips are so powerful that conventional memory can no longer supply data fast enough.

Further, HBM is difficult and expensive to manufacture, given its complexities. These complexities lead to low yields, long production cycles, and constrained supply. However, because HBM is essential for AI performance, it makes demand inelastic. This structural mismatch between demand and supply is expected to create persistent shortages and premium pricing, benefiting the few producers capable of manufacturing HBM at scale. Hyperscaler and neocloud AI-spending momentum is set to carry through 2026, which should support HBM and other AI-related product growth.

NAND: The SSD Engine

NAND flash is a memory chip used for long-term storage in Solid State Drives (SSDs). These SSDs are used in data centres, retaining data even when power is off, but operating at much slower speeds.

Source: Bloomberg
Date: 4th March 2026

DRAM: The Building Blocks of HBM

Dynamic Random Access Memory (DRAM) serves as the main system memory in servers and computers, providing large working capacity at a relatively lower cost, but at a lower bandwidth. It is typically located separately from the processor.

Source: Bloomberg
Date: 4th March 2026

Major Beneficiaries of the Memory Trend

Investors can get exposure to the memory theme by investing in the individual stock picks or via the iShares MSCI South Korea ETF (EWY), which gives a total exposure of 46% to Samsung and SK Hynix. These two companies are the top memory chip producers in the world.

Stock Snapshot

ETF Snapshot

iShares MSCI South Korea ETF (EWY)

Over the past year, the South Korean index KOSPI has rallied 105.41%. The iShares MSCI South Korea ETF is a proxy for investing in the South Korean market. The rally has been driven mainly by the Memory Supercycle, which is expected to continue into 2026, supporting further growth in the South Korean market. The major constituents of the ETF include Samsung Electronics, which accounts for 27.15%, followed by SK Hynix at 18.74%, Hyundai at 2.91%, and others.

South Korea is well positioned to lead in 2026, supported by strong earnings growth and a favorable momentum profile. The main driver behind the rally is the expectation that South Korea will deliver close to 50% EPS growth, which stands out compared to other emerging markets. This growth is largely driven by the AI supercycle and the recovery in the semiconductor industry. The AI industry is currently facing shortages in NAND, DRAM and high-bandwidth memory (HBM) chips due to strong demand. As AI model sizes continue to expand, rising demand for higher memory content and bandwidth could drive a 24% annual increase in HBM content per AI chip. Semiconductor export prices jumped by more than 40% by late 2025, and this trend is expected to continue into 2026. Major companies such as Samsung and SK Hynix have seen strong upward revisions to their 2026 earnings. The ongoing shortage of high-bandwidth memory has further lifted expectations for both companies, placing South Korea ahead of other emerging markets.

Despite the strong rally, South Korean equities still appear inexpensive. Forward earnings multiples are around 9.3x to 9.5x, which is the lowest among major emerging markets, even after the strong performance in 2025. In addition, the MSCI Korea Index trades below its five-year historical average. This valuation gap, which is often referred to as the “Korea Discount,” presents a huge opportunity for investors, especially as the government focuses on reforms aimed at unlocking greater shareholder value. Despite concerns about a potential AI bubble, earnings trends for regional chipmakers remain strong, and expanding partnerships between Korean chipmakers and Nvidia continue to support a positive outlook.

Lastly, Korean conglomerates have accelerated share buybacks, totaling $10.9 billion in the third quarter of 2025. Samsung Electronics announced a 10 trillion won buyback plan, alongside other companies, highlighting a clear commitment to narrowing the valuation gap.

South Korea’s central role in the global AI supply chain continues to attract strong foreign investor interest and presents an excellent opportunity for investors.