AI architecture upgrades are expected to drive the memory market to a new peak in 2027, with over 50% YoY growth.

2026/01/28

TechNews Report
January 22, 2026
Author: TechNews

According to the latest research from global market research firm TrendForce, AI innovation is bringing about structural changes in the market. Data access volume continues to expand, relying not only on high-bandwidth, high-capacity, and low-latency DRAM products to support large-scale model parameter access, long-sequence inference, and multi-tasking parallel operation, but also on NAND Flash, a key component for high-speed data flow. Therefore, memory has become an indispensable key resource in AI infrastructure and a fiercely contested area for CSPs (Computer-Supplied Components).

With limited production capacity, more resources must be allocated, driving up prices and resulting in the overall memory industry's output value reaching new highs year after year. It is estimated to reach US$551.6 billion in 2026 and peak at US$842.7 billion in 2027, representing a 53% year-on-year increase.

Looking at the DRAM sector, in 2025, influenced by geopolitical and overall economic uncertainties, the end-market attitude tended to be conservative in the first half of the year, especially with limited recovery in consumer applications. However, as market trends become clearer, North American cloud service providers (CSPs) increased capital expenditures in the second half of 2025, significantly accelerating the deployment of AI servers and driving substantial growth in memory procurement, thus fueling a new upward price cycle. Driven by high data access demand, DRAM demand growth was even more amplified, reaching $165.7 billion in 2025, an annual increase of 73%, far exceeding the $69.7 billion in NAND Flash production in 2025. This led suppliers to place greater emphasis on DRAM deployment in their capacity planning.

Furthermore, AI has evolved from early large-model training to combining inference, memory, and decision-making capabilities, resulting in an exponential increase in demand for memory capacity, bandwidth, and access efficiency. This technological evolution has led to a significantly larger DRAM price surge than historical cycles. While past data shows a maximum quarterly increase of around 35%, the surge in DDR5 demand drove DRAM price increases to 53-58% in the fourth quarter of last year. Despite already high DRAM prices, CSP demand for memory remains strong, driving prices even higher. A price increase of over 60% is expected in the first quarter of this year, with some product lines potentially seeing prices nearly double. Coupled with continued bullish expectations for the next three quarters, this will significantly boost DRAM production value to $404.3 billion annually, representing a year-on-year growth rate of 144%.

Observing the changes in the NAND Flash market, NVIDIA pointed out at the recently concluded CES 2026 that AI is completely reshaping the entire computing stack. As generative AI moves towards agent-based systems with long-term inference capabilities, AI agents need to frequently access massive vector databases for retrieval-enhanced generation (RAG) when performing tasks. The large volume of data and its highly random access characteristics will significantly increase the demand for high-IOPS enterprise-grade SSDs, driving up NAND Flash prices. A 55-60% quarter-on-quarter increase is projected for the first quarter of this year, and this upward trend is expected to continue until the end of the year, simultaneously pushing the year-on-year growth rate of market value to 112% in 2026, reaching $147.3 billion.

Looking at the overall memory market, the shortage situation shows no signs of easing. Therefore, the power to set contract prices still lies with the suppliers. Looking ahead, TrendForce believes that the AI wave continues to evolve, advancing simultaneously from hardware stacking and system architecture to software applications. Memory has become an indispensable core resource for AI computing. Supported by long-term demand for AI servers, high-performance computing, and enterprise-grade storage, the upward trend in DRAM and NAND Flash contract prices is expected to continue into 2027, thus extending market revenue growth momentum into that period.

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