The higher the mountain, the deeper the valley.
The semiconductor industry, especially the memory market, is currently experiencing an extraordinary expansion that can only be described as "explosive growth." Words like "booming" simply cannot adequately describe this phenomenon. Just take a look at the charts, and anyone will be shocked by the sheer scale.
Figure 1 shows the three-month moving average shipments of various semiconductors based on World Semiconductor Trade Statistics (WSTS) data from 1991 to May 2026. Over the past 30 years, despite fluctuations in the economic environment, the four major categories—microcomponents, memory, logic devices, and analog devices—have generally shown a steady upward trend. This represents the "normal development trajectory" of the semiconductor industry.
Figure 1. Three-month moving average shipment value of semiconductor products by type (as of April 2026). Source: Compiled by the author based on WSTS data.
However, since around 2024, logic circuits, and especially the recently surging memory sector, have shown a nearly vertical growth trajectory, completely overturning traditional perceptions. The growth in memory is particularly astonishing, almost breaking through the peak of the charts. This growth rate is so fast that the accumulated growth history of the past 30 years seems like just a warm-up.
Based on my years of close observation of the semiconductor market, I can say with certainty that the memory market has never seen such a steep growth. This can be described as a historical anomaly that is shaking the fundamental structure of the semiconductor industry.
Growing 10-fold in approximately 10 years, with an annual growth rate as high as 285%, is truly shocking. Figure 2 illustrates this explosive growth, focusing on the period from 2016 onwards. In 2016, the monthly shipment value of MOS memory was about $5.6 billion. After a brief boom during the "memory bubble" of 2017-2018, shipments plummeted to only $5.8 billion by the economic downturn in early 2023. This marked the lowest point of the semiconductor industry's recession.
Figure 2. Three-month moving average shipment value of semiconductor products by type (April 2016 to April 2026). Source: Compiled by the author based on WSTS data.
However, the subsequent recovery, or more accurately, the surge, has been remarkable. As of May 2026, the monthly shipment value of memory has skyrocketed to $63.3 billion. Compared to the 2016 level, it has grown more than 11 times in just a decade. Compared to the trough in early 2023, it has increased by approximately 10.7 times in just a few years.
Similarly, Figure 2 shows that the scale of the logic business, which includes NVIDIA GPUs, has also grown from $13.3 billion to $31.6 billion, clearly demonstrating the "NVIDIA GPU effect" and the "AI effect." However, even the growth in the logic business appears relatively moderate compared to the explosive growth in the memory business.
Viewed from the perspective of growth rates, this anomaly becomes even more apparent. Figure 3 shows the year-over-year growth rate of the same data, with the recent year-over-year growth rate for memory reaching as high as 285%, setting a historical record.
Figure 3. Year-over-year growth rate of three-month moving average shipments of semiconductors by type (as of April 2026). Source: Compiled by the author based on WSTS data.
For reference, even at the peak of the previous "memory bubble" (around 2017), the annual growth rate reached only about 60%. In comparison, you can see how astonishing the current growth rate is. Looking at the other three categories in Figure 3, even logic circuits are at only about 40%, while microcontrollers and analog circuits are at only about 14% to 19%. In other words, only the growth in memory has truly reached "another level."
DRAM and NAND Are Experiencing Explosive Growth
Looking at the memory market, the main driving force behind its explosive growth comes from two major memory products: DRAM and NAND flash memory (hereinafter referred to as NAND). Figure 4 shows the quarterly overview of the global DRAM and NAND markets based on TrendForce data.
Figure 4. Global DRAM and NAND market (TrendForce's forecast for Q2 2026). Source: Compiled by the author based on TrendForce's DataTrack data.
In early 2023, during the semiconductor industry recession, DRAM prices hit rock bottom at only $9.7 billion, and NAND prices also plummeted to $8.7 billion. This was a dark period where all memory manufacturers fell into the red and were forced to cut production.
However, it is projected that by the second quarter of 2026, the DRAM market size will leap to $145 billion, and the NAND market size will reach $81 billion. Compared to the trough in early 2023, the DRAM market size has grown by approximately 15 times, and the NAND market size has grown by about 9 times. If the two are added together, the quarterly total will reach $226 billion, and the annual total will exceed $900 billion—a scale that is hard to believe at first glance.
Memory, once considered a "cheap standard" or "commodity" product, is now poised to seize the leadership position in the semiconductor industry from microcomputers (such as logic and MPUs).
The Cause Is the Abnormal Surge in Memory and Wafer Prices
Why has the memory market expanded to such a scale? The key lies in the fact that this explosive growth is not merely driven by an increase in shipment volume; the biggest factor is the abnormal surge in memory prices themselves.
Figure 5 shows the trends in spot prices for DRAM (DDR5 16Gb 2Gx8) and wafer prices for NAND (1Tb TLC wafer). In early 2025, the spot price of DRAM was only $4.70. Recently, the price has skyrocketed to $46.00, an increase of about 10 times. NAND wafer prices have also jumped from $2.40 to $25.00, similarly an increase of about 10 times.
Figure 5: Surge in spot prices of DRAM (DDR5 16Gb 2Gx8) and NAND (1Tb TLC wafer). Source: Compiled by the author based on TrendForce's DataTrack data.
In other words, the main reason for the tenfold increase in market size is not a tenfold increase in shipment volume, but rather a nearly tenfold surge in "unit prices." Even if memory sales remain unchanged, revenue would still grow tenfold. This is the mechanism behind the explosive growth in the memory market size.
For memory manufacturers, this is an ideal environment. After all, prices can rise automatically without the need for a substantial increase in capital investment, thereby significantly improving profit margins. As will be discussed later, the soaring stock prices of memory manufacturers are also due to the rapid profit growth brought about by this abnormal price increase.
Reasons for the Price Surge
So, why are memory prices surging? It is because demand far exceeds supply, but tracing the root of this demand, we find it is attributable to the astonishingly massive investments made by hyperscale data center operators.
Figure 6 shows the capital expenditure trends of the top four hyperscale data center operators (Amazon, Google, Microsoft, and Meta). In 2015, the total capital expenditure of these four companies was only $21 billion. Even so, this was considered a "huge sum" at the time.
Figure 6: Capital expenditure of the top 4 hyperscale data center operators. Source: Compiled by the author based on financial reports of each company and TrendForce data, etc.
However, since OpenAI released ChatGPT in November 2022, the generative AI field has ushered in a wave of enthusiasm, and the capital investment curve has climbed sharply accordingly. It is estimated that by 2025, the total investment of these four companies will reach $355 billion, and by 2026, this figure is expected to hit an astonishing $755 billion. This represents an unprecedented investment boom, with investment growing approximately 36 times in just over a decade since 2015.
$755 billion far exceeds 120 trillion yen. Just four companies plan to invest an amount equivalent to Japan's national budget (general account) in one year for data center and AI infrastructure construction. This shows just how extraordinary this situation is.
AI Data Centers Are Like "Black Holes"
The ultimate destination of this massive investment is AI data centers. Figure 7 illustrates the current situation in a schematic diagram.
Figure 7: Why are DRAM and NAND flash memory prices surging?
As hyperscale data centers compete to invest in AI data centers, the semiconductors essential for AI training and inference—namely GPUs from companies like NVIDIA, high-bandwidth memory (HBM) used in GPUs, and high-capacity storage SSDs equipped with NAND flash memory—are being sucked one after another into the "black hole" of AI data centers.
Memory manufacturers prioritize the production of high-margin HBM as well as high-performance DRAM and NAND flash memory for data centers. This is a natural business decision. Consequently, production line capacity has been shifted to the AI sector, leading to a significant reduction in capacity available for other applications.
The industry most severely affected by this is DRAM and NAND flash memory used in digital consumer electronics such as personal computers, smartphones, and game consoles. These products are experiencing severe memory shortages, reaching the point of being "completely insufficient."
Due to limited supply capacity, if demand is concentrated solely on AI data centers, the memory for consumer electronics will inevitably be depleted. This will lead to fierce competition for limited supply, thereby driving up prices. This is directly related to the abnormal surge in memory prices mentioned earlier.
In fact, PC and smartphone manufacturers have already started sending out distress signals, stating that they cannot obtain the memory they need and that procurement costs are soaring, forcing them to pass these costs on to product prices. Ironically, in the shadow of the rise of AI, the digital devices we use every day are becoming increasingly expensive and even scarcer.
Semiconductor Market Forecasts Are "Completely Wrong"
In 2023, I made a forecast on the development trend of the global semiconductor market up to 2032, as shown in Figure 8. By analyzing the history of the semiconductor industry and combining the "PC effect," "Internet effect," "smartphone effect," and the upcoming "AI semiconductor effect," I predicted that the semiconductor market would grow at a rate of approximately "doubling every decade." This forecast projected that by 2032, the market size would reach about $1.2 trillion. At the time, I considered this a fairly optimistic forecast.
Figure 8: 2023 global semiconductor market forecast. Data source: Compiled based on WSTS data and the author's forecast.
However, it turns out this forecast was completely wrong. In fact, the reason it was wrong is that it was too conservative. Please refer to Figure 9. According to the WSTS (World Semiconductor Trade Statistics) Spring 2026 forecast, the global semiconductor market size will reach $630.5 billion in 2024, $795.6 billion in 2025, and break through $1.5 trillion in 2026 to reach $1.5112 trillion. Furthermore, it is expected to grow rapidly to $1.9137 trillion by 2027, approaching $2 trillion.
Figure 9: Due to the booming AI, the global semiconductor market is expanding rapidly, and forecasts are severely off track. Source: Compiled by the author based on WSTS data and the WSTS Spring 2026 Semiconductor Forecast.
In just a few years, the market size has easily surpassed the author's previous forecast of $1.2 trillion for 2032. The 2032 forecast has already been realized in 2026. This does not mean the previous forecast was "too optimistic," but rather that the disruptive power of the AI boom has completely overturned all previous conventions in the semiconductor industry.
Figure 10 clearly demonstrates that this rapid growth is driven by memory (including DRAM and NAND) and logic circuits (including GPUs). Memory is expected to break through $1 trillion in 2027, reflecting the explosive growth of DRAM + NAND described earlier. The logic circuit market is also projected to exceed $500 billion.
Figure 10: Rapid growth in memory (including DRAM and NAND) and logic (including GPUs). Source: Compiled by the author based on WSTS data and the WSTS Spring 2026 Semiconductor Forecast.
On the other hand, the analog circuit and microcomponent sectors have remained almost flat. In other words, the overall growth of the semiconductor market is not balanced; instead, only these two AI-related sectors are growing at an unprecedented pace, pulling the growth of the entire market. This is an extremely distorted growth structure.
How Long Can This Boom Last?
Now, let us answer the question on everyone's mind: "How long will the AI boom and the growth it brings last?"
The key to understanding this lies in knowing the long history of the memory market. Figure 11 shows the annual growth rate of the memory market over the past 35 years since 1991. This chart reflects the countless ups and downs the semiconductor industry has experienced.
Figure 11: Annual growth rate of the memory market. Source: Compiled by the author based on WSTS data and the WSTS Spring 2026 Semiconductor Forecast.
From the boom brought by the release of Windows 95 in 1995, to the IT bubble in 2000 and its subsequent burst, then the memory bubble in 2017-2018, the collapse of Lehman Brothers in 2008, and the boom driven by the COVID-19 pandemic since 2020, the semiconductor industry has experienced a roller-coaster of booms and busts.
What is worth noting here is not the height of individual peaks, but the "duration" of sustained positive growth. A careful analysis of Figure 11 reveals a key fact: at no point in history has the memory market maintained an average annual positive growth for more than five years. In the past 35 years, there has never been a case of six or seven consecutive years of positive growth.
Why does the market stabilize after five years? Because the memory market is inherently subject to the "silicon cycle," which includes surging demand, rising prices, increased production investments by companies, oversupply, and plummeting prices.
If the economy continues to boom, companies will inevitably compete to invest in equipment, ultimately leading to oversupply and a crash in prices. This is the inevitable operating mechanism determined by the very nature of memory as a product.
The current AI boom is expected to drive substantial growth in the memory market, starting from the trough in 2023 and peaking in 2024. According to historical patterns, this boom should end by 2028 at the latest, and may even peak in 2027.
While it is inevitable that some will say, "This time is different" or "AI is special," we must not forget that the exact same claims were made every time a bubble economy emerged in the past.
The Higher the Mountain, the Deeper the Valley
The history of the semiconductor industry also tells us another indisputable rule: "The higher the peak, the deeper the subsequent valley."
If you look at Figure 11 again, this rule becomes obvious. The IT bubble reached a peak annual growth rate of over 50% in 2000, but in the very next year, 2001, it plummeted to an abyss of -49.5%. Similarly, the memory bubble of 2017-2018 also experienced a peak of over 60%, followed by a sharp drop of 33% in 2019. In this industry, the higher the peak of the boom, the more severe and prolonged the subsequent recession tends to be.
Let us re-examine the current AI boom. The annual growth rate of 285% is an unprecedented peak, far exceeding any previous bubble. Its increase is so massive that the peaks of the IT bubble and the memory bubble seem insignificant in comparison.
Applying this principle, the conclusion is obvious. Following this unprecedented boom, the subsequent "valley" is likely to be deeper and more severe than any the semiconductor industry has experienced before. We should prepare ourselves for the extremely severe economic recession expected to begin in 2027-2028, a recession that cannot be overcome with half-hearted efforts.
Soaring Stock Prices of Memory Manufacturers and "Billionaires"
Currently, the stock prices of memory manufacturers are soaring across the board. This is entirely expected, as rising prices have led to a substantial increase in their profits.
A symbolic example is Kioxia. The rise in the company's stock price has enabled 600 investors, who can be called "billionaires," to gain over 1 billion yen in unrealized returns from their holdings. The entire industry is immersed in an unprecedented celebratory atmosphere.
However, we need to remain calm now. Stock prices are like a mirror, reflecting people's expectations for the future. When these expectations are too high, if reality falls even slightly short, stock prices will crash instantly.
The higher the mountain, the deeper the valley. This principle applies equally to stock prices, not just market size. Every time a bubble bursts in the past, the same scene has unfolded: billionaires who got rich at the peak of the bubble are forced to drastically reduce their assets as the recession arrives.
Now, in the midst of an economic boom, is exactly the time to make solid preparations for a recession. This boom will not last forever. History shows that positive growth in the memory market lasts for a maximum of five years, after which a trough period will follow (at least on the surface). The higher the peak, the deeper the valley. Therefore, I strongly urge the companies currently enjoying the boom: "While the boom continues, you should make solid preparations for the recession."
*Disclaimer: This article was created by the original author. The content represents their personal views. We repost it solely for sharing and discussion, which does not mean we endorse or agree with it. If you have any objections, please contact the backend.