Goldman Sachs' heavyweight report: The most severe shortage of memory chips in fifteen years is approaching, and even a collapse in consumer demand cannot stop it

Goldman Sachs warns that the market is on the brink of the most severe storage chip supply shortage in the past 15 years.

According to information from the Wind Trading Desk, Goldman Sachs stated in a report on February 8 that the global memory market will experience one of the most severe supply shortages in history in 2026-2027, with significant widening of the supply-demand gap for the three major categories: DRAM, NAND, and HBM. More importantly, even in extreme scenarios where demand for smartphones and PCs declines sharply, strong server demand can still absorb the shock and maintain market tension.

However, unexpectedly for the market, Goldman Sachs downgraded Micron's rating to neutral with a target price of $235 while releasing this bullish report on the memory industry, citing that "most of the positives have already been priced in." For investors, this means that while the memory industry's prosperity is highly certain, individual stock valuations are increasingly divergent, with Samsung Electronics and SK Hynix being more valuable for allocation.

DRAM Supply Gap Hits 15-Year Worst Level

Goldman Sachs has significantly raised its expectations for the DRAM supply shortage.

The latest forecast shows that the DRAM supply-demand imbalance will reach 4.9% and 2.5% in 2026 and 2027, respectively, far exceeding previous expectations of 3.3% and 1.1%. The supply shortage in 2026 will be the most severe in the past 15 years.

The core driver of this tension is the explosive growth in server demand.

Goldman Sachs has raised its expectations for server DRAM (excluding HBM) demand in 2026/2027 by 6%/10%, expecting growth rates of 39% and 22% for those two years, respectively. When including HBM, server-related DRAM demand will account for 53% and 57% of global total demand, making servers the most important driver of DRAM demand.

In stark contrast, Goldman Sachs has downgraded its DRAM demand expectations for PCs and smartphones.

The growth rate of mobile DRAM demand is expected to slow significantly from the high double digits of the past few years to 7% in 2026, while the growth rate for PC DRAM demand is only 5%. Goldman Sachs has lowered its expectations for mobile DRAM demand in 2026/2027 by 7%/7% and for PC DRAM demand by 3%/5%, mainly reflecting the global team's downward revision of shipment forecasts and the reduction in unit content due to rapidly rising memory costs.

On the supply side, Goldman Sachs expects global DRAM supply to grow by 21%/19% in 2026/2027, only slightly up from previous expectations.

The core reason is the limited cleanroom space of major suppliers, making significant capacity growth difficult in the short to medium term. Only Samsung's P4 plant has enough flexibility to increase new capacity, while SK Hynix's M15X cleanroom space is mainly used for HBM. Samsung's P5 and Hynix's Yongin plant may not reach mass production until the second half of 2027, which means limited upward supply potential before then.

NAND Market Faces One of the Largest Shortages in History

The supply-demand dynamics in the NAND market have also tightened significantly. Goldman Sachs expects the NAND supply-demand imbalance to be 4.2%/2.1% in 2026/2027, higher than previous expectations of 2.5%/1.2%. **This will be one of the largest shortages in the history of the NAND industry **

The strong growth in enterprise SSD demand is the main driving force. Goldman Sachs has raised its expectations for enterprise SSD demand in 2026/2027 by 14%/14%, forecasting growth rates of 58%/23%, with its share of global NAND demand rising to 36%/39%.

Analysts believe that NVIDIA's launch of the ICMSP (Inference Context Storage Platform) architecture at CES 2026 will create significant additional NAND demand.

Based on a configuration of 16TB of storage space added per GPU and 512GB of onboard SSD per BlueField DPU, Goldman Sachs estimates that the Rubin platform alone will generate an incremental NAND demand of 29EB/79EB in 2026/2027, accounting for 3%/6% of total demand. This forecast aligns with SanDisk's comments that ICMSP will bring an additional demand of 75-100EB by 2027.

Demand for NAND in mobile and PC segments is significantly weak.

Goldman Sachs has lowered its expectations for mobile NAND demand in 2026/2027 by 6%/7%, predicting that mobile NAND demand will experience zero growth for the first time in 2026. The expected SSD demand from PC customers has also been revised down by 1%/1%, with zero growth anticipated in 2026, both at historical lows.

Supply discipline remains strong, with Goldman Sachs expecting global NAND supply to grow by 18%/18% in 2026/2027. Major suppliers will focus on DRAM capital expenditures, with NAND emphasizing technology migration rather than wafer capacity increases. Significant increases in NAND wafer capacity may be limited to Samsung's P4 plant and Kioxia's Beijing plant, but both companies will continue to focus on migrating to higher-layer 3D NAND.

HBM Market Size Revised Up to $75 Billion

Goldman Sachs has raised its expectations for the HBM TAM (Total Addressable Market) in 2026/2027 by 8%/9%, to $54 billion/$75 billion (previously $50 billion/$69 billion). The revision mainly reflects improvements in HBM demand for GPUs and ASICs.

Notably, the acceleration of ASIC demand is particularly noteworthy.

In line with the global team's view on the accelerated application of ASICs in servers, Goldman Sachs has raised its HBM demand expectations for ASICs in 2026/2027 by 27%/14%, while GPU HBM demand has only been raised by 1%/5%. ASICs are expected to account for 33%/36% of HBM demand in 2026/2027 (previously expected to be 28%/34%).

On the supply and demand side, despite Goldman Sachs raising its industry HBM capacity expectations, mainly due to Samsung and SK Hynix increasing their capacity expansion rates, the larger upward revision in demand is expected to lead to a supply shortage in the HBM industry of 5.1%/4.0% in 2026/2027, far exceeding the previous forecast of 0.7%/1.6%.

Goldman Sachs expects that by the end of 2026, industry HBM capacity will reach approximately 515,000 wafers/month (previously expected to be 485,000 wafers/month), and by the end of 2027, it will reach 595,000 wafers/month (previously expected to be 565,000 wafers/month). After a 15% decline last year, Samsung's HBM business is expected to grow by 157% in 2026, with revenues approaching $15 billion SK Hynix's growth will be more moderate after an increase of about 116% last year, but it will still maintain a leading position with approximately 52% market share by 2026.

BOM Cost Analysis: Supply and Demand Remain Tight Even in Extreme Scenarios

Goldman Sachs conducted a detailed BOM (Bill of Materials) cost analysis, assessing the rising burden of memory costs and its potential impact on demand.

For smartphones, by the third quarter of 2026, the DRAM and NAND costs of the iPhone are expected to reach about 23% of the total BOM, the highest level since 2010, compared to 10% in the third quarter of 2025. The memory cost share of the Samsung Galaxy S series is expected to rise significantly to about 29%, up from 13% in the third quarter of 2025.

For PCs, using the Dell XPS series as a sample, memory costs are expected to reach 17% of the total BOM by the third quarter of 2026, compared to 7% in the third quarter of 2025.

However, the key point is that even in a highly negative scenario—smartphone shipments declining by 11% year-on-year (baseline scenario -6%), single-device DRAM capacity growth of only 9% (baseline scenario +14%), PC shipments declining by 10% (baseline scenario -5%), and single-device DRAM capacity growth of only 5% (baseline scenario +10%)—the DRAM demand growth in 2026 can still reach 21%, with an industry supply shortage of 1.7% (baseline scenario 4.9%).

This analysis confirms that while higher memory costs may lead to demand destruction for PCs/smartphones and lower DRAM content adoption rates, given the expected significant supply shortage this year, the DRAM industry's supply and demand will remain tight even in highly negative scenarios.

Investment Recommendations: Samsung and Hynix Are More Attractive

Goldman Sachs reiterated its buy ratings for Samsung Electronics, SK Hynix, SanDisk, Tokyo Electron, Ulvac, and Disco.

Samsung Electronics (Buy, target price 205,000 KRW) is a key beneficiary due to its large exposure in the traditional memory sector.

Goldman Sachs expects traditional DRAM pricing to rise by about 176-184% year-on-year in 2026, with operating profit margins reaching 71%/66% (2026/2027), close to historical highs. Coupled with significant improvements in the HBM business, operating profit is expected to grow more than fourfold year-on-year in 2026, exceeding 180 trillion KRW, with ROE approaching 30%, a level not seen in the past 20 years. The current stock price corresponds to a 2026 P/E ratio of 7.4 times and a P/B ratio of 1.9 times.

SK Hynix (Buy, target price 1,200,000 KRW) is expected to achieve unprecedented profit margins—close to 80% for DRAM operating profit margins and over 40% for NAND in 2026. With a solid lead in the AI memory sector, the company's ROE is expected to exceed 70%, the highest level ever.

Surprisingly for the market, Goldman Sachs downgraded Micron's rating to Neutral, with a target price of $235, citing that "most of the positives have already been priced in." Despite Goldman Sachs recognizing Micron's continued execution capability on the HBM product roadmap, expecting it to capture about 20% of the rapidly growing, high-margin market, it believes that the risk-reward is roughly balanced at the current valuation level, and that HBM pricing may be adjusted downward by 2026 due to an increase in suppliers (such as Samsung).

For equipment stocks, Goldman Sachs emphasizes that Tokyo Electron (Buy, target price 43,000 JPY) has a relatively high market share in leading DRAM manufacturing tools, covering EUV coating/developing, capacitor etching, batch deposition, and supercritical dry cleaning tools.

Among small and mid-cap stocks, Ulvac (Buy, target price 8,400 JPY) is highlighted as a key beneficiary of DRAM (especially Samsung) capital expenditures. In the backend equipment sector, Disco (Buy, target price 68,000 JPY) continues to be favored, as the company holds a dominant market share in HBM grinding and cutting tools