Samsung Predicts AI Chip Shortage Will Persist Until 2028

Samsung Electronics, the renowned South Korean technology leader, has issued a stark warning regarding the ongoing global shortage of AI memory chips, indicating that the situation is unlikely to improve in the near future. The company anticipates that the supply constraints will intensify in 2027 and extend into 2028, driven by an ever-increasing demand from artificial intelligence firms and data centers. This forecast was shared during the release of Samsung's second-quarter earnings report, which highlighted a staggering 250-fold increase in profits from its semiconductor division. Jaejune Kim, the executive vice president overseeing Samsung's memory business, emphasized during the earnings call that the demand for these essential components is not showing any signs of abating. He stated, "The supply shortage in 2027 is expected to worsen compared to this year, and it is expected to continue in 2028," underscoring the critical nature of the situation.

In response to the escalating demand, Samsung has proactively entered into long-term supply agreements with the five largest data center operators globally and is on the verge of finalizing similar contracts with five additional major clients. While the company has chosen not to disclose the identities of these partners, it has confirmed that these agreements will span a minimum of five years and will account for approximately 60 to 70 percent of its long-term production capabilities. Kim noted that these contracts are designed to mitigate financial risks associated with scaling up chip production, incorporating elements such as upfront payments and floor pricing to stabilize revenue streams. The semiconductor division's impressive operating profit of 89.2 trillion won in the second quarter, which represents a remarkable increase compared to the same period last year, reflects the surging demand for memory chips utilized in AI servers and data centers.