If you’re planning hardware refreshes or cloud capacity expansions, you’re facing an 18 to 24 month period of price volatility in the memory market. You need a strategy that accounts for uncertainty rather than betting on a single forecast.
Here’s what the data shows. DRAM prices will peak in Q1 2026 with a 55-60% quarter-over-quarter surge according to TrendForce. Relief begins in Q3 2026, and normalisation arrives somewhere between Q4 2026 and Q4 2027 depending on how AI infrastructure spending plays out (the primary variable driving the three scenarios). The timeline isn’t certain enough for single-point planning, which is why you need scenario-weighted projections. (For foundational context on why recovery takes years not months, see our comprehensive guide to the shortage’s underlying causes.)
This article lays out the three recovery scenarios (best, base, worst case) with specific quarterly milestones and probability weightings. You’ll get procurement timing recommendations, budget planning ranges for 2026-2028, and contract negotiation windows tied to the price trajectory.
The focus is conventional DDR5 server DRAM contract pricing, not spot market fluctuations or specialty HBM memory. You’re getting multi-year timeline guidance because that’s what the structural constraints of fab capacity expansion require.
When Will DRAM Prices Normalize After the 2025-2026 Shortage?
Normalisation lands between Q4 2026 and Q4 2027 depending on which scenario plays out.
The best case (20% probability) has Q3 2026 relief accelerating into Q4 2026 normalisation if AI demand moderates faster than expected. The base case (60% probability) sees Q3 2026 price declines continuing through Q1-Q2 2027 as production volumes increase 20% or more. The worst case (20% probability) extends normalisation to late 2027 or early 2028 if sustained AI infrastructure buildout keeps HBM production prioritised over commodity DRAM.
TrendForce, Sourceability, and IDC forecasts all converge on 2027 as the most likely recovery year. TeamGroup’s GM warned that normalisation is unlikely before 2027-2028 when new production capacity finally comes online.
What does “normalise” actually mean? It’s a return to pre-shortage pricing trends based on historical DRAM price index baselines from 2020-2024, not a drop to absolute price levels from years past. The market settles back into predictable quarterly variations rather than the sharp swings you’re seeing now.
Contract prices lag spot prices by one to two quarters. If you’re buying enterprise volumes rather than individual modules, expect your normalisation to trail what consumers see by that lag window. Cloud service providers are already locking supply contracts for 2027 in Q1 2026 to get ahead of this.
The probability weighting comes from combining analyst forecast consensus (high confidence), fab timeline certainty (very high confidence), and AI demand trajectory forecasting (medium confidence). When you weight those factors and compare them to historical recovery patterns from the 2016-2017 and 2020-2021 shortages, the base case scenario at 60% probability becomes the sensible planning assumption while you budget for worst-case extensions.
What Percentage Are DRAM Prices Increasing in Q1 2026?
TrendForce forecasts a 55-60% quarter-over-quarter increase in conventional DRAM contract prices for Q1 2026.
Server DRAM gets hit harder. TrendForce projects server DDR5 modules surging over 60% QoQ in Q1 2026 because hyperscalers are prioritising supply before it reaches the SMB market.
The real-world validation came from TeamGroup’s GM reporting that prices doubled within one month during November-December 2025. That’s not a forecast, that’s manufacturers already experiencing the severity TrendForce predicted.
The distinction between contract pricing and spot market pricing matters here. These forecasts reference contract prices that cloud providers and enterprise buyers lock in, not the spot market where individual module prices bounce around day to day. If you’re planning infrastructure spending, contract prices are what affect your budget.
Q1 2026 represents peak pricing before any supply adjustments kick in. Some contract 16Gb DDR5 chips went from $6.84 in September 2025 to $27.20 in December 2025, nearly 300% in three months. That’s the trajectory heading into Q1.
TrendForce is the Taiwan-based memory market analyst that manufacturers and distributors actually use for procurement planning. When they forecast 55-60%, that becomes the working assumption across the supply chain whether individual buyers like it or not. For analysis of when costs peak and when they stabilise, see our detailed breakdown of infrastructure cost passthrough.
What Is Causing the DRAM Price Surge in Early 2026?
The primary driver is HBM production for AI accelerators getting prioritised over commodity DDR5, reducing available supply for servers and PCs.
DRAM suppliers are reallocating advanced process nodes and new capacity toward server and HBM products to support rising AI server demand. The shift represents a structural change in how manufacturing capacity gets allocated.
Fab utilisation rates already exceed 90%, which limits the ability to increase output without constructing entirely new facilities. Supply tightness continues to intensify with suppliers’ inventories approaching depletion and shipment growth now reliant solely on wafer output increases.
The demand side is AI server buildout from hyperscalers like AWS, Google, and Azure. Since late 2025, cloud service providers have been pulling in orders, creating increased demand for server DRAM that was already being squeezed by HBM prioritisation.
The delayed fab capacity expansion compounds the problem. Micron’s megafab in New York has been pushed to late 2030, originally scheduled for mid-2028. That means relief must come from production efficiency gains and HBM-to-DDR5 reallocation rather than new manufacturing capacity. (Understanding the shortage timeline fundamentals helps explain these constraints.)
The market segmentation hierarchy shows how allocation decisions play out. HBM gets first priority due to higher margins. Server DDR5 gets second priority because hyperscalers lock long-term contracts. Consumer PC memory gets whatever remains, which isn’t much.
DRAM inventory dropped from 12 weeks in October 2024 to 2-4 weeks in October 2025, a 66% reduction. When you combine depleted inventory with maximised fab utilisation and structural demand from AI infrastructure, you get Q1 2026’s price surge.
What Is the Timeline for New Fab Capacity to Come Online?
Micron’s New York megafabs face a 2-3 year delay with the first fab now set for late 2030.
The initial fabrication plant, previously scheduled for mid-2028, is now projected to come online in late 2030 with groundbreaking in Q2 2026, marking eight years from the 2022 announcement to production. The build period grew from three to four years, and labour shortages are cited as another factor behind the delay.
New fab construction follows a consistent timeline. Groundbreaking, clean room construction, equipment installation, and production ramp to volume output requires 3-5 years minimum. The lead time from planning to producing chips in a new fab is typically 3-5 years, which is why announcements in 2025-2026 don’t help the 2026-2028 shortage.
The gap is clear. New fabrication capacity from Micron, Samsung, and SK hynix will not meaningfully impact supply constraints until late 2027 or 2028, leaving 18-24 months of tightness ahead. Micron won’t contribute materially with new capacity until late 2027, and that’s assuming no further delays.
This means 2026-2027 relief must come from alternative mechanisms. Production efficiency gains from existing fabs, utilisation optimisation at current facilities, and HBM-to-DDR5 reallocation as AI demand potentially moderates. Counterpoint forecasts suggest 20%+ production volume increases are achievable through these non-expansion measures, but those gains take time to materialise.
How Does HBM Production Affect Commodity DRAM Availability?
HBM and DDR5 share the same fabrication equipment and production lines, creating a direct trade-off.
Every wafer allocated to HBM reduces DDR5 output. Manufacturers are maximising revenue by prioritising HBM because profit margins run 3-5x higher than commodity DRAM. Micron, Samsung, and SK hynix are focusing new capacity on HBM rather than standard DDR5 modules.
The demand driver is NVIDIA GPU requirements. Nvidia has effectively become “a customer with the purchasing scale of a major smartphone maker” due to memory needs for AI accelerators. That kind of concentrated demand from a high-margin customer shapes how manufacturers allocate production capacity.
This priority hierarchy persists across the supply chain. DRAM suppliers have simultaneously tightened supply to PC OEMs and module makers while maintaining allocations to hyperscalers and NVIDIA.
HBM production won’t decline until AI infrastructure buildout moderates. In the base case scenario, that moderation begins in 2027. In the worst case, sustained AI spending extends HBM prioritisation through 2028, which is why worst-case normalisation forecasts extend to late 2027 or early 2028.
The economic incentive structure explains why this persists. When you can sell HBM at 3-5x the margin of commodity DDR5, and your customer is placing orders with smartphone manufacturer scale, the allocation decision is straightforward. Server DDR5 gets second priority because hyperscalers sign long-term contracts, leaving consumer memory to absorb the shortage.
Manufacturers are also wary of overbuilding capacity given concerns about an AI bubble. That conservative approach to capital spending in new DRAM capacity means they’re not rushing to construct facilities that could sit underutilised if AI demand crashes.
Which Recovery Scenario Is Most Likely – Best Case, Base Case, or Worst Case?
The base case at 60% probability is most likely. Q3 2026 relief begins, followed by Q1-Q2 2027 normalisation.
The best case (20% probability) requires AI demand moderation that seems unlikely given the infrastructure buildout momentum across hyperscalers. The worst case (20% probability) becomes realistic if sustained AI spending extends HBM prioritisation through 2028.
Analyst forecast consensus from TrendForce, Sourceability, and IDC aligns with the base case timeline.
Historical recovery patterns support an 18-24 month duration. The 2016-2017 shortage lasted 16 months, the 2020-2021 shortage lasted 14 months. The current cycle forecasts longer due to structural HBM competition that didn’t exist in previous shortages.
The probability weighting methodology combines three factors. Fab timeline certainty rates high confidence because construction schedules are physical constraints with limited variability. AI demand trajectory rates medium confidence because forecasting technology adoption is inherently uncertain. Geopolitical factors rate low confidence but carry high impact if they materialise.
When you reconcile the three analyst sources, TrendForce provides the most granular DRAM price specifics given their Taiwan-based position in the memory manufacturing ecosystem. IDC offers device market context showing how smartphone and PC demand affects the broader picture. The convergence on 2027 across all three analysts validates the base case as the planning assumption.
The worst case isn’t far-fetched. Some industry experts are predicting shortages past 2028 if AI infrastructure spending remains elevated. The delayed arrival of new production capacity supports the worst-case timeline, where shortages could extend past 2028 if AI infrastructure spending remains elevated.
Risk factors for scenario deviation include unexpected AI demand acceleration (pushes toward worst case), faster HBM-to-DDR5 reallocation than forecast (pushes toward best case), and geopolitical disruption to fab construction timelines (pushes toward worst case or beyond).
When Should I Place Hardware Orders to Avoid Peak Prices?
Pre-Q1 2026 orders in Q4 2025 let you lock current pricing before the 55-60% surge if your budget allows it.
Q1 2026 orders hit peak pricing. Only order what you absolutely need during this quarter. You’re taking maximum cost exposure at the worst possible time.
Q3 2026 orders become optimal timing for non-urgent needs as prices begin declining. This is when you start seeing relief from the peak, making it the procurement window for anything you deferred from Q1.
Q1 2027 and beyond is when you defer non-critical procurement to a normalised price environment. By then you’re back to predictable quarterly variations rather than shortage-driven swings.
Contract negotiation timing matters. Lock multi-year agreements in Q3-Q4 2026 as the decline trajectory confirms. Supply contracts for 2027 could be finalised as early as Q1 2026, which is what hyperscalers are already doing to secure allocations. For detailed guidance on when to negotiate vs when to wait, see our contract negotiation tactics framework.
Stockpiling is a trade-off between upfront capital cost and avoiding Q1 2026 peak exposure. If you have Q4 2025 pricing available, 12-18 month demand certainty, storage capacity, and capital budget, the cost-benefit analysis might favour pre-buying. The breakeven calculation is straightforward: upfront cost plus storage versus 55-60% Q1 surge exposure.
The practical guidance for SMB infrastructure budgets in the $50K-500K annual range is to split procurement timing. Lock in immediate needs in Q4 2025 if possible, minimise Q1 2026 orders to what’s unavoidable, plan significant procurement for Q3 2026, and defer everything else to 2027.
Strategic recommendations include securing long-term allocation agreements with suppliers and moving beyond just-in-time models toward strategic buffer inventory. Leading organisations track pricing trends, allocation signals, and roadmap changes weekly rather than quarterly. For comprehensive guidance on when to stockpile vs when to wait, see our detailed procurement timing framework aligned with these price forecasts.
How Can I Plan Infrastructure Budget Through the Memory Shortage?
Use scenario-weighted budgeting: multiply each scenario’s cost projection by its probability, then sum them.
The formula is (20% × best case cost) + (60% × base case cost) + (20% × worst case cost). This gives you a probability-weighted projection rather than betting on a single outcome.
Your 2026 budget should plan for a 40-50% DRAM cost increase as the weighted average across scenarios for Q1-Q2 procurement. That’s not a worst-case buffer, it’s the expected value when you weight the scenarios properly.
Your 2027 budget models a 15-25% decrease from peak as normalisation progresses. The base case has this happening in Q1-Q2 2027, so your budget assumptions need to reflect partial-year relief depending on when you’re procuring.
Your 2028 budget returns to pre-shortage pricing trends with normal 5-10% market variation. By then the structural shortage is resolved and you’re back to standard procurement planning.
Build contingency reserves of 15-20% to buffer against worst-case scenario extension. This isn’t padding the budget arbitrarily, it’s accounting for the 20% probability that normalisation extends to late 2027 or early 2028.
Your planning horizon needs to extend 24-36 months minimum given the recovery timeline uncertainty. Annual budget cycles don’t work when the shortage spans multiple years. You need multi-year projections with quarterly review triggers based on actual price movements versus forecasts. For detailed multi-year budget assumptions and scenario-weighted planning frameworks, see our comprehensive budget planning guide.
Budget review triggers should be quarterly reassessment comparing actual price movements to forecast. If Q1 2026 comes in below the 55-60% forecast, reassess whether you’re tracking toward best case. If Q3 2026 relief is weaker than expected, reassess whether worst case is materialising.
The multi-year budget assumptions break down as 2026 surge year, 2027 recovery year, 2028 normalised year. Each year requires different procurement strategies and capital allocation decisions.
FAQ Section
When Will Cloud Prices Go Down After the AI Boom?
Cloud infrastructure costs driven by DRAM prices will decline from Q3 2026 onwards as memory costs ease, but expect a 6-12 month lag between component price relief and cloud provider rate reductions. Hyperscalers may absorb initial relief to recover margins before passing savings to customers. Base case: meaningful cloud rate reductions in Q1-Q2 2027.
Where Can I Find TrendForce DRAM Price Forecasts?
TrendForce publishes quarterly DRAM price forecasts at trendforce.com/research under the Memory & Storage category. Reports are typically released 2-3 weeks before quarter start. Free executive summaries are available; detailed data requires a paid subscription. Alternative: DRAMeXchange, which is TrendForce’s memory division, provides spot price tracking.
Where to Access IDC Memory Market Projections?
IDC semiconductor market research is available at idc.com/getdoc.jsp under Semiconductors & Enabling Technologies practice. Key reports include the Worldwide Semiconductor Supply Forecast (quarterly) and Memory IC Market Tracker (monthly). Requires IDC subscription; limited free insights are available via press releases and analyst blogs.
What Are Gartner’s Predictions for DRAM Supply Normalization?
Gartner forecasts align with the base case scenario for 2027 normalisation. Access research via gartner.com/en/research under Supply Chain and Semiconductors topics. Key research includes Predicts 2026: Semiconductor Supply Chain and quarterly Market Trends notes. Gartner clients access full reports; non-clients are limited to webinar summaries.
Will Server DRAM or Consumer DRAM Recover First?
Server DRAM prices will decline first in Q3 2026 but consumer PC memory will normalise faster in Q4 2026 due to lower priority and thinner margins. The server segment experiences a steeper initial surge (over 60%) but earlier relief as hyperscaler demand moderates. The consumer market sees a smaller surge (45-50%) but benefits from faster manufacturer reallocation once server demand eases.
Should I Stockpile Memory Components Before Q1 2026 Price Surge?
Stockpiling is justifiable if you have Q4 2025 pricing available, 12-18 month demand certainty, storage capacity, and capital budget. The breakeven analysis is upfront cost plus storage versus 55-60% Q1 surge exposure. Risks include component obsolescence as DDR5 specs change, warranty periods, and opportunity cost of capital. Best for high-volume users with $200K+ annual memory spend and predictable needs.
How Bad Is the DRAM Shortage Going to Get in 2026?
Q1 2026 represents peak severity with 55-60% QoQ contract price increases and potential allocation limits from distributors. Server DRAM may see temporary unavailability for spot buyers as manufacturers prioritise contract customers. Worst-case scenario: extended allocation through Q2 2026 before Q3 relief begins. SMB companies are most vulnerable as hyperscalers lock supply.
Can You Explain Why Memory Prices Keep Going Up?
Prices increase due to supply-demand imbalance where AI server buildout drives memory consumption faster than production capacity expands. Compounding factors include HBM prioritisation reducing commodity DDR5 output, fab utilisation limits preventing volume increases, new capacity delayed to 2030, and server memory prioritised over consumer. Unlike demand-driven cycles, supply constraints mean prices won’t ease until production physically increases or AI demand moderates.
TrendForce vs IDC vs Gartner – Which Forecast Should I Trust?
Use TrendForce for quarterly DRAM price specifics like the 55-60% Q1 2026 increase. Use IDC for device market context covering smartphone and PC demand impact. Use Gartner for enterprise IT planning guidance. TrendForce is most accurate for memory pricing trends given their Taiwan-based, memory-focused position. Reconcile forecasts by treating consensus as high confidence and outliers as scenario planning bounds. All three align on 2027 normalisation, which validates the base case.
What Percentage Production Increase Is Needed for Recovery?
Counterpoint forecasts that 20%+ production volume increases in 2026 are required to begin price relief, sustained through 2027 for normalisation. Historical recovery cycles show 15-20% annual production growth drives price stabilisation. The current shortage requires HBM-to-DDR5 reallocation (5-8% effective increase), efficiency gains (3-5%), utilisation optimisation (2-4%), and new capacity in 2030+ (15%+). The 2026-2027 relief is achievable through the first three mechanisms.
Where to Find Micron Fab Expansion Timeline Updates?
Micron investor relations at investors.micron.com publishes quarterly earnings with fab construction updates. Key documents include Capital Expenditure Guidance in earnings releases and annual Technology & Product roadmap presentations. CHIPS Act funding announcements via commerce.gov/chips provide policy context. Micron’s New York megafab timeline updates are typically disclosed in Q4 (November) earnings calls.
How Long Will the Memory Shortage Last?
Base case (60% probability): 18-24 months from Q1 2026 peak to Q1-Q2 2027 normalisation. Best case (20%): 12-15 months to Q4 2026. Worst case (20%): 24-30 months to late 2027-early 2028. Duration depends on AI demand trajectory (unknown) and production efficiency gains (moderately certain). Historical comparison shows the 2016-2017 shortage lasted 16 months and 2020-2021 lasted 14 months. The current cycle forecast is longer due to structural HBM competition.
