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Chip economics the memory cycle

Boom, bust, repeat.

Memory chips are a commodity with a two-year delay built in. Prices soar, everyone orders a fab, and the fabs all arrive at once.

The scene is a small model of that, running quarter by quarter. Bars are the price of memory; red means selling below cost. Blue arcs are fabs ordered in a boom, landing years later. Scroll to go on.

−37%DRAM sales, 2019
+93–98%DRAM contract prices, one quarter of 2026
88%of DRAM revenue at the top three, 2Q26

Figures from SIA with WSTS data, TrendForce and IC Insights, named in the chapters. The model is an illustration, not a forecast.

01 An old idea

The pig cycle.

Economists first saw this in pigs. In the 1920s, Mordecai Ezekiel in the US and Arthur Hanau in Germany noticed that pork prices swung in waves. Farmers bred more pigs when prices were high; the pigs came to market a season later, all together, and the price fell.

The cobweb model draws it. Supply decides this season from last season's price; demand sets the price for what arrives. Follow the white line.

0.88×

Below 1×, producers react less to price than buyers do, and the swings die out. Above 1×, they overreact, and the swings grow until something breaks. Definitions from Wikipedia's articles on the cobweb model and the pork cycle.

02 Concrete takes time

The two-year pig.

A pig takes months. A memory fab takes years. Three recent projects on one clock:

Micron broke ground in Boise in September 2022 and expects output in the second half of 2027. SK hynix planned 19 months to build M15X on a site it already ran. Micron bought a finished cleanroom in Taiwan to save time, and still expects shipments from its fiscal 2028.

2022
Producing0 of 3
Lit buildingoutput started or planned

Dates as the companies announced them (Micron, SK hynix) or as Tom's Hardware reported Micron's revised Boise schedule. Plans, not guarantees. TrendForce says a ready cleanroom saved Micron "over a year".

03 The model

Build your own bust.

Demand grows steadily, with one small surge early on. Each quarter, makers order capacity for the demand they expect when the fab is ready, and order more when prices are high. Change the two things that make memory cyclical.

2 yr
confident
Highest price0
Lowest price0
Busts below cost0
Price 1× isthe cost of making it

Set build time to zero and the surge is absorbed in a few quarters. Set it to two years with confident buyers of capacity and the same small surge rings for a decade. The model is ours: a textbook cobweb with a build delay, not a forecast of any real market.

04 What it cost

Twenty years of swings.

The real cycle is rougher than the model. From late 2007, DRAM makers sold below their cash costs; in 2008 they lost a combined $7 billion. Qimonda, number five in DRAM, filed for insolvency in January 2009. Elpida followed in 2012.

In the 2023 bust, Micron cut wafer starts by close to 30% and lost $5.83 billion in its fiscal year; SK hynix lost 7.73 trillion won at the operating line. Three years later, contract prices nearly doubled in a single quarter.

Sources: iSuppli via EDN (2008), Wikipedia (Qimonda, Elpida), SIA with WSTS data (2019), TrendForce (price moves), Micron and SK hynix results. Flag heights only separate the labels.

05 Survivors

Every bust takes someone.

A bust hurts everyone, but it kills the maker with the thinnest wallet. The survivors buy the pieces. Over thirty years, that turned a crowded market into three companies.

Counts from IC Insights, via Evertiq (May 2022): "from 20 in the mid-1990s to just six". Shares from TrendForce, 7 September 2026. The top-three total, 87.6%, is our sum of TrendForce's shares.

06 The AI twist

Is this time different?

AI chips need HBM, stacked memory that eats wafers. Micron has described a three-to-one trade: the wafer area for one bit of HBM would make three bits of ordinary DRAM. Every wafer turned amber below takes phones and PCs off the menu.

20%
Ordinary DRAM bits0
All DRAM bits0

Arithmetic from the three-to-one ratio, as TrendForce reported Micron's remarks in December 2025. IDC wrote that "this time is different"; Morningstar, as Business Insider reported it, that the AI boom cannot stop the cycle. TrendForce expects DRAM supply to stay tight into 2027 and NAND prices to come under pressure. This page takes no side.

07 Where to go next

The lag is the lesson.

Memory is not unusual in having cycles. It is unusual in how long the lag is and how much money sits in the fab while it waits.

Every figure comes from a publisher named below. Where a figure is a forecast or a plan, the page says so.