Citi Forecasts Worsening Memory Chip Undersupply Through 2031, Citing AI Demand

The global memory chip market is projected to face a worsening undersupply through 2031, fueled by explosive demand from artificial intelligence applications, according to a new forecast from Citi. In a research note published Monday, analysts at the bank identified the rise of 'continual learning' in AI as a primary driver that will significantly outpace supply growth in key memory segments.

The AI Catalyst

Citi expects 'continual learning' to become a central theme in AI development over the next five years. This approach, which constantly reinforces AI models by training them on new tasks and knowledge, creates a persistent and growing need for memory.

This process requires both frequent model updates and access to vast archives of previously acquired data. As a result, it is expected to drive significant demand for high-performance memory like HBM, server DRAM, and high-capacity storage such as enterprise solid-state drives (eSSDs).

Deepening Supply Deficits

The investment bank's analysis points to a significant structural imbalance developing between supply and demand for both DRAM and NAND memory chips. Citi's forecasts show demand growth consistently exceeding the expansion of supply.

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• DRAM: Global demand is forecast to grow 30% in 2027 and 35% in 2028, while supply is expected to grow by only 19% and 22%, respectively. This results in a projected supply-demand deficit of -8.7% in 2027, worsening to -9.7% in 2028.
• NAND: Demand is expected to rise 29% in 2027 and 33% in 2028, outpacing supply growth of 21% and 25%. Citi projects the NAND supply-demand ratio to hit -6.1% in 2027 and -5.5% in 2028, a sharp increase from the -0.8% deficit forecast for 2026.

Market and Sector Impact

The demand surge is particularly acute for specialized memory used in AI accelerators. Citi forecasts that High Bandwidth Memory (HBM) bit demand will increase 62% year-over-year in 2027 and another 69% in 2028.

In its note, Citi identified several companies as top picks positioned to benefit from this trend. The list includes memory producers such as Samsung Electronics, SK Hynix, and Micron. For the semiconductor equipment and materials sector, the bank highlighted firms including Applied Materials (AMAT) and Lam Research.