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Server Prices Surge Up to Fourfold as AI Demand Squeezes Memory Supply

Credited to Business Korea · businesskorea.co.kr · 8h ago

Gartner Warns DRAM and NAND Shortages Will Pressure Corporate IT Budgets Through at Least 2028

The price of a single server has surged as much as fourfold in just one year, putting corporate information technology (IT) infrastructure investment under severe pressure. The increase reflects a deepening shortage of general-purpose memory as artificial intelligence (AI) data centers absorb vast quantities of high-bandwidth memory (HBM) and high-capacity DRAM.

According to market research firm Gartner’s report, Server and Storage Cost Outlook Through 2027 Amid the AI Boom, equipment price increases and delivery delays stemming from shortages of DRAM and NAND flash are expected to persist until at least 2028. Gartner warned that AI-driven cost inflation is putting such severe pressure on corporate infrastructure budgets that equipment expansion and replacement projects could be canceled.

The cost structure of servers, once dominated by processors, is rapidly shifting toward memory. Memory accounted for 39% of server manufacturing costs in 2015, but its share has risen to 59% this year. Gartner projected that if the trend continues, memory could account for two-thirds of total manufacturing costs even in conventional, non-AI servers by 2030.

The primary driver of the price surge is explosive growth in memory demand for AI accelerators. As major technology companies expand their AI infrastructure, semiconductor manufacturers including Samsung Electronics and SK Hynix are concentrating production on higher-margin HBM and high-capacity enterprise products. This has reduced the relative supply of general-purpose memory used in PCs, smartphones and conventional servers. DRAM prices are estimated to rise 237% this year, while NAND flash prices are projected to jump 293%.

The shortage is expected to take considerable time to resolve. Although Samsung Electronics, SK Hynix and Micron are building new production facilities, equipment installation and yield stabilization typically take two to three years. Gartner expects current capacity expansion efforts to translate into actual supply increases no earlier than the middle to latter part of 2027.

Even an increase in supply is unlikely to bring server prices down immediately. Server and storage manufacturers may maintain elevated selling prices to protect their profitability. Gartner expects DRAM prices to begin stabilizing in the first half of 2028 but does not anticipate server prices quickly returning to their 2025 levels.

The price shock originating in the server market is also showing signs of spreading to consumer electronics. Manufacturers of laptops, smartphones and gaming consoles, which all rely on DRAM and NAND flash, may have little choice but to pass higher component costs on to consumers. Gartner described the phenomenon as “memoryflation,” warning that higher prices could prompt consumers to delay replacing their devices and weaken demand through 2028.

Companies also need longer-term strategies to manage rising costs. Rather than rushing into long-term supply contracts, Gartner recommended adjusting equipment replacement cycles and extending the service life of existing servers. SK Group Chairman Chey Tae-won also warned in March that semiconductor wafer shortages could persist through 2030, suggesting that supply chain instability may continue for years.