China’s 24 GW AI Buildout Tightens South Korean DRAM Supply

By Grace Kim

China has built at least 24 gigawatts (GW) of AI data-center capacity, with roughly 20 GW more under construction or in planning, tightening dynamic random access memory (DRAM) supply for global buyers.

Chinese companies already receive substantial volumes of DRAM and NAND flash, a nonvolatile storage technology, from Samsung Electronics and SK hynix. Yet as AI-service computing grows and data-center infrastructure expands, buyers are seen as having difficulty securing additional supply through existing distribution channels and short-term contracts.

The U.S. government’s restrictions on advanced-semiconductor exports to China prevent Samsung and SK hynix from shipping high-bandwidth memory (HBM), a key AI-accelerator component, into the country. Running large AI data centers still requires general-purpose DRAM for main memory, alongside HBM.

ChangXin Memory Technologies (CXMT), China’s domestic memory maker, is rapidly increasing DRAM production. Samsung and SK hynix nevertheless retain an edge in technology and production stability for the high-performance DDR and LPDDR needed by AI servers and other applications.

A server-company executive explained: “Unlike DRAM for PCs or smartphones, server DRAM runs 24 hours a day, and DRAM for AI data centers in particular requires greater stability. When you assess actual performance, there is a large gap between CXMT’s server DRAM and DRAM from Samsung and SK hynix.”

Chinese buyers want LPDDR and server DDR. DDR supports high-performance, large-capacity processing in PCs and servers but consumes substantial power. LPDDR, an ultra-low-power semiconductor standard, reduces power draw and heat in mobile and on-device systems and is also widely used in servers. The overlap puts smartphone and PC makers in competition with server companies for the same LPDDR supply.

Daishin Securities forecasts rising memory prices as server companies pay server-memory-comparable prices to secure LPDDR. Samsung and SK hynix need steady deliveries to Chinese cloud service providers (CSPs), the local equivalent of large technology companies, to secure market share in China. China and the United States have the world’s strongest demand for AI data-center construction.

How large is China’s AI data-center buildout?

A September SemiAnalysis report put China’s built AI data-center capacity at at least 24 GW, second only to the United States at 56 GW. Another 20 GW or so is under construction or in planning.

• ByteDance: building about 5.3 GW of capacity
• Alibaba: pursuing 3.9 GW
• Tencent: 2.4 GW
• Baidu: 1.1 GW
• Huawei: 1 GW

China Mobile, China Telecom and China Unicom are also actively building AI data centers.

Omdia said Yangtze Memory Technologies Co., Ltd. (YMTC), China’s largest NAND flash maker, recorded a 38.5% market share in mainland China in the second quarter, overtaking Samsung and SK hynix for the top spot. It was the first time a Chinese company had ranked first in the mainland memory-chip market.

How are five-year contracts changing allocation?

As buyers from U.S. companies to Chinese technology groups seek supply, long-term agreements (LTAs) have become commonplace. Earnings releases from three memory makers disclosed contracts with key customers. Supply agreements typically run five years, with pricing and advance payments varying from contract to contract.

Apple is reportedly the only member of the Magnificent Seven—Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta and Tesla—without an LTA. Industry observers expect Apple to sign one within the year.

Samsung said in its second-quarter earnings announcement that it had signed LTAs with the world’s top five data-center operators. It plans to allocate at least 70% of production capacity to LTAs. SK hynix said it had signed LTAs with at least 10 customers.

Kim Dong-won, head of research at KB Securities, said: “We estimate that Samsung Electronics has already secured through LTAs about 80% of its planned memory production for 2027. Competition among hyperscalers to secure supply is continuing for the remaining 20% of memory that is not under contract.”

What does this change for memory buyers?

They face tighter access to server DRAM and higher LPDDR prices as Chinese data-center operators compete with device makers. Multiyear LTAs shift allocation toward contracted customers; buyers without an agreement, including Apple on current reporting, must compete for uncontracted supply.