Citi: Raising memory supply forecasts; DRAM and NAND shortfalls expected to narrow in 2027

How much are the shortfalls expected to narrow as supply increases?

Taking into account memory makers’ third-quarter results and latest supply guidance, Citi lowered its forecast for the 2027 DRAM supply-demand shortfall from 8.7% to 3.8%, and its NAND shortfall forecast from 6.1% to 3.3%.
Citi expects DRAM bit supply to grow 24% year over year in 2027, above its previous forecast of 19%; NAND bit supply is expected to grow 22%, slightly above the previous forecast of 21%. Its demand growth forecasts for the two have been lowered from 30% and 29% to 28% and 26%, respectively.

On the supply side, Citi expects Samsung and SK hynix to increase DRAM bit supply by 22% and 28% respectively in 2027, driven by the ramp-up of 1cnm process capacity.
Demand is diverging sharply: Citi expects server DRAM demand to grow 53% year over year in 2027, while mobile DRAM demand falls 11%. Although supply growth guidance is above expectations, the current memory supply-demand fulfillment rate remains around 70%.

Consumer NAND demand is weaker than Citi expected, prompting the bank to lower its forecast for overall demand growth in 2027; meanwhile, suppliers are advancing process upgrades to meet growing demand for enterprise solid-state drives (eSSDs).
Citi expects eSSD demand to grow 52% year over year in 2027, supported in part by a 38% year-over-year increase in storage content per device.

Citi raised its forecast for year-over-year growth in DRAM capital spending in 2027 from 52% to 55%, and for NAND from 34% to 35%; it also expects the two to continue growing by 52% and 34%, respectively, in 2028.
Citi believes suppliers are seeking medium- to long-term earnings visibility through long-term agreements, and therefore expects shortages to persist. But if demand fails to materialize as expected after capacity expansion, excess bit supply could lead to inventory adjustments and price declines.