NAND memory supply could exceed demand in 2027 and alleviate shortages during the second half of the year

TrendForce expects the NAND Flash memory market to remain marked by shortages through 2026, but begin to regain balance throughout 2027. According to its July monthly update, Supply could finally exceed demand in the second half of 2027reducing restrictions that this year are being driven by the growth of artificial intelligence and the limited expansion of capacity.

The firm estimates that the market will close 2026 with a supply deficit of between 4% and 5%. Manufacturers are primarily turning to process migrations to increase production, as available factory space remains limited and much of the investments are concentrated in DRAM. Therefore, additional NAND capacity will continue to arrive gradually and not through an immediate expansion of new plants.

Suppliers in South Korea, the United States and Japan would continue to modernize existing lines and selectively expand production. At the same time, Chinese manufacturers could more strongly increase their capacity when new equipment comes into operation. TrendForce estimates that China could get closer 19% of global NAND bit productiongaining weight within a market still dominated by a small group of companies.

Servers will continue to drive demand, but mobile phones and laptops will slow down the market

The main support for the demand will come from the servers. New Intel and AMD platforms should accelerate shipments during the second half of 2026, increasing annual server deliveries by 17%. In 2027, the commercialization of agentic AI applications and greater availability of processors and memory could eliminate bottlenecks, so server market growth would remain strong.

However, the situation is very different in consumption. TrendForce expects global smartphone production to fall by 15% to 20% in 2026 and decline again in 2027, albeit more moderately. Premium mobile phones with artificial intelligence will sustain part of the demand, but price sensitivity will limit the recovery. With all of this on the table, manufacturers will continue to tweak memory, storage, and other components.

This scenario had already led to anticipating visible cuts in phones, with the possible return of microSD, 90 Hz screens or cheaper materials to compensate for the cost of memory. Laptops would not provide much upward pressure either, as after falling around 10% in 2026, their shipments could decline slightly again in 2027.

Although servers already account for more than 40% of total NAND bit demand, smartphones and laptops still account for close to another 40%. That distribution explains why weak consumption may be enough to relax the market even as data centers continue to grow. TrendForce believes that the balance will depend on both the rise of AI and the lack of recovery in consumer electronics.

The forecast points to an improvement, but the market remains surrounded by uncertainty

The TrendForce forecast provides an indicative date for relief, but does not eliminate uncertainty. In May, Micron warned that shortages will continue beyond 2026 in HBM, DRAM and NAND. Both readings are not necessarily incompatible, although they show that forecasts can change depending on the type of memory, demand and the actual production rate.

There are also factors that are difficult to anticipate. For example, further acceleration of artificial intelligence could absorb the additional capacity before it reaches the consumer market. Likewise, an unexpected recovery in mobile phones and laptops would alter current estimates. Added to this are node changes, manufacturing yields and the priority that each supplier gives to DRAM or HBM over NAND.