The memory shortage brought on by strong demand from all things artificial intelligence has companies looking for ways to mitigate rising prices and that trend doesn't appear to be slowing.
Samsung Electronics announced it has signed a memorandum of understanding to expand its relationship with chip designer Broadcom across memory and semiconductor technologies. The companies expect the collaboration to be worth more than $200 billion over the next five years through 2030.
Broadcom stock rose 2.1% to $389.74 in premarket trading on Monday after ending Friday down 2.7%.
Memory is top of mind and the companies said Saturday that part of the partnership will see them collaborate on the supply of next-generation high-bandwidth memory products for AI.
The next five years of collaboration will combine Broadcom's expertise in designing application-specific integrated circuits (ASICS), or chips for specific AI use cases, with Samsung's robust manufacturing capabilities on both memory and semiconductor tech.
"AI is driving unprecedented demand for tightly integrated semiconductor technologies spanning memory, logic, and advanced packaging," Young Hyun Jun, CEO of the device solutions division at Samsung Electronics, said in a press release.
J.P. Morgan analyst Harlan Sur on Monday wrote the firm believes Samsung will continue to be Broadcom's main supplier of high bandwidth memory. Sur estimated that over the length of the collaboration, Broadcom's purchase mix from Samsung will be about 90% to 95% memory and between 5% and 10% foundry wafer.
This could be a big win for Broadcom. J.P. Morgan estimated the collaboration implies more than $1 trillion in cumulative Broadcom AI revenue through both ASICS and networking.
Demand for memory has been growing across every category of enterprise compute, which has brought supply scarcity along surging memory prices.
Morgan Stanley analyst Stephen Byrd on Monday wrote that "longer-term concerns that memory shortage will intensify in 2027 and again in 2028 are still as strong as ever."
"There isn't enough memory vs. AI requirements, and we just don't see that changing. Conversations with our purchasing contacts in the date center space show no signs of shortages abating," Byrd wrote.
Write to Kit Norton at kit.norton@barrons.com
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July 27, 2026 08:19 ET (12:19 GMT)
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