Contents

In 2025, DDR4 briefly surpassed DDR5 in profitability and pricing, driven by supply shifts, early EOL transitions, and speculative demand—signaling a structural shift in the DRAM market under AI-driven demand.

Omdia view

Executive summary

  • DRAM suppliers’ capacity shift toward high bandwidth memory (HBM) has tightened conventional DRAM supply, leading to sharp changes in price and profitability dynamics.
  • A notable development in 2025 was DDR4 profitability at times exceeding that of DDR5, reversing the expected economics of the technology transition. This dynamic prompted divergent supplier responses and temporarily extended the market relevance of legacy DRAM.
  • Early end-of-life (EOL) announcements for DDR4 and LPDDR4/X further disrupted customers still dependent on legacy DRAM, triggering speculative demand that drove reverse premiums in both spot and contract markets.
  • Looking ahead, DDR4’s recent strength is unlikely to be sustained. With suppliers extending EOL timelines and reintroducing production support—combined with speculative buying in late 2025 and weakening real demand as prices surged—DDR4 will stabilize and peak in 1H26.
  • More broadly, this episode reflects a structural transformation in the DRAM industry, where AI-driven demand and disciplined supply are reshaping market fundamentals and establishing a new baseline for industry behavior.

Legacy DRAM resilience: What DDR4 and LPDDR4/X tell us about the DRAM market shift

From HBM shift to legacy DRAM disruption

Over the past two years, DRAM suppliers have steadily increased their capacity allocation toward HBM, tightening availability for conventional DRAM. Even as DDR5 became the mainstream product, its price premium over DDR4 remained above 50% through 1H25, leaving many general-purpose server buyers still reliant on DDR4 for cost reasons.

For LPDDR5/X, the premium was narrower than in the server segment but remained in the double digits. Chinese smartphone makers, supported by favorable sourcing from CXMT, continued to use LPDDR4/X for a large share of mid- to low-end models.

This balance shifted when suppliers announced early EOL plans for DDR4 and LPDDR4/X. Customers dependent on legacy DRAM faced significant challenges, as mode migration requires systems-on-chip (SoCs) with DDR5/LPDDR5/X compatibility, along with corresponding system redesign, validation, and qualification cycles. The following processes are not trivial:

  • Mobile SoCs follow a 9–12-month design cycle, requiring architectural adjustments to support LPDDR5/X.
  • System-level integration, including power management, printed circuit board (PCB) design, validation testing, typically adds another 6–9 months to the supply timeline.

Taken together, migrating from DDR4/LPDDR4X to DDR5/LPDDR5X often requires at least 12 months, and in many cases, significantly longer. With limited short-term flexibility, speculative demand surged, and within a quarter, spot prices flipped to reverse premiums, followed shortly by contract pricing.

Profitability inversion and supplier responses

In the server DRAM segment, DDR5 profitability has stood at around 50%. Yet in 2025, DDR4 profitability has now surpassed DDR5—a surprising reversal of expected economics.

Samsung, SK hynix, and CXMT responded by extending legacy DRAM support through 2026, while Micron adhered to its original EOL timeline. This divergence underscored the balloon effect in the DRAM market: even small shifts in product mix or supply allocation can trigger outsized price movements.

AI as the structural game-changer

While the immediate disruption can be linked to early EOL announcements, the deeper underlying driver is the rise of AI. Suppliers are prioritizing high-margin, capacity-intensive products, such as HBM, reshaping allocation strategies and reducing flexibility for conventional DRAM.

Historically, the DRAM industry followed 2–3-year cycles closely tied to macro demand in PCs and smartphones. When profitability declined, suppliers cut investment; when demand recovered, prices and margins rebounded. Today, with artificial intelligence (AI) as a dominant megatrend, these cycles have shortened dramatically.

Figure 1: The DRAM cycle: Past vs. current and future Figure 1: The DRAM cycle: Past vs. current and future

Source: Omdia

Market volatility now reflects hyperscaler purchasing and inventory patterns, resulting in more frequent and sharper mini cycles.

Despite record-high investment levels, supply growth remains structurally constrained. Increased capital spending is absorbed by advanced-node transitions, extreme ultraviolet (EUV) adoption, and the heavy wafer demand of HBM. As a result, wafer output growth for commodity DRAM remains limited.

The combination of sustained AI-driven demand and disciplined supply has established a new market baseline: structurally tight supply, upward profitability trends, sharp price hikes, and recurring mini cycles.

Figure 2: DRAM ASP QoQ (%) Figure 2: DRAM ASP QoQ (%)

Source: Omdia

Conclusion: Legacy DRAM as a structural signal

The recent dynamics surrounding DDR4 and LPDDR4/X are not simply the result of shortages or delayed migration. They represent a broader structural signal that the DRAM industry has entered a new phase.

This structural shift in the DRAM industry can be understood across three key dimensions:

  • Demand: Persistent AI investment is reshaping the consumption profile of DRAM across servers, mobile, and emerging applications.
  • Supply: Even with record-high capital expenditures, capacity expansion has not kept pace, as advanced-node transitions and HBM wafer demand constrain effective output.
  • Cycles: The legacy DRAM episode demonstrates how shorter, AI-driven mini cycles now dominate industry behavior, replacing the longer PC- and mobile-driven cycles of the past.

In short, the resilience of legacy DRAM highlights a fundamental shift: the DRAM market is no longer governed by traditional cyclical patterns but by structural dynamics rooted in AI demand and disciplined supply. This new baseline is likely to continue shaping industry profitability and investment strategies in the years ahead.

At the same time, near-term dynamics suggest that the recent DDR4 surge is not sustainable. With suppliers already extending EOL plans and providing additional production support—and with speculative demand inflating prices in late 2025 while real consumption is declining—DDR4 is likely to stabilize and peak in 1H26. This new baseline of constrained supply and AI-driven demand will continue shaping industry profitability and investment strategies over the next several years.

Appendix

Author

Lino Jeng, Senior Principal Analyst, DRAM

[email protected]