The 2028 capacity wave is memory's real fear — but the makers say supply stays tight
A November 14 Snowshagal note says tool move-in at SK hynix, Micron and Samsung fabs lands in 2027 but meaningful output only ramps in 2028 — while the makers say the shortage could last through 2030 and the shares trade at about 3x forward earnings.
The News
A November 14 research note from Snowshagal has put a date on the question hanging over memory stocks: when does the new wave of chip-making capacity actually arrive? Its answer is 2028, not 2027. The note says tool move-in — installing the machines that make chips — at SK hynix's Yongin Fab 1, Micron's Idaho Fab 1 and Samsung's Pyeongtaek P5 is expected in the first three quarters of 2027, according to Hana Securities. But installing and qualifying the full toolset takes roughly a year, so meaningful output only ramps in 2028, and DS Securities expects capacity growth to peak that year.
That timing is the tension at the heart of the note. Analysts expect operating profit at the two leading Korean memory makers to rise roughly 56–68% in 2027 from 2026 levels, yet their shares trade at roughly three times 12-month forward earnings — a low price for fast-growing profits. The market, in other words, is already pricing in the 2028 supply. The profit-growth and valuation figures are broker estimates cited in the Snowshagal note — DS Securities and Eugene Securities for the profit forecasts, SK Securities for the P/E ratios — not company guidance.
The makers push back. Micron said on its September 30 earnings call that supply and demand could tighten further in fiscal 2027 and 2028 compared with 2026. SK hynix has said demand exceeds supply through 2030. And TrendForce expects new fabs to make a meaningful contribution to supply only from 2028 onward, with the balance in NAND flash — the memory used in phones and solid-state drives — easing from the second half of 2027. The Snowshagal note itself concludes that more capacity does not automatically mean a glut: whether there is a surplus depends on demand, which the available data cannot yet establish.
The fear showed up in Friday's prices. Micron fell 2.52% to $778.31, SK hynix closed in Seoul at ₩1,216,000, down 3.03%, and Samsung closed at ₩206,000, down 0.96%. Memory stocks fell again on Friday as the selling set off by Nvidia's chief executive resigning spread across AI hardware. October producer prices came in softer than expected (+0.3% month on month, +6.5% year on year, below consensus), so the pressure came from the Nvidia-led selloff, not from hot inflation data.
The 2028 wave is real — but so is the shortage until it arrives.
Why It Matters
The 2028 date matters because it reframes the selloff. If the capacity wave does not arrive until 2028, the shortage that has pushed memory prices up through 2026 has at least another year to run — and the profits the Korean makers are forecast to earn in 2027 would arrive before the new supply does. That is why the note's authors think the market may be pricing in a glut too early.
The low valuation is the other half of the story. Trading at roughly three times forward earnings means investors are paying very little for each dollar of expected profit — a sign they believe the profit surge will not last. If the makers are right and supply stays tight through 2028, those earnings could hold up longer than the market expects, and today's prices would look cheap in hindsight. If the market is right, the 2028 wave arrives on schedule and prices fall as new supply floods in.
The fab timeline explains why neither side can be sure yet. A fab is a factory that makes chips, and 'tool move-in' is the stage when the production machines are installed. Even after the tools arrive, they must be tested and qualified — a process that takes about a year before the factory produces chips in volume. So a 2027 tool move-in means 2028 output, and any delay in construction or qualification pushes the wave further out. Demand is the wildcard: AI data centres keep buying memory faster than anyone forecast, and nobody can yet say whether that demand will still be growing when the new fabs switch on.
Analyst's Take
Our call is Mixed. The 2028 timeline is genuinely good news for memory makers: it says the shortage — and the high prices that come with it — has another year to run, and the makers' own words back that up. But the market's fear is not irrational either. A wave of new fabs is really being built, capacity growth really is expected to peak in 2028, and the shares' low valuation shows investors are already braced for it. Both sides have evidence; neither has proof.
What to watch: Micron's December fiscal first-quarter report is the next test of whether memory pricing holds, and any update on fab construction schedules — from SK hynix's Yongin site, Micron's Idaho plant or Samsung's Pyeongtaek P5 — will move the 2028 date in one direction or the other. The demand side matters just as much: if AI spending slows, the glut arrives early; if it keeps growing, the shortage lasts longer than even the makers expect.
Reader poll: Tight through 2028, Glut by 2028, or Too early to call — which is your call?
Are you bullish or bearish on this story?
By The Numbers
FAQ
What is a fab?
A fab is a factory that makes computer chips. Building one takes years and billions of dollars, and once the machines are installed they must be tested and qualified before the factory can produce chips in volume.
What is tool move-in?
Tool move-in is the stage when the production machines — the 'tools' — are installed in a new fab. It is a milestone, but not the finish line: installing and qualifying the full toolset takes roughly a year before the fab produces chips in meaningful volume.
Why does new capacity scare memory investors?
Memory chips are a commodity: when supply grows faster than demand, prices fall, and memory makers' profits fall with them. Investors worry that a wave of new fabs arriving in 2028 will flood the market just as today's shortage — and today's high prices — end.
What does forward earnings mean?
Forward earnings are the profits analysts expect a company to make over the next 12 months. A share price of about 3x forward earnings means investors are paying about $3 for each $1 of expected profit — a low price that signals doubt the profits will last.
Why is the 2028 date good news for the makers?
If new supply does not arrive until 2028, the shortage that has pushed memory prices up through 2026 has at least another year to run. The makers would keep earning high prices — and high profits — while the new fabs are still being built and qualified.
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Source: Snowshagal