Samsung Electronics is reportedly restructuring its commodity DRAM processes at its Hwaseong campus in South Korea. The Seoul Economic Daily reported on July 27 that the company is consolidating equipment and adding production lines at the Hwaseong Complex 1 (H1) site. Industry sources expect production capacity by the end of 2026 to increase by roughly 15% compared to the start of the year. As industry-wide production allocation prioritizing AI server memory prolongs shortages of commodity products used in smartphones and PCs, this represents an attempt to boost supply without building a new fab from scratch.
Around the same time, reports have emerged that Apple is considering deals with Chinese memory manufacturers. However, Samsung has not officially announced the Hwaseong restructuring plan, and the 15% figure is itself an industry estimate. It remains unclear who will receive the additional output, and there is no explanation suggesting the move was initiated to retain Apple as a customer. This restructuring is reported to be an effort to shorten inter-process logistics for commodity DRAM and quickly increase production capacity using existing equipment.
Consolidating End-Fabs into Hwaseong H1
According to the Seoul Economic Daily, Samsung's Memory Manufacturing Technology Center formed a task force in July 2026 and began building end-fab facilities for commodity DRAM at Hwaseong H1. The plan reportedly involves relocating end-fab equipment currently dispersed across Hwaseong Complex 2 (H2) and the Cheonan campus to H1, while using the freed-up space to add new production lines.
End-fab refers to the final stage of the wafer front-end process, where memory elements such as transistors produced in the main fab are connected. Because Samsung has focused on expanding equipment centered on the main fab at Hwaseong, part of the final process stages had been handled in Cheonan. This required time to transport wafers between sites, creating a constraint when trying to increase commodity DRAM supply.
At H1, unused clean rooms remain after older-generation memory lines were removed. The newspaper reported that Samsung plans to use this space as a new end-fab site. Compared to constructing a new building, this approach can reduce both investment costs and construction time while bringing processes closer together. It is also expected to improve transport efficiency by allowing wafers to be sent in bulk to back-end production lines.
The 15% figure is not an officially announced production target from Samsung. Industry sources interviewed by the newspaper estimated that commodity DRAM production capacity by the end of 2026 would increase by about 15% compared to the start of the year. This applies specifically to commodity product capacity resulting from the Hwaseong process restructuring, not to a 15% increase in Samsung's overall DRAM output.
Server-Priority Allocation Has Thinned Commodity Supply
Samsung's Q1 2026 quarterly report states that supply shortages are likely to continue as memory manufacturers prioritize production for servers. It also noted that AI infrastructure investment is strengthening demand for server DRAM and SSDs, while rising memory prices in smartphones and PCs may be dampening demand for finished products. The Hwaseong restructuring can be understood as an effort to compensate for the commodity supply reduction caused by server-priority allocation through greater efficiency in existing equipment.
Samsung estimated its global DRAM market revenue share for the quarter at 38.4%, exceeding the 34.0% figure the company reported for full-year 2025. Both quarterly revenue and operating profit in the memory business reached record highs. The company explained that increasing high-value-added AI products despite limited supply, combined with overall market price increases, boosted profitability.
Meanwhile, according to the Seoul Economic Daily, prices for DDR4—a representative commodity DRAM product—rose more than 80% in the first half of 2026 alone. The more wafers are directed toward profitable server products, the more pressure mobile and PC manufacturers face on both procurement prices and available supply volume. Consolidating processes allows commodity capacity to be added over a shorter period, without waiting for a new fab to be completed.
However, production capacity is not the same as actual shipment volume. Only once equipment relocation and new line startups progress by year-end, and the increased capacity is allocated to commodity production, will this be reflected in the quantities customers actually receive. This report does not disclose monthly wafer input volumes, customer-specific allocations, or shipment start dates.
Apple's China Procurement: Negotiations Before Any Decision
Apple itself acknowledges memory supply and pricing as a business risk. In its Form 10-Q for Q2 fiscal year 2026, the company noted that industry-wide supply constraints and rising costs for components including DRAM and NAND could pressure revenue and gross margins. While Apple has not disclosed specific suppliers, its official filings confirm that memory shortages have a direct impact on the company's profitability and product pricing.
Bloomberg reported on July 1 that Apple is negotiating with ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) regarding memory for products sold in China. These discussions are ongoing, and no contract has been finalized. If Chinese manufacturers are added as candidates, Apple could diversify its supply sources and gain additional leverage in price negotiations with existing memory suppliers.
CXMT was included in the U.S. Department of Defense's 1260H list, published on June 8, which designates it as a "Chinese military company." However, the 1260H list is a designation framework, and inclusion alone does not constitute a blanket ban on purchases by private companies. Related regulations described under the Department of Defense's Project CLEAR apply specifically to contracts with the Department of Defense and lobbying relationships. While uncertainty remains for Apple regarding politics and future regulation, describing the current situation as "U.S. regulations prohibit purchasing Chinese-made memory" would not be accurate.
Samsung's Hwaseong restructuring and Apple's negotiations with Chinese suppliers are unfolding in parallel within the same tight memory market environment. The former is a production-side response aimed at quickly increasing commodity DRAM supply, while the latter is a buyer-side response aimed at diversifying procurement sources. Without disclosed volumes or contract terms specific to Apple, it cannot be concluded that the 15% capacity increase is a measure to prevent Apple from switching suppliers.
Can the Year-End 15% Be Converted into Actual Shipments?
Samsung has stated its policy of focusing DRAM and NAND sales on AI products through the second half of 2026. At the same time, the Hwaseong process restructuring is intended to meet demand for commodity products. If capacity increases as reported, this would represent an operational approach that maintains profit opportunities from AI products while easing shortages for mobile and PC products using existing equipment.
Three key factors will determine the outcome. First, whether equipment relocation and line additions at H1 are completed by year-end. Second, whether the approximately 15% capacity increase compared to the start of the year is actually achieved. Third, whether the increased capacity is allocated to commodity product shipments. Regarding Apple, it is necessary to separately monitor whether negotiations with CXMT and YMTC progress toward actual contracts.
What is increasing at Hwaseong, for now, is projected production capacity. Whether that capacity reaches approximately 15% by the end of 2026, and whether the increase translates into actual commodity DRAM shipments, will serve as the benchmark for evaluating the effectiveness of this restructuring. The impact on Apple's procurement sources must be judged separately, once customer-specific allocations and contract details become clear.