SK Hynix Inc.’s 12-layer HBM3E memory chip displayed at a semiconductor exhibition in Seoul, South Korea.
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Chipmakers and analysts have warned that a memory chip shortage could hit the consumer electronics and auto industries next year as companies prioritize huge demand from the artificial intelligence boom.
The CEO of Semiconductor Manufacturing International, China’s largest contract chip maker, reportedly said on an earnings call Friday that customers are holding off on ordering other types of chips used in his products due to concerns about memory chip shortages.
“People don’t have the courage to place too many orders in the first quarter of next year,” Zhao Haijun, co-CEO of SMIC, said at an earnings call. “No one knows how much memory (chips) is actually available, or how many phones, cars, and other products it can support.”
Analysts say these supply constraint concerns come as chipmakers focus more on advanced memory chips used in artificial intelligence computing and less on the production needed for consumer products.
Dan Nystedt, vice president of research at TriOrient, told CNBC: “The ramp-up in AI is certainly consuming much of the available chip supply, and 2026 is likely to be much larger than this year in terms of overall demand.”
AI servers primarily run on processors from chip designers such as: Nvidia. These AI processors rely heavily on a type of memory known as high-bandwidth memory (HBM). This has proven to be highly advantageous for memory companies such as: SK Hynix and micron to pursue.
Nystedt said memory suppliers are chasing this AI demand as much as possible thanks to usually high profit margins, noting that AI server companies are willing to pay top dollar for premium chips.
“This could be very detrimental to PCs, laptops, consumer electronics and cars that rely on cheap memory chips,” he said.
But perhaps the bigger problem is that the memory industry suffered a severe recession in 2023 and part of 2024, leading to a lack of investment in the industry. “They are currently building new production capacity, but it will take some time to get it up and running.”
wider impact
Faced with supply constraints, memory companies are reportedly raising chip prices.
This was reported by Reuters just last Friday. samsung electronics secretly increased the price of some memory chips by 60% compared to September. Samsung did not respond to a request for comment.
MS Hwang, research director at Counterpoint Research, told CNBC that “rising memory prices and shrinking availability are raising concerns about production bottlenecks.”
“Supply tightness is already impacting low-end smartphones and set-top boxes, but we think the risks could extend further,” he added.
Fan warned that China is “feeling the crisis more acutely” because of its heavy reliance on low-cost equipment, but supply constraints are a global problem.
In the meantime, consumers may be paying the price for lack of memory.
Technology-focused market intelligence and consulting firm TrendForce predicted in a report on Monday that the memory industry is beginning a “strong price increase cycle” that could force downstream brands to raise retail prices and increase pressure on the consumer market.
As a result, the research group predicted increased price and demand pressure on consumer products such as smartphones and notebooks.
