The AI Memory Crunch: What's Happening?
The artificial intelligence revolution is creating an unexpected crisis in the technology industry. While AI systems demand increasingly sophisticated memory chips, traditional computers and smartphones are facing severe shortages of the regular memory components they need to function.
Memory chips come in two primary varieties: those that help computers process information and those designed for data storage. Currently, semiconductor manufacturers are concentrating their efforts on developing advanced memory specifically for AI applications because these products offer greater complexity and significantly higher profit margins.
This strategic shift means companies are producing fewer conventional memory chips that remain essential for everyday devices like personal computers and mobile phones.
Tech Giants Sound the Alarm
Dell Technologies is experiencing unprecedented challenges in securing adequate memory supplies. In an official statement to Bloomberg, Dell CEO Jeff Clarke revealed that the company has never witnessed "costs move at the rate they are today."
The computer manufacturer is struggling to obtain sufficient DRAM supplies, including both high-bandwidth memory required for AI systems and standard memory used in conventional personal computers. The shortage extends to hard drives and NAND flash memory as well. Clarke emphasized that "the cost basis is going up across all products," indicating widespread price pressure throughout their product lineup.
Dell plans to adjust its product configurations and options, but has explicitly warned consumers that they will feel the impact directly. The company may implement price increases to manage these rising costs. Complicating matters further, US sanctions have restricted capabilities of new Chinese chip companies, thereby reducing overall supply in the market.
Hewlett-Packard is confronting similar challenges. HP CEO Enrique Lores predicted that the second half of 2026 will be particularly difficult for the industry. The company intends to raise prices when necessary to manage the situation.
"For the second half, we are taking a prudent approach to our guide, while at the same time we're implementing aggressive actions," Lores told Bloomberg. HP's strategy includes sourcing memory from additional suppliers and designing products that use less memory internally. The company disclosed that memory components represent between 15% to 18% of the total cost of a typical PC, highlighting the significant impact these shortages could have on final product pricing.
Memory Manufacturers Thrive Amid Shortage
While computer manufacturers struggle with supply constraints, memory chip producers are experiencing remarkable financial success. Stock prices for industry leaders Samsung, SK Hynix, and Micron have surged as supplies diminish across the market.
SK Hynix has already sold its complete memory chip inventory for the upcoming year, while Micron anticipates shortages will persist into 2026. SK Group chairman Chey Tae-won cautioned that "we have entered an era in which supply is facing a bottleneck," underscoring the systemic nature of the problem.
Japan's Kioxia has also seen its stock value increase significantly following its public listing. Analyst Sanjeev Rana explained to Bloomberg: "Everything that's related to memory — advanced or conventional — is in very strong demand and supply is lagging."
The memory shortage may eventually affect logic chips used in AI systems as well. Some customers might halt orders if they cannot secure sufficient memory chips to complement their AI processors. SMIC, China's primary chipmaker, has warned that these shortages could disrupt automobile and electronics production by 2026.
Several technology companies are already responding to the crisis. Xiaomi has increased smartphone prices, while Lenovo and Asus have accumulated substantial component inventories. In contrast, Apple maintains that it is effectively managing its cost structure despite the challenging market conditions.
