In an unprecedented move highlighting a severe global crisis, tech giant Apple has stationed its key purchasing executives in hotels in South Korea, right next to the factories of memory chip makers Samsung and SK Hynix. This desperate measure aims to secure long-term supplies of vital memory chips for future iPhones, as prices have skyrocketed by as much as 300% since mid-2025.
Tech Giants Set Up Camp in a Semiconductor Hotel Boom
According to reports from The Korea Economic Daily, Apple's procurement teams have taken up semi-permanent residence in hotels located in Hwaseong, Gyeonggi Province. These locations are strategically chosen for their proximity to the semiconductor manufacturing plants of Samsung and SK Hynix. The primary goal is to negotiate two- to three-year contracts specifically for LPDDR5X RAM, a crucial component for upcoming iPhone models.
Apple is not facing this challenge alone. Other technology behemoths, including Dell, Google, and Amazon, have also established extended stays for their executives in the same region. This collective corporate migration has sparked what local media describes as a "semiconductor boom" for South Korea's hospitality industry. Business hotels, such as the Doubletree and Nine Tree in Pangyo, are witnessing surging demand for long-term accommodations from these global tech emissaries.
However, the memory chip manufacturers currently hold all the leverage. Both Samsung and SK Hynix are reportedly sticking to their strategy of offering only short-term, quarterly contracts. They anticipate that memory chip prices will continue their upward trajectory through 2027. In a telling sign, the companies are already supplying server DRAM for the first quarter of 2026 at prices 60-70% higher than those in Q4 2025.
AI Demand Creates a Perfect Storm for Memory Shortage
The root cause of this severe shortage is the explosive, unrelenting demand from the artificial intelligence (AI) sector. AI companies are voraciously consuming a specialized type of memory called HBM3E (High Bandwidth Memory 3E). This advanced memory is built by stacking DRAM chips vertically and is essential for powerful AI accelerators.
For instance, a single Nvidia H200 AI accelerator requires eight of these HBM3E units. The demand surge intensified after Chinese customers, having received US export approval, placed new orders worth approximately $3 billion. This massive production priority for HBM3E has directly led to severe shortages in the supply of standard server and mobile DRAM, which is used in smartphones and computers.
Consequences: Soaring Costs and Potential iPhone Price Hikes
The financial impact on device makers is staggering. A 12GB memory module that Apple needs now costs the company around $70 per unit. This represents a jaw-dropping 230% increase from the prices seen in early 2025. Industry analyst Jukan notes that memory now constitutes more than 20% of total smartphone production costs, a significant jump from about 15% just a few quarters ago.
This crisis forces smartphone makers into difficult choices. One potential consequence for Apple is that it may have to either increase the price of its future iPhone models or consider shipping devices with less RAM to manage costs. Analysts suggest, however, that Apple's efficient iOS software architecture and its traditionally higher profit margins might position it slightly better to weather this supply chain disruption compared to some of its Android competitors.
The scene of corporate executives camping out in hotels for months underscores a fundamental shift in the global tech supply chain. With the AI revolution in full swing, the battle for the most fundamental components—memory chips—has moved from boardrooms to the doorsteps of factories, reshaping industry dynamics and potentially the cost of the gadgets in consumers' hands.
