A SK Hynix Inc. 12-layer HBM3E memory chip displayed at the Semiconductor Exhibition in Seoul, South Korea.
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Chipmakers and analysts are warning of a memory chip shortage that could hit the consumer electronics and automotive industries next year, as companies prioritize massive demand from the artificial intelligence boom.
In an earnings call on Friday, the CEO of Semiconductor Manufacturing International Corp, China’s largest contract chipmaker, said that fears of a memory chip shortage were prompting its customers to hold back orders for other types of chips used in their products.
“Everyone is hesitant to place too many orders or ship too much in the first quarter of next year because they don’t know how many mobile phones, cars, or other products [the memory chip industry] can supply,” said Zhao Haijun, SMIC’s co-CEO, according to a Google translation.
Analysts say these supply constraint concerns come as chip manufacturers focus on advanced memory chips used in artificial intelligence computing, with less focus on production needed for consumer products.
“The AI build-out is absolutely eating up a lot of the available chip supply, and 2026 looks to be far bigger than this year in terms of overall demand,” Dan Nystedt, vice president of research at TriOrient, told CNBC.
AI servers primarily run on processors from chip designers like Nvidia. These AI processors heavily rely on a type of memory known as High-Bandwidth Memory or HBM, which has proven extremely lucrative for memory companies like SK Hynix and Micron to pursue.
Memory suppliers have been chasing as much of this AI demand as possible thanks to typically high margins, Nystedt said, noting that AI server companies are willing to pay top dollar for premium chips.
“It could be very bad for PCs, laptops, consumer electronics and automotive, which depend on cheap memory chips,” he said.
Perhaps a bigger issue, however, is that the memory industry suffered some severe downturns in 2023 and part of 2024, leading to under-investment in the industry. “They’re building new capacity now, but it will take time to get running.”
Broader impacts
In the face of supply constraints, memory companies have reportedly been raising prices of their chips.
Just last Friday, Reuters reported that Samsung Electronics had quietly raised prices on select memory chips by as much as 60% compared to September. Samsung didn’t immediately respond to a request for comment.
“With memory prices rising and availability shrinking, concerns about production bottlenecks are gaining traction,” M.S. Hwang, research director at Counterpoint Research, told CNBC.
“Supply tightness is already hitting low-end smartphones and set-top boxes, but we think the risk could broaden,” he added.
China is “feeling the pinch more acutely” due to high reliance on low-cost devices, but Hwang cautioned that the supply constraints were a global problem.
In the meantime, consumers could pay the price of memory shortages.
In a report on Monday, tech-focused market intelligence and consulting firm TrendForce predicted that the memory industry has begun a “robust upward pricing cycle,” which could force downstream brands to hike retail prices, adding pressure on the consumer market.
As a result, the research group predicted increased price and demand pressures for consumer products like smartphones and notebooks.
