Memory Shortage: AI's Impact on Device Prices

Situated in Idaho, Micron Technology is a key player in the RAM chip-making industry, currently benefiting from the soaring demand.

The demand for memory is surging, led by the rapidly evolving field of artificial intelligence.

The rapid expansion of AI-focused cloud services and data hubs has resulted in a significant appetite for specific memory chips, creating a shortage. This shortfall is anticipated to influence the pricing of various high-tech gadgets.

Avril Wu, a senior research executive at TrendForce, a Taiwan-based market analysis firm, urges consumers to purchase desired devices sooner rather than later due to these dynamics.

Known as RAM, or Random Access Memory, these chips are vital for the smooth operation of electronic devices like smartphones, computers, and gaming consoles. They allow simultaneous browser tab activity and facilitate seamless video streaming.

TrendForce data reportedly shows that the growth in demand for RAM is surpassing supply by a factor of 10%, with manufacturers incurring increased costs monthly due to this heightened demand.

The Demand from AI’s Appetite for Memory

AI-infrastructure facilities demand vast memory volumes to function alongside the sophisticated GPU processors necessary for AI training and operation.

Sanchit Vir Gogia, CEO of Greyhound Research, asserts that AI operational loads substantially depend on memory.

AI enterprises are pouring billions into the rapid establishment of new data centers globally, a trend that Gogia argues is not merely a temporary market fluctuation.

According to Gogia, AI fundamentally alters memory demand, necessitating large, resilient memory, extensive bandwidth, and proximity to computing power, without which performance would significantly deteriorate.

Reduced Chip Availability for Other Industries

Micron Technology, headquartered in Idaho, is capitalizing on the booming memory requirement for AI. It recently reported strong quarterly earnings tied to rising chip prices.

Sanjay Mehrotra, Micron's CEO, has expressed confidence in a sustained strong market as AI maintains its growth trajectory.

Chipmakers like Micron are compelled to prioritize fulfilling the lucrative AI-related demand, resulting in reduced chip availability for sectors such as personal computing, smartphones, and consumer electronics.

This translates to increasing costs. Jeff Clarke, COO of Dell Technologies, acknowledged on a November 25 announcement that these costs will inevitably impact consumers.

Experts suggest there is no quick remedy for this situation.

Wu from TrendForce notes a bottleneck within the memory chip industry, predicting that by the end of 2026, manufacturing facilities will reach their expansion limits.

Micron is currently constructing a new factory in Idaho, anticipated to begin operations in 2027.

Price surges from suppliers are expected to continue into the foreseeable future, according to Wu.