A severe shortage of memory chips is triggering a worldwide supply chain crisis, pitting artificial intelligence giants against consumer electronics manufacturers in a fierce competition for limited components. This supply squeeze spans the entire memory spectrum—from basic flash chips utilized in USB drives and smartphones to sophisticated high-bandwidth memory (HBM) essential for powering AI chips in data centers.
Market analytics from TrendForce indicate that prices in certain segments have more than doubled since February, creating a volatile trading environment. The ramifications are being felt globally: Japanese electronics retailers have imposed purchase limits on hard-disk drives, while Chinese smartphone manufacturers are issuing warnings about impending price increases.
Technology behemoths including Microsoft, Google, and ByteDance are engaged in urgent negotiations with leading memory-chip producers Micron, Samsung Electronics, and SK Hynix to secure stable supplies, according to industry sources. The crisis has escalated to the point where average inventory levels for dynamic random-access memory (DRAM)—critical for computers and phones—plummeted to just two to four weeks in October, down significantly from 13-17 weeks in late 2024.
The current shortage stems from a perfect storm of industry factors. The explosive growth of generative AI following ChatGPT’s 2022 debut prompted memory manufacturers to prioritize production of high-margin HBM chips for AI applications. Simultaneously, heightened competition from Chinese DRAM producers accelerated South Korean firms’ shift toward more advanced products. This production pivot coincided unexpectedly with robust replacement cycles for traditional data centers, PCs, and stronger-than-anticipated smartphone sales.
SK Group Chairman Chey Tae-won highlighted the severity of the situation, stating: ‘We’re receiving requests from so many companies that we’re worried about how we’ll handle them. If we fail to supply them, they could face situations where they can’t do business at all.’
The supply constraints are now manifesting in consumer markets. Realme India’s marketing chief Francis Wong described the memory cost increases as ‘unprecedented since the advent of smartphones,’ noting potential handset price hikes of 20-30% by June. In Tokyo’s Akihabara electronics district, stores are enforcing purchase limits to prevent hoarding, with prices for some memory products doubling within weeks.
Industry analysts project the shortage may persist through late 2027, despite announced capacity expansions by major manufacturers. New production facilities typically require at least two years to become operational, creating an extended timeline for market rebalancing. The prolonged shortage threatens to slow AI-driven productivity gains, delay digital infrastructure projects worth hundreds of billions of dollars, and potentially contribute to broader inflationary pressures across global economies.