Technology leaders including Elon Musk and Tim Cook have issued warnings about an emerging global crisis: a shortage of memory chips is beginning to impact profits, disrupt corporate planning, and drive up prices for a wide range of products from laptops and smartphones to cars and data centers, with supply constraints expected to worsen.

Since the beginning of this year, over a dozen major companies, including Tesla and Apple, have indicated that a severe shortage of DRAM—a type of memory chip essential to nearly all technology products—is likely to constrain production. Cook stated that this will squeeze iPhone profit margins. Micron Technology described the shortage as "unprecedented." Musk even suggested that Tesla may have to build its own chip factories.

"If we don't build chip factories, we will face chip bottlenecks," Musk said late last month.

The root cause of the memory chip supply crunch is the wave of artificial intelligence (AI) data center construction. Because NVIDIA’s AI chips require large amounts of high-bandwidth memory, available capacity in the memory chip industry is being squeezed, leading to severe shortages even for traditional sectors such as mobile phones and personal computers.

The resulting surge in memory prices has drawn comparisons to the hyperinflation of the Weimar Republic era. From December last year to January this year, prices for one type of DRAM skyrocketed by 75%. An increasing number of retailers and intermediaries are adjusting prices daily. Some have referred to the impending situation as "memory doom."

"We are at the forefront of a massive transformation unlike anything we've seen before," said Tim Archer, CEO of chip equipment supplier Lam Research, during a conference in Korea this month. "The scale of demand we are facing from now until the end of the decade will surpass any previous period—in fact, it will overwhelm all other sources of demand."

Worryingly, memory chip prices are already soaring and supplies are tightening even before AI giants begin their massive data center construction plans in earnest. Alphabet and Amazon have announced that their capital expenditures this year could reach $185 billion and $200 billion, respectively—potentially the highest corporate capital spending levels in a single year in history.

Bernstein semiconductor analyst Mark Li warned that memory prices are rising in a "parabolic" fashion. While this will bring substantial profits for Samsung, Micron, and SK Hynix, other segments of the electronics industry are likely to pay a heavy price in the coming months.

In an interview following the release of earnings last week, Lenovo Group CEO Yang Yuanqing stated that the supply tightness will last at least until the end of this year, adding that "the structural imbalance between supply and demand is not a short-term fluctuation."