Recent discussions have widely focused on the emerging memory crisis. Analysts indicate that the sharp rise in memory prices has triggered a chain reaction across global stock markets, with the impact likely to persist longer than initially anticipated. The pressure on profit margins for downstream electronics companies may only be beginning.

A growing number of tech industry leaders, including Elon Musk and Tim Cook, have warned that a global crisis is brewing. A shortage of memory chips is starting to severely impact profits, disrupt corporate plans, and drive up prices for everything from laptops and smartphones to cars and data centers—and the situation is expected to worsen.

Since early 2026, companies like Tesla, Apple, and over a dozen other major firms have stated that a shortage of DRAM—a fundamental component of nearly all technology—will constrain production capacity. Tim Cook warned that this will squeeze iPhone profit margins. Micron Technology described the bottleneck as "unprecedented." Elon Musk highlighted the severity of the issue by announcing that Tesla will have to build its own memory manufacturing facility. "We have two choices: face a chip bottleneck or build a fab," he said at the end of January.

The root cause of this supply crunch lies in the construction of AI data centers.

A Global Memory Storm Memory chips are a crucial part of the semiconductor family. Made from silicon wafers, they store data and transfer it to processing units—the "brains" that perform computations.

AI data centers rely on an ultra-fast memory architecture called High Bandwidth Memory (HBM). In HBM, DRAM chips are stacked vertically and placed next to Graphics Processing Units (GPUs). This configuration is essential for running large language models, which require continuous processing of massive datasets.

Companies like Alphabet Inc. and OpenAI are purchasing memory chips in vast quantities—acquiring millions of NVIDIA AI accelerators equipped with enormous memory—to power chatbots and other applications, thereby claiming an increasing share of memory chip production. This forces consumer electronics manufacturers to compete for dwindling chip supplies from companies like Samsung Electronics and Micron.

The resulting price surge resembles the hyperinflation seen during the Weimar Republic era. The price of one specific DRAM product skyrocketed by 75% from December to January, with increases accelerating throughout the holiday season. Retailers and intermediaries are adjusting prices daily. Some are calling the impending situation "RAMmageddon."

As the AI industry's demand for HBM chips surges, manufacturers are shifting production capacity away from traditional DRAM and NAND chips used in consumer electronics.

Prices for these memory chips are rising at record rates. Market research firm TrendForce predicts that in the first quarter alone, DRAM and NAND flash prices are expected to increase by 90-95% and 55-60%, respectively.

SK Hynix, Samsung, and U.S.-based Micron account for over 90% of global memory chip production. Driven by soaring demand, these companies have seen their valuations reach historic highs.

All three are expanding production in Asia, the primary hub for semiconductor manufacturing. Micron plans to build additional fabs in the U.S., Japan, Singapore, and Taiwan. Samsung and SK Hynix are increasing capacity in South Korea.

The rise of AI and its demand for computing power has boosted Asian hardware suppliers, some of which are overshadowing the internet companies that long dominated the region's tech boom. Recently, the combined market capitalization of SK Hynix and Samsung surpassed that of Chinese tech giants Alibaba and Tencent for the first time.

Few industries have been as profoundly affected by this rapid wave as the global memory sector. In the three years since ChatGPT's launch, Samsung, SK Hynix, and Micron have redirected much of their production, R&D, and investment toward HBM memory chips for NVIDIA and AMD AI accelerators. This has led to reduced capacity for standard DRAM chips used in basic electronics like phones.

The reason these companies prioritize HBM over DRAM is simple mathematics.

For every NVIDIA AI accelerator purchased by hyperscale data center operators, High Bandwidth Memory (HBM) is required to power it. These chips consist of highly integrated DRAM, typically stacked in 8 or 12 layers. NVIDIA's latest Blackwell chip comes with 192GB of memory—six times that of a modern high-performance PC. An integrated AI server system called NVL72 contains 72 Blackwell chips and 13.4TB of memory. The memory capacity in a single NVL72 rack system is enough for a thousand high-end smartphones or hundreds of high-performance PCs.

Taipei-based consulting firm TrendForce predicts that demand for HBM will grow by 70% year-over-year in 2026 alone. The firm also forecasts that HBM will account for 23% of total DRAM wafer output by 2026, up from 19% last year.

Worryingly, prices have surged and supplies have tightened even before AI giants have fully ramped up their data center construction plans. Alphabet and Amazon.com Inc. recently announced massive building initiatives for this year, with potential investments reaching $185 billion and $200 billion, respectively—exceeding any single company's annual capital expenditure in history.

"We are at the beginning of an unprecedented, massive transformation," said Tim Archer, CEO of chip equipment supplier Lam Research Corp., at a conference in Korea this month. "The scale of demand we are about to face from now until the end of the decade will surpass anything we've seen before. In fact, it will overwhelm all other sources of demand."

Processors are the first to feel the impact.

Some Chips Bear the Brunt Over the past few months, multiple reports have indicated that both AMD and NVIDIA are adjusting their GPU roadmaps.

This is not the first time the consumer GPU industry has been affected by technological shifts—cryptocurrency mining caused similar disruptions. However, the dynamics driven by AI are fundamentally different.

A key aspect of the GPU shortage is its close link to ongoing memory supply constraints. While this is a major factor, another dimension deserves attention. Since 2023, as infrastructure construction accelerated, GPU manufacturers' revenue trends have shown a common pattern. Analyzing quarterly revenue changes across market segments leads to a simple conclusion: funding from enterprise/data center growth is expanding at an unprecedented rate and is more attractive than ever.

On the other hand, companies like NVIDIA have seen their client revenue share drop to single-digit percentages, while AMD's client revenue share continues to decline. The reason for delving into these financial details is straightforward. When one segment becomes more lucrative than others, it is prudent for businesses to allocate resources there. For GPU makers, the enterprise market is undoubtedly the safer bet.

Take NVIDIA as an example. Before the AI boom, the company's market capitalization was around $200-300 billion. With the surge in enterprise demand, its valuation soared to $5 trillion, representing staggering growth. While market cap doesn't directly reflect the contribution of AI/data center technology, it clearly shows that NVIDIA's primary path to enhancing shareholder value is to prioritize enterprise clients over individual users—a "major transformation" we have already witnessed.

A similar trend exists at AMD, though the decline in client revenue is less pronounced due to the company's thriving CPU business. However, due to the DRAM shortage, AMD's focus has shifted more toward the enterprise market than the client segment. Delays in product roadmaps, insufficient GPU supply, and the absence of any mention of consumer GPUs in public forums indicate that the enterprise market has superseded the gaming market in dominance.

Thus, the DRAM shortage is severely affecting NVIDIA. Reports suggest the company has stopped bundling GPU memory with its Add-in-Board (AIB) partners, meaning manufacturers must now secure their own capacity and negotiate DRAM agreements. Ultimately, such developments are impacting the launch of next-generation GPUs, with the RTX 50 SUPER series being the first example. Meanwhile, NVIDIA's Rubin series, originally planned for release in fiscal 2027-2028, has been indefinitely postponed, threatening launch schedules for the coming years.

The situation is similar in the AMD camp. The company launched its RDNA 4 GPU series last year, including the RX 9070 and RX 9060, but AMD's plans for this year remain unclear. It is known that AMD has no immediate plans for high-end RDNA 4 GPUs, and with no "RDNA 4.5" release on the horizon, it appears existing models will remain in use for the next few years. AMD's next major GPU release is expected to be the RDNA 5 series, but unfortunately, it has also been delayed.

It is widely reported that prices for mainstream graphics cards have risen significantly over the past few months, and multiple sources indicate that card manufacturers have begun raising prices for non-reference (AIB) models.

These reports clearly suggest that for consumers, the best course of action amid the GPU shortage is to remain patient and wait for the market to stabilize—or at least hope for that outcome. With no new graphics card launches planned by major manufacturers in the near term, current-generation products will remain the only option. However, given supply chain conditions and inventory reductions by NVIDIA and AMD, acquiring a GPU now is nearly impossible, at least not at reasonable prices.

The experience with these GPUs illustrates that a widespread price surge is having far-reaching effects on the industry.

Mark Li, an analyst at Bernstein covering the semiconductor sector, warns that memory chip prices are rising in a "parabolic" fashion. While this will bring substantial profits to Samsung, Micron, and SK Hynix, other electronics firms will pay a heavy price in the coming months.

Severe Ripple Effects Across the Supply Chain This disruption threatens the profitability of entire product lines and is upending long-term plans.

According to informed sources, Sony Group is considering delaying the release of its next-generation PlayStation console to 2028 or even 2029. This would severely disrupt Sony's carefully orchestrated strategy to maintain user engagement during hardware transitions. Its main competitor, Nintendo, is also contemplating a price increase for the Switch 2 in 2026. Previously, the launch of Nintendo's new Switch 2 console boosted memory card sales, leading to an oversupply in 2025. Representatives for Sony and Nintendo declined to comment.

A manager at a laptop manufacturer stated that Samsung Electronics has recently begun reviewing memory supply contracts quarterly, compared to the usual annual review. According to Chinese media outlet Jiemian News, Chinese smartphone makers including OPPO and Transsion Holdings are lowering their 2026 shipment targets, with OPPO reducing its target by up to 20%. These companies did not respond to requests for comment.

"Right now, we are in the eye of the storm, dealing with it hour by hour, day by day," Steinar Sonsteby, CEO of Norwegian IT firm Atea ASA, told analysts in February.

Cisco Systems issued weak earnings guidance last week, citing the memory shortage as a factor contributing to its largest stock decline in nearly four years. Qualcomm and Arm Holdings both warned of potential further negative impacts.

At Sunin Plaza, a DIY computer hub in Seoul, the usual bustling crowds have vanished. The maze of stalls, once a trading center for gaming graphics cards and motherboards, is now eerily quiet.

"Honestly, it's better not to do business right now because prices will almost certainly be higher tomorrow," said Seo Yong-hwan, who runs three DIY computer stores in Seoul and frequently deals with stalls at Sunin Plaza. "Unless Steve Jobs returns from the dead and declares AI is just a bubble, this trend is likely to continue for a while."

Last year, U.S. chipmaker Micron Technology decided to discontinue its popular consumer memory brand, Crucial, dealing a heavy blow to the high-end and DIY PC markets. The discontinuation sparked a buying frenzy as people hoarded remaining stock, driving memory prices to new highs in January. The average price of a Falcon Northwest custom computer is expected to rise by $1,500 to around $8,000 per unit by 2025.

This situation recalls one of the largest supply chain disruptions in recent years: the shortage of cheap, basic automotive and power chips during the COVID-19 pandemic, which paralyzed automakers from Ford Motor Company to Volkswagen Group, forced smartphone makers to stockpile chips at high prices, and spurred a global movement, including in the U.S., to attract and establish local chip manufacturing.

Back then, the cause was an unexpected surge in demand for products as people worked from home to reduce contact.

This time, as described, the memory shortage stems from the memory industry's pivot toward AI.

The massive investment, comparable to the most expensive human endeavors in history, is driven by four tech giants eager to outperform their rivals in an area that could determine their future trajectory. To build this AI infrastructure, these giants are spending heavily on the necessary components, resources, and talent.

This has ignited a chain reaction from the memory crisis.

"In terms of scale and duration, this is the largest demand-supply disconnect I've experienced in my 25 years in the industry," said Manish Bhatia, Executive Vice President of Operations at Micron Technology, in an interview with Bloomberg News in December.

Bhatia may be referring to the growing consensus that the industry is experiencing a so-called "super-cycle" of AI demand. This refers to a wave of massive, widespread technology adoption that is distorting—even overturning—the memory industry's decades-long boom-and-bust cycle, where chipmakers historically expanded production chasing price increases, only to face downturns from overexpansion. This time, the upward trend is so pronounced that almost no one—especially hyperscale memory operators—is betting on the cycle ending.

From Samsung to Dell Technologies, major electronics firms have warned consumers about price increases this year, as inflation could become a focal point with key U.S. midterm elections approaching.

Soaring memory costs mean that DRAM could soon account for up to 30% of the bill of materials for low-end smartphones—triple the 10% seen in early 2025.

GF Securities estimates the supply-demand gap for DRAM at 4% and for NAND at 3%, but these figures do not account for insufficient inventory in some sectors, meaning the actual imbalance could be larger.

According to Counterpoint Research, rising memory costs could make low-end devices economically unviable for electronics companies. As profit margins shrink, some low-cost smartphones may disappear from the market entirely.

Counterpoint forecasts a 2.1% decline in global smartphone shipments in 2026. Chinese brands with extensive entry-level portfolios, such as Honor, vivo, and OPPO, are expected to be hit hard by rising memory costs.

"The DRAM chip shortage is expected to persist throughout the year in the electronics, telecommunications, and automotive industries," said Huang Mingsheng, an analyst at Counterpoint. "We are already seeing signs of panic buying in the automotive sector, while smartphone manufacturers are turning to more cost-effective chip alternatives to mitigate the impact."

In summary, an electronics storm is approaching.