AI fuels memory chip shortage that could hit phones and cars

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.

The CEO of Semiconductor Manufacturing International Corp, China’s largest contract chip maker, said in an earnings call Friday. reportedly It said fears of memory chip shortages had led its customers to delay orders for other types of chips used in its products.

“People don’t dare to place too many orders for the first quarter of next year,” SMIC co-CEO Zhao Haijun said during the earnings release. “Because no one knows how much memory (chips) will actually be available – how many phones, cars or other products they can support.”

Analysts say these supply constraint concerns come as chipmakers focus on advanced memory chips used in artificial intelligence computing and less on production needed for consumer products.

“The AI ​​fabric is certainly eating up a lot of the current chip supply, and it looks like 2026 will be much bigger than this year in terms of overall demand,” Dan Nystedt, vice president of research at TriOrient, told CNBC.

AI servers run primarily on processors from chip designers such as: Nvidia. These AI processors rely heavily on a type of memory known as High Bandwidth Memory, or HBM, which has proven to be extremely lucrative for memory companies. SK Hynix And Micron to follow.

Nystedt noted that memory vendors are chasing as much of this AI demand as possible, often thanks to high margins, and that AI server companies are willing to pay top dollar for top-of-the-line chips.

“This could be very bad for PCs, laptops, consumer electronics and automotive that rely on cheap memory chips,” he said.

But perhaps a bigger problem is that the memory industry is likely to experience serious downturns in 2023 and part of 2024, leading to underinvestment in the sector. “They are currently building new capacity, but it will take time to get up and running.”

Memory companies face supply constraints reportedly They increase the prices of their chips.

Just last Friday, Reuters reported HE Samsung Electronics It had quietly increased prices of certain memory chips by up to 60% compared to September. Samsung did not immediately respond to a request for comment.

“With memory prices rising and availability decreasing, concerns about production bottlenecks are increasing,” MS Hwang, research director at Counterpoint Research, told CNBC.

“The supply crunch is already affecting lower-end smartphones and set-top boxes, but we think the risk could increase,” he added.

China is “feeling the pinch more acutely” due to a high reliance on low-cost devices, but Hwang warned that supply constraints were a global problem.

Consumers, meanwhile, may pay the price for lack of memory.

In a report published Monday, technology-focused market intelligence and consulting firm TrendForce predicted that the memory industry has embarked on a “strong upward pricing cycle,” which could force sub-brands to increase retail prices, increasing pressure on the consumer market.

As a result, the research group guess Increasing price and demand pressures for consumer products such as smartphones and laptops.