In November 2022, an artificial intelligence (AI) boom was kicked off following the release of ChatGPT, prompting a whirlwind of AI data center construction. AI data centers are heavily reliant on graphic processing units that require high-bandwidth memory (HBM) devices. These HBM devices, which can be thought of as a three-dimensional stack of dynamic random-access memory (DRAM) chips, require more wafer area than standard DRAM chips. Though HBM manufacturing is more resource-intensive than standard DRAM – 1 gigabyte of HBM consumes four times the capacity of standard DRAM – HBM chips also generate higher profits for DRAM manufacturers.
As a result, memory manufacturers are allocating increasing capacity for HBM production and constraining production of traditional DRAM chips used in other sectors like automotive, consumer electronics, and medical devices as they face limited fab capacity.
The issue further extends to non-volatile memory storage devices that do not require a power input to retain data like NAND flash memory products. Producers are opting to install DRAM production lines over NAND despite similar hikes in demand for some NAND flash memory products from AI infrastructure projects. This competition for memory chip production has led to memory supply crunches and price hikes across numerous industries, with companies in the electronics and automotive sectors expected to be of particularly high risk of operational disruptions throughout 2026.
Memory chip shortages loom amidst increased demand, constrained production capacity
Only three companies – SK Hynix Inc., Samsung Electronics Co., Ltd., and Micron Technology, Inc. – are responsible for over 90% of the DRAM market. As such, their decisions regarding production strategies across different product categories have a significant influence on the entire memory market.
Recent reports indicate that up to 70% of memory chip products created globally in 2026 will be destined for AI data centers, and DRAM manufacturers are shifting production lines to meet that demand. Micron, for example, is halting production of its personal computer memory to focus on high-end AI memory lines like HBM. SK Hynix Inc. announced plans to convert one of its main DRAM production lines to HBM in 2024 and continues to focus investments on HBM capacity.
Even with this shift in manufacturing priorities, a Micron representative announced in January 2026 that the company had sold out AI memory product contracts for 2026. The company estimates it can only meet about two-thirds of medium-term memory requirements for some customers.
In October 2025, SK Hynix Inc. similarly indicated that it had already sold all of its 2026 production capacity for HBM, DRAM, and NAND. At the same time, DRAM suppliers reported that average DRAM inventory levels fell from 17 weeks in late 2024 to just two to four weeks in October 2025. In the last quarter of 2025 alone, memory product prices increased by 50%, and are expected to further increase by 40-50% by the end of the first quarter of 2026 in light of dwindling supplies.
While increases in NAND prices remain lower than those for DRAM, January sales results showed Samsung’s NAND chip prices still jumped about 20% quarter-over-quarter. With recent reports indicating that Samsung and SK Hynix Inc. plan to cut NAND production in efforts to increase capacity for the manufacture of more profitable lines like DRAM, it is possible that non-volatile memory technology prices might face similar price hikes soon.
Despite the enormous demand for DRAM, it is unlikely that manufacturers will be able to scale up production in the near future. A new Micron megafab in Onondaga County, New York began construction on January 16, but the new capacity from the unit likely will not have a major impact on supply until 2028. Other Micron fabs under construction in Boise, Idaho are not expected to start memory production until 2027 and 2028, and a $1.8 billion (€1.54 billion) expansion to an existing plant in Taiwan similarly will not contribute to DRAM production until the second half of 2027. A SK Hynix Inc. announcement highlighting a $13 billion (€11.1 billion) investment to expand existing production in Cheongju, South Korea will not complete construction until the end of 2027, while a new Samsung facility in Gyeonggi will not be operational until 2028. Although many memory companies exist, most do not have DRAM manufacturing capabilities and instead serve as module assemblers for pre-purchased DRAM chips from companies like SK Hynix or Micron. Because of the technical expertise and intensive quality control necessary to make DRAM chips, DRAM manufacturing cannot be easily outsourced to alternate foundries.
Electronics companies warn of business impacts due to memory chip shortages
As the global supply of some memory chips is set to tighten, with prices for available capacity likely to increase further, companies in sectors such as consumer electronics and automotive might experience business disruptions as chip manufacturers shift production capacity to cater to AI-related projects.
In China, several major smartphone makers such as Xiaomi Corp., Oppo Electronics Corporation, and Shenzhen Transsion Holdings Co. lowered shipment targets for this year in response to rising component costs, with Oppo Electronics Corporation trimming its forecast by around 20%.
Dell Inc., a manufacturer of personal computers, servers, and data storage devices based in the U.S., warned that the cost basis for its products was likely to increase due to the memory supply shortages. The company is reportedly planning to change its mix of configurations to reduce the impact of the shortages but still expects retail prices to rise.
California-based HP Inc. has reportedly started to broaden its memory supplier network and is trying to put less memory into its products to address supply shortages. Despite this measure, the company cautioned that the second half of the year is expected to be challenging, which could result in price increases for its products, mainly personal computers, printers and related products.
Even Samsung Electronics Co., Ltd., one of the world’s biggest memory chip makers, warned that it may be forced to raise prices for its consumer products as a result of the supply shortages.
Meanwhile, Lenovo Group Limited and Asustek Computer Inc., Hong Kong and Taiwan-based manufacturers of consumer electronics such as laptops and smartphones, reportedly started stockpiling memory chips in anticipation of a supply crunch. In total, the end prices for consumer electronics such as phones, laptops, or home appliances could increase by up to 20% due to higher production costs. According to some estimates, the global personal computer market might contract by around 9%, while global sales of smartphones could drop by 5% in 2026 as AI-related projects consume more and more of the available memory capacity.
Automotive sector faces growing risk of business disruptions amid dwindling memory supply
The automotive industry, where DRAM is widely used in advanced driver assistance and infotainment systems, as well as in the electronic architecture of vehicles, will also face a growing risk of business disruptions in 2026. With the automotive sector accounting for less than 10% of the global DRAM market, automakers and suppliers are left with less economic bargaining power than higher-margin customers such as companies involved in the data center market.
While AI data centers rely on higher-performance HBM DRAM products, vehicles still need standard DRAM that chipmakers seem to be moving away from to focus on HBM production instead. The business impact of supply shortages and price increases could vary by company, but electric vehicles and internal-combustion engine vehicles in the premium segment are expected to be more exposed to these risks due to their higher memory usage per vehicle.
If memory chip costs continue to rise due to dwindling supply, automotive manufacturers may be forced to scale back high-end systems that require more memory usage in some of their car models to reduce production costs and avoid manufacturing delays. Vehicle makers may also be able to cushion the impact by stockpiling needed memory chips, but with memory chips not easily changeable across vehicle systems, a permanent shift towards more HBM production capacity would likely still disrupt vehicle manufacturing in the long-term.
At the time of writing, public statements from automotive representatives remain limited, however, Semiconductor Manufacturing International Corporation, China’s largest contract chip manufacturer, had warned of memory chip supply shortages in the automotive sector in 2026 as early as last November.
Everstream clients are receiving more detailed insights and recommendations about this risk.
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