Artificial intelligence has significantly simplified various tasks, enabling quick coding, instant presentation creation, and image generation. However, this convenience comes with a price beyond subscription fees. The surging demand for AI has caused a spike in memory chip prices. Major players like OpenAI and Anthropic are in a race to secure these chips for their AI models in data centers, leaving consumer electronics brands, such as smartphone manufacturers, struggling to procure adequate chip supplies. This surge in demand has resulted in price hikes across products like smartphones and laptops, with indications suggesting that the chip shortage issue may persist for the foreseeable future.
A recent report from Nikkei Asia reveals that chipmakers are unlikely to ramp up capacity to meet demand until at least 2027. The global memory chip market is dominantly controlled by three key suppliers – Samsung, SK Hynix, and Micron. Memory chips serve as critical components in a wide array of products, including PCs, smartphones, vehicles, and industrial equipment.
These three market leaders collectively command approximately 90% of the global DRAM market share and have shifted their focus towards high-bandwidth memory essential for AI semiconductor development. This strategic shift has led to a delay in the production of general-purpose memory chips used in personal computing devices and smartphones, resulting in supply shortages since late 2025 and subsequent price escalations in consumer goods.
Despite plans to boost production, the three major suppliers are expected to meet only 60% of DRAM demand. Micron has even opted to discontinue its consumer business to concentrate on AI data center sales. The ongoing turbulence in the Middle East, particularly due to the US-Iran situation, has further complicated the chip shortage issue by driving up electricity and material costs, adding uncertainty to production forecasts.
Samsung, the largest memory chip manufacturer globally, aims to launch a new fabrication plant at its Pyeongtaek campus by 2026, but full-scale production is not anticipated before 2027 or later. SK Hynix has initiated operations at an HBM fab in Cheongju, marking the sole production increase among the top three suppliers for 2026. The company is also fast-tracking the construction of another facility in Yongin, with completion expected in early 2027.
Micron plans to kickstart HBM production in Idaho and Singapore by 2027 and is set to build a fab in Hiroshima, Japan, with mass production scheduled for 2028. Despite these efforts, SK Group Chairman Chey Tae-won anticipates that AI memory supply constraints could persist until 2030 due to a wafer shortage and other production obstacles.
Research from Counterpoint suggests that resolving the memory shortage would necessitate a 12% annual production increase until 2027, whereas current plans only foresee a 7.5% expansion. Normalization of the supply-demand balance is not expected until 2028. The slow pace of new capacity coming online, coupled with rising demand for AI-related memory, raises concerns about market stabilization timing. Smartphone sales are predicted to drop by 13% in 2026 as memory costs surge, potentially making smartphones less affordable for some consumers.
The share of memory costs in producing budget-friendly smartphones is projected to rise to nearly 40% by mid-2026, possibly leading to reduced smartphone production by manufacturers.