A growing procession of tech industry leaders including Elon Musk and Tim Cook are warning about a global crisis in the making: A shortage of memory chips is beginning to hammer profits, derail corporate plans and inflate price tags on everything from laptops and smartphones to automobiles and data centers — and the crunch is only going to get worse.
The resulting price spikes are starting to look a bit like the Weimar Republic’s hyperinflation. The cost of one type of DRAM soared 75% from December to January, accelerating price hikes throughout the holiday quarter. A growing number of retailers and middlemen are changing their prices every day. “RAMmageddon” is the term some use to describe what’s coming.
The disruption is threatening the profitability of entire product lines and upending long-term plans.
“Right now, we’re kind of in the middle of a storm that we are dealing with hour by hour and day by day,” Steinar Sonsteby, CEO of the Norwegian IT firm Atea ASA, told analysts in February.
At Sunin Plaza, the do-it-yourself PC mecca in Seoul, the usual weekday buzz has evaporated. The labyrinth of stalls, once a high-energy hub for gaming graphic cards and motherboards, is now engulfed in an eerie quiet.
“It’s actually wiser to hold off doing business today, as prices are almost certain to be higher tomorrow,” said Suh Young-hwan, who runs three DIY PC shops in Seoul and frequently does business with stalls at Sunin Plaza. “Unless Steve Jobs rises from the dead to declare that AI is nothing but a bubble, this trend is likely to persist for some time.”
The premium and DIY PC segment was hit hard when US chipmaker Micron decided last year to end its popular Crucial brand of consumer memory sticks, after three decades in operation. Kelt Reeves, CEO and founder of custom PC maker Falcon Northwest, said Crucial’s demise started a “stampede” to secure as much inventory as they could, driving memory prices to new highs in January. Across 2025, Falcon Northwest’s average selling price rose by $1,500 to roughly $8,000 for each custom-made computer.
Back then it was because of an unexpected surge in demand for products from people working from home and trying to minimize contact.
The three companies are prioritizing HBM over DRAM because of simple math.
For every Nvidia AI accelerator that the hyperscalers buy, these companies also need high-bandwidth memory, or HBM, to power their efforts. Such chips are made up of intricately packed DRAM, often stacked in layers of eight or 12. Nvidia’s latest Blackwell comes with 192 gigabytes of RAM, or six times the amount that a powerful modern PC would need. An integrated AI server system dubbed the NVL72 boasts 72 Blackwell chips and 13.4 terabytes of RAM. Each NVL72 rack-scale system sold uses enough memory for a thousand high-end smartphones or a few hundred beefy PCs.
They also — during normal times — yield better margins simply because Samsung and all can charge more given the imbalance in supply and demand. Micron’s revenue is expected to more than double in the fiscal year ending in August. SK Hynix’s sales more than doubled in 2024 and are likely to double again this year.
But that wave of HBM business spells trouble for memory consumers. It’s leaving the rest of the world bereft of the memory that people need to store cellphone photos, steer cars, download movies and run computer programs. GF Securities estimates that there is a 4% gap between the supplies and demands for DRAM and 3% for NAND, but those figures do not yet factor in low inventories in some industries so the actual imbalance is likely bigger.
“DRAM shortages are set to persist across the electronics, telecom, and automotive industries throughout the year,” Counterpoint analyst MS Hwang said. “We are already seeing signs of panic buying within the auto sector, while smartphone manufacturers are pivoting toward more cost-effective chip alternatives to mitigate the impact.”
And it’s unlikely that the supply of basic memory will rebound anytime soon.
Samsung, SK Hynix and Micron have together endured multiple boom-bust cycles in memory chip demand. While they are racing to increase supply, it will take years to build and outfit the new chip facilities needed to make more memory chips.
Bhatia may be referring to a growing view that the industry is experiencing a so-called “super-cycle” of AI demand. That refers to a wave of technology adoption so vast and broad that it’s skewing or even eradicating the memory sector’s decades-long cycle of boom and bust, where chipmakers build capacity to chase rising prices, only to overdo things and precipitate a downturn. This time, the upswing is clear and few — least of all the hyperscalers — are gambling on an end.
Skyrocketing memory costs mean DRAM could soon account for as much as 30% of low-end smartphones’ bill of materials — tripling from 10% in early 2025. The biggest impact would be on cheaper handsets that lack pricing power, Counterpoint Research said.
