The artificial intelligence (AI) craze is not only changing Silicon Valley but also creating a domino effect on the entire hardware supply chain, especially memory chips, which are essential components in personal computers and smartphones.
For more than three decades, Kelt Reeves, founder of Falcon Northwest (a US high-end computer company), has provided high-performance computer lines for gamers willing to spend over $4,000 to own powerful configurations.
However, since the end of last summer, the price of memory chips has tripled, forcing his company to raise the price of many models from about 5,800 USD to more than 7,000 USD.
This is not a bubble created by consumers. No one believes that this is just a short-term fluctuation," Mr. Reeves said.
The main reason comes from the AI race between OpenAI, Meta, Google and many other technology corporations. Data centers serving AI require huge amounts of memory, causing chip manufacturers to prioritize supply for this highly profitable segment instead of the traditional consumer market. As a result, the amount of chips for PCs and smartphones has decreased, leading to a sharp increase in selling prices.
According to TechInsights (a market research and technology analysis company based in Canada), increased memory costs could cause the price of a popular PC to increase by $119, equivalent to 23% compared to the same period last year.
Not only RAM, NAND storage chips, an important component for long-term memory, also recorded significant increases.
The memory market is chaotic, it is very difficult to find a quick cooling solution," said memory market analyst (DRAM & NAND) Mike Howard.
This impact has begun to reflect in the financial reports of major corporations. Microsoft said that PC revenue could fall due to increased memory costs. Meanwhile, Dell admitted that it had to adjust the selling prices of some laptop models, while Apple and HP declined to comment on market fluctuations.
After many price crisis cycles in the past, the memory chip market is currently focused on three giants: Samsung, SK Hynix and Micron.
The explosive demand from AI has helped their revenue and stock prices increase sharply. Jim Handy, a technology expert at Objective Analysis, commented: "Most of the current demand almost comes from artificial intelligence.
Memory plays an increasingly strategic role, especially high bandwidth memory (HBM), RAM chip stacking technology to increase data transfer speed.
Nvidia, the leader in the AI hardware market, is buying a large number of HBMs to integrate with AI processors, helping to increase performance and reduce computing costs. Nvidia CEO Jensen Huang said the world will need more chip factories to meet accelerating demand.
In that context, the US semiconductor corporation - Micron has announced its withdrawal from the Crucial retail segment to prioritize serving strategic customers in the AI field. This company is investing tens of billions of USD to expand production capacity in the US and Taiwan (China), but new factories can only be put into operation from 2027.
Currently, many customers only receive about half to two-thirds of the memory they order.
For consumers, especially those who assemble their own PCs, the impact is very clear. The price of a popular RAM on PCPartPicker has increased from 105 USD to 250 USD in just a few months. While high-end customers still accept to pay, the group of cheap buyers are at risk of being eliminated from the game.
