AI frenzy is causing a worldwide supply chain disaster, prices soar | Latest Tech News
An acute global scarcity of reminiscence chips is forcing artificial intelligence and consumer-electronics firms to combat for dwindling provides, as prices soar for the unglamorous but important parts that permit devices to store data.
Japanese electronics shops have begun limiting how many hard-disk drives buyers can buy.
Chinese smartphone makers are warning of price will increase. Tech giants including Microsoft, Google and ByteDance are scrambling to secure provides from memory-chip makers such as Micron, Samsung Electronics and SK Hynix, according to three people acquainted with the discussions.
Magnifier screens show chips at a sales space in a mall of Huaqiangbei electronics market in Shenzhen, Guangdong Province, China, on Oct. 30, 2025. REUTERS
The squeeze spans nearly every sort of reminiscence, from flash chips used in USB drives and smartphones to superior high-bandwidth reminiscence (HBM) that feeds AI chips in data facilities.
Prices in some segments have more than doubled since February, according to market-research firm PatternForce, drawing in merchants betting that the rally has additional to run.
The fallout might attain past tech. Many economists and executives warn the protracted scarcity dangers slowing AI-based productiveness features and delaying tons of of billions of {dollars} in digital infrastructure.
It might also add inflationary strain just as many economies try to tame price rises and navigate US tariffs.
“The memory shortage has now graduated from a component-level concern to a macroeconomic risk,” said Sanchit Vir Gogia, CEO of Greyhound Research, a technology advisory firm. The AI build-out “is colliding with a supply chain that cannot meet its physical requirements.”
This GWN examination of the spiraling supply disaster is based on interviews with nearly 40 people, including 17 executives at chipmakers and distributors.
The exterior of a PC store Ark in Akihabara, Tokyo, Japan, on Nov. 13, 2025. REUTERS
It reveals industry efforts to meet voracious urge for food for superior chips — pushed by Nvidia and tech giants like Google, Microsoft and Alibaba — created a twin bind: Chipmakers still can’t produce enough high-end semiconductors for the AI race, yet their tilt away from conventional reminiscence merchandise is choking supply to smartphones, PCs and client electronics. Some are now hurrying to course-correct.
Details of the global scramble by tech corporations and price will increase described by electronics retailers and part suppliers in China and Japan are reported right here for the first time.
Average stock ranges at suppliers of dynamic random-access reminiscence (DRAM) — the main sort used in computer systems and telephones — fell to two to 4 weeks in October from three to eight weeks in July and 13 to 17 weeks in late 2024, according to PatternForce.
The crunch is unfolding as traders query whether or not the billions of {dollars} poured into AI infrastructure have inflated a bubble.
Memory chips by South Korean semiconductor provider SK Hynix are seen on a circuit board of a pc in this illustration image taken on Feb. 25, 2022. REUTERS
Some analysts predict a shakeout, with only the largest and financially strongest firms ready to abdomen the price will increase.
One memory-chip government told GWN the scarcity would delay future data-center initiatives. New capability takes at least two years to construct but memory-chip makers are cautious of overbuilding for concern it might end up idle ought to the demand surge go, the particular person said.
Samsung and SK Hynix have announced investments in new capability but haven’t detailed the manufacturing break up between HBM and typical reminiscence.
SK Hynix has told analysts that the reminiscence shortfall would last through late 2027, Citi said in November.
A Tranium3 artificial intelligence chip made by Amazon Web Services seems in an undated handout image offered to GWN on Dec. 1, 2025. via REUTERS
“These days, we’re receiving requests for memory supplies from so many companies that we’re worried about how we’ll be able to handle all of them. If we fail to supply them, they could face a situation where they can’t do business at all,” Chey Tae-won, chairman of SK Hynix mother or father SK Group, said at an industry discussion board in Seoul last month.
OpenAI in October signed initial offers with Samsung and SK Hynix to supply chips for its Stargate project, which might require up to 900,000 wafers per month by 2029. That’s about double current global month-to-month HBM manufacturing, Chey said.
Samsung told GWN it is monitoring the market but wouldn’t remark on pricing or buyer relationships. SK Hynix said it is boosting manufacturing capability to meet elevated reminiscence demand.
Microsoft declined to remark and ByteDance didn’t deal with questions about the chip pressure. Micron and Google didn’t reply to remark requests.
‘Begging for supply’
After ChatGPT’s release in November 2022 ignited the generative AI increase, a global rush to construct AI data facilities led reminiscence makers to allocate more manufacturing to HBM, used in Nvidia’s highly effective AI processors.
Competition from Chinese rivals making lower-end DRAM, such as ChangXin Memory Technologies, also pushed Samsung and SK Hynix to speed up their shift to higher-margin merchandise.
The South Korean corporations account for two-thirds of the DRAM market.
Samsung told prospects in May 2024 that it deliberate to end manufacturing of one sort of DDR4 chips — an older selection used in PCs and servers — this 12 months, according to a letter seen by GWN. (The company has since modified course and will prolong manufacturing, two sources said).
In June, Micron said it had informed prospects it could stop transport DDR4 and its counterpart LPDDR4 — a sort used in smartphones — in six to 9 months.
The exterior of PC store iCON in the electronics procuring district of Akihabara, Tokyo, Japan, Nov. 13, 2025. REUTERS
ChangXin adopted go well with in ending most DDR4 manufacturing, one source said. The firm declined to remark.
This shift, however, coincided with a substitute cycle for conventional data facilities and PCs, as effectively as stronger-than-expected gross sales of smartphones, which rely on typical chips.
In hindsight, “one could say the industry was caught off-guard,” said Dan Hutcheson, senior research fellow at TechInsights.
Samsung raised prices of server reminiscence chips by up to 60% last month, GWN has reported.
Nvidia CEO Jensen Huang, who in October announced offers and shared fried chicken with Samsung Electronics Chairman Jay Y. Lee during a journey to South Korea, acknowledged the price surge as important but said Nvidia had secured substantial supply.
Google, Amazon, Microsoft and Meta in October requested Micron for open-ended orders, telling the company they’ll take as a lot as it could actually ship, irrespective of price, according to two people briefed on the talks.
China’s Alibaba, ByteDance and Tencent are also leaning on suppliers, dispatching executives to go to Samsung and SK Hynix in October and November to foyer for allocation, the 2 people and another source told GWN.
“Everyone is begging for supply,” one said.
The Chinese corporations didn’t deal with questions about the chip crunch. Nvidia, Meta, Amazon and OpenAI didn’t reply to requests for remark.
In October, SK Hynix said all its chips are bought out for 2026, while Samsung said it had secured prospects for its HBM chips to be produced next 12 months.
Visitors stroll past the brand of NVIDIA during the Korea Electronics Show 2025 at the COEX conference and exhibition middle in Seoul on October 22, 2025. AFP via Getty Images
Both corporations are increasing capability to meet AI demand, but new factories for typical chips gained’t come online until 2027 or 2028.
Shares in Micron, Samsung and SK Hynix have rallied this 12 months on chip demand.
In September, Micron forecast first-quarter income above market estimates while Samsung in October reported its greatest quarterly revenue in more than three years.
Consultancy Counterpoint Research expects prices of superior and legacy reminiscence to rise by 30% through the fourth quarter and presumably another 20% in early 2026.
Smartphone sticker shock
Chinese smartphone makers Xiaomi and Realme have warned they might have to raise prices.
Francis Wong, Realme India’s chief advertising officer, told GWN the steep will increase in reminiscence prices have been “unprecedented since the advent of smartphones” and might pressure the company to elevate handset prices by 20% to 30% by June.
“Some manufacturers might save costs on imaging cameras, some on processors, and some on batteries,” he said. “But the cost of storage is something all manufacturers must completely absorb; there’s no way to transfer it.”
Xiaomi told GWN it could offset increased reminiscence prices by raising prices and promoting more premium telephones, including that its other companies would help cushion the influence.
A discover displaying buyer buy limits for system reminiscence, strong state drives and onerous disk drives is displayed exterior PC store Ark in Akihabara, Tokyo, Japan, on Nov. 13, 2025. REUTERS
In November, Taiwanese laptop computer maker ASUS said it had about 4 months of stock, including reminiscence parts, and would modify pricing as needed.
Winbond, a Taiwanese chipmaker with around 1% of the DRAM market, was among the first to announce a capability growth to meet demand.
Its board of administrators permitted a plan in October to sharply increase capital expenditure to $1.1 billion.
“Many customers have been coming to us saying, ‘I really need your help,’ and one even asked for a six-year long-term agreement,” Winbond’s President Pei-Ming Chen said.
Traders rush in
In Tokyo’s electronics hub of Akihabara, shops are limiting purchases of reminiscence merchandise to curb hoarding. An indication exterior PC store Ark says that since November 1 prospects have been restricted to shopping for a whole of eight merchandise across hard-disk drives, solid-state drives and system reminiscence. Ark declined to remark.
Clerks at 5 retailers said shortages had pushed prices sharply increased in latest weeks. At some shops, one-third of merchandise have been bought out.
Products such as 32-gigabyte DDR5 reminiscence — standard with players — have been over 47,000 yen, up from around 17,000 yen in mid-October.
Electronic objects are displayed at PC Shop iCON in the electronics procuring district of Akihabara, Tokyo, Japan, on Nov. 13, 2025. REUTERS
Higher-end 128-gigabyte kits had more than doubled to around 180,000 yen.
The hikes are driving prospects to the secondhand market — benefiting people like Roman Yamashita, proprietor of iCON in Akihabara, who said his business promoting used PC elements is booming.
Eva Wu, a gross sales supervisor at part trader Polaris Mobility in Shenzhen, said prices are altering so quickly that distributors issue broker-style quotes that expire daily — and in some instances hourly — versus month-to-month before the crunch.
In Beijing, a DDR4 vendor said she had hoarded 20,000 models in anticipation of additional will increase.
Some 6,000 miles away in California, Paul Coronado said month-to-month gross sales at his company, Caramon, which sells recycled low-end reminiscence chips pulled from decommissioned data-center servers, have surged since September.
Almost all its merchandise are now purchased by Hong Kong-based intermediaries who resell them to Chinese purchasers, he said.
“We were doing about $500,000 a month,” he said. “Now it’s $800,000 to $900,000.”
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