AI Boom Sparks Decade-Long Memory and Storage Shortage Concerns

Reviewed byNidhi Govil

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Industry experts warn of a potential 10-year shortage in NAND flash and DRAM due to surging AI demand. This could lead to significant price increases for SSDs, RAM, and various electronic devices.

AI Boom Triggers Memory and Storage Crisis

The rapid advancement of artificial intelligence (AI) is not only revolutionizing software and services but also creating a significant impact on hardware markets. Industry experts are now warning of a potential decade-long shortage in NAND flash and DRAM, driven by the insatiable appetite of AI for memory and storage resources

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Source: Digit

Source: Digit

Unprecedented Demand from AI Data Centers

The surge in demand is primarily attributed to the explosive growth of AI-focused data centers. These facilities require vast amounts of high-speed memory and storage to support complex AI models and applications. According to reports, some AI projects are consuming up to 40% of global DRAM output, highlighting the scale of this demand

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. For instance, OpenAI has reportedly signed a deal with Samsung and SK Hynix for 900,000 DRAM wafers per month, potentially accounting for 40% of current global DRAM production

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Source: pcgamer

Source: pcgamer

Shift from HDDs to SSDs

Another factor contributing to the shortage is the ongoing transition from traditional hard disk drives (HDDs) to solid-state drives (SSDs) in data centers. Pua Khein-Seng, CEO of Phison Electronics Corporation, notes that the ratio of SSDs to HDDs in data centers has shifted from single digits in 2020 to about 20% today, with projections suggesting it could reach 80-100% in the near future

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Source: TweakTown

Source: TweakTown

Supply Constraints and Manufacturing Challenges

The supply side is struggling to keep up with this surge in demand. Memory manufacturers had scaled back production during the market slowdown of 2022-2023, creating a shortfall as demand rebounded. Additionally, many manufacturers are now focusing on high-margin memory segments like High Bandwidth Memory (HBM) for specialized AI applications, diverting resources from mainstream DRAM and NAND flash production

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Impact on Consumers and Businesses

The consequences of this supply-demand imbalance are already visible in the market. Contract prices for DRAM and NAND flash have surged by 15-20% in late 2025. Consumers and businesses alike are facing the prospect of higher prices for a wide range of electronic devices, including smartphones, PCs, and graphics cards

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Long-Term Outlook and Industry Response

While some analysts predict that this shortage could last up to a decade, others caution about a potential AI bubble that might burst, which could alleviate some of the pressure on the memory and storage markets

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. In response to these challenges, the industry may need to prioritize efficiency and optimization in memory usage, potentially driving innovation in hardware design and AI algorithms

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