Memory shortage crisis deepens as DRAM prices surge 70% amid AI server demand

The Daring Attempt to End the Memory Shortage Crisis

The supply shortage of the RAM needed to build phones and PCs isn't going away. But a few companies have a plan to solve it. A supply shortage is the last thing tech companies want to talk about at CES. The annual trade show is their chance to promote new products and drum up excitement for what's coming, not discuss the one thing that could make selling new products in 2026 an uphill battle. But I've read the reports. I've seen the RAM kits selling for thousands of dollars. I've heard the statements from laptop suppliers and part manufacturers warning investors about what's coming. You probably have too. The memory chip shortage is already dire for companies and for individuals who build their own PCs. But don't think because you only use a laptop and a phone you're going to get out of this so easy. While the situation remains grim, I met two companies who have engineered ways out. Their plans aren't guaranteed to work, and they won't be easy to pull off. But they just might be our only hope. "We're waiting for the AI bubble to pop," a spokesperson from a small PC manufacturer who wished to remain anonymous told me when asked about how they were handling the memory shortage. None of the big laptop manufacturers or PC builders would say something quite that direct, but actions speak louder than words. While happily selling "AI PCs," Lenovo, Dell, Asus, and HP have all stated that they'll be doing everything in their power to secure their supply of DRAM for the foreseeable future. DRAM, or dynamic random-access memory, is the kind of memory used in laptops and phones, and it's what the three main memory manufacturers are now turning their backs on in favor of high-bandwidth memory for AI data centers. Lack of memory is the main reason you can't run ChatGPT on your PC and have to outsource every prompt to the cloud. I spoke to Dell COO Jeff Clarke in December about what his company was doing to remedy the situation. "Our focus has been to secure the supply. That has always been the number one rule of our supply chain -- to never run out of parts. We've been at this for a while. This just didn't show up. So we've been out there for a while securing our supply." It's a sentiment similar to what competitors like HP and Asus have told shareholders. But hoarding memory will only have two effects: It will raise prices even more or further tighten supply. Rumors of higher prices on electronics have begun to flood the internet. On the last day of 2025, Asus went first, officially announcing that it would be raising prices and tweaking configuration options on existing products. This was the follow-up to a leaked internal document from Dell stating that prices could rise by as much as 30 percent in 2026.

The PC market braces for an AI-driven storm

The personal computer has remained surprisingly resilient to change over the past 15 years. Apple promised a "post-PC" era with the iPad in 2010 and failed to deliver one. Smartphones even overtook laptops as the most popular device to connect to the internet a decade ago, but millions of people still kept buying PCs every year. But this PC resiliency is going to be tested even further this year. RAM and NAND / SSD prices have surged in recent months due to shortages created by AI data center demand. Some stores have had to sell memory like it's lobster, prebuilt PC costs have risen, and some assemblers are even selling PCs without RAM. Now, we're about to see how the shortage hits regular laptops and PCs from the likes of Lenovo, Dell, HP, Asus, and Acer. TrendForce predicts that memory prices are projected to "rise sharply again in the first quarter of 2026." More price rises will only put further pressure on laptop and PC pricing, and we're seeing early signs that PC makers are adjusting prices at CES this week. Asus announced to its channel partners this week that it's implementing price hikes across its products as a result of the memory market conditions. Dell also adjusted the launch pricing of its XPS 14 and XPS 16 just hours before they were announced this week, in a sign that laptop pricing is going to become increasingly fluid. Lenovo has been stockpiling PC memory to try and weather the storm throughout 2026, and HP has warned it will have to increase prices and offer lower RAM configurations later this year. Like Lenovo, HP also has a stockpile of memory, but it expects the continued rise in costs will begin eating into PC product margins by May. There's no quick fix for PC makers, either. Offering less RAM on laptops will be difficult for manufacturers, particularly below the 8GB threshold. Windows 11 has a minimum RAM requirement of 4GB, but it doesn't run particularly well in those conditions. While TrendForce predicts some smartphones are likely to return to just 4GB this year, "for budget notebooks, DRAM cannot be reduced quickly due to processor pairing needs and operating system limitations." The timing of this memory shortage couldn't be any worse for Microsoft and its PC partners. Windows 10 just hit end of life in October, and many businesses are in the process of migrating to Windows 11. That often involves a PC refresh cycle, and there were strong signs throughout 2025 that PC shipments were accelerating thanks to a refresh of the existing install base. That momentum could be derailed later this year once RAM stockpiles are depleted. Timing isn't the only problem for the PC market, as the increased prices of RAM and SSDs could be permanent instead of a temporary supply constraint. "This is not just a cyclical shortage driven by a mismatch in supply and demand, but a potentially permanent, strategic reallocation of the world's silicon wafer capacity," warns IDC. "For decades, the production of DRAM and NAND Flash for smartphones and PCs was the primary driver for production. Today, that dynamic has inverted." The demand from hyperscalers like Microsoft, Google, Meta, and Amazon has pushed Samsung, SK Hynix, and Micron to pivot toward building high-bandwidth (HBM) and high-capacity DDR5 memory. "Every wafer allocated to an HBM stack for an Nvidia GPU is a wafer denied to the LPDDR5X module of a mid-range smartphone or the SSD of a consumer laptop," says IDC. This is going to have a big impact on the DIY market and PC gaming, too. "PC gaming is thriving at a time when overall consumer PC shipments have declined by 14 percent in the last five years... annual gaming PC shipments are up 50 percent," said Henry Lin, director of product management at Nvidia, in a briefing with The Verge last week. The popularity of PC gaming has allowed smaller assemblers to offer custom prebuilt systems at competitive prices. These smaller builders can't stockpile RAM or SSDs, and "will bear the greatest burden of the shortage," warns IDC. "That in turn represents an opportunity for large OEMs to gain share from smaller assemblers in the gaming space by positioning prebuilt systems as offering higher value." Demand for memory looks set to impact GPU prices too. Rumors have suggested that Nvidia could force GPU partners to adjust pricing to factor in increased memory costs. "The demand for memory in the market is at record levels, and this does mean supply will be tight," admitted Ben Berraondo, director of global PR for Nvidia GeForce, in a briefing with The Verge last week. "There have been no major changes in how we manage memory with our customers. There are no major supply chain changes to GeForce," says Berraondo. Despite a lack of major memory changes to GeForce, pricing is already starting to increase. Newegg has started listing a variety of RTX 5090 cards at well above $4,000. It's becoming increasingly difficult to find an RTX 5090 for under $3,000, after prices were close to the $1,999 retail price in September. Berraondo didn't comment directly on the rumors of $5,000 pricing for the RTX 5090, but he did point to Nvidia's Founders Edition model still being listed at $1,999 at Best Buy. That's great, but it's constantly out of stock so it's not representative of the true retail pricing of the RTX 5090. If the costs of building a gaming PC don't stabilize in 2026, Microsoft will also feel increased pressure on its next-gen Xbox plans. Microsoft is aggressively pivoting toward PC for the future of Xbox consoles, with the handheld Xbox Ally devices just the beginning of its plans. Component costs could force the price of the next-gen Xbox even higher and also impact Sony's plans with the PS6 and Valve's upcoming Steam Machine. The memory shortage also threatens to impact Microsoft's AI PC push. Microsoft set a surprising minimum of 16GB of RAM for its Copilot Plus PCs, in order to handle local small language models. Qualcomm has been pushing to bring Windows on Arm (Copilot Plus PCs) down to the $600 price range, but that effort looks set to reverse due to memory costs. It increasingly feels like we're witnessing a battle over the future of the PC, where component prices and AI features are having a big impact on computing. If AI demand wins the battle then more traditional computing tasks will increasingly be performed in the cloud. That could force businesses to increasingly move to virtual machines instead of refreshing laptops and gamers to look at cloud streaming services instead of buying an expensive gaming PC. I don't think this battle means the end of the PC anytime soon. It just feels like another step in Big Tech marching us toward an unproven AI future. I have faith the PC will survive and evolve and prove once again how important it truly is. I'm always keen to hear from readers, so please drop a comment here, or you can reach me at [email protected] if you want to discuss anything else. If you've heard about any of Microsoft's secret projects, you can reach me via email at [email protected] or speak to me confidentially on the Signal messaging app, where I'm tomwarren.01. I'm also tomwarren on Telegram, if you'd prefer to chat there. Thanks for subscribing to Notepad.

AI chip frenzy to wallop DRAM prices with 70% hike

Samsung and SK hynix readying another gouge as server silicon squeeze leaves PCs and phones out in the cold Memory prices are set to spike again as chipmakers prioritize AI server production over consumer devices, with analysts warning of a high double-digit jump in Q1 2026 alone as demand outpaces supply. Samsung Electronics and SK hynix are reportedly planning to raise server memory prices by up to 70 percent this quarter, according to Korea Economic Daily. Combined with 50 percent increases in 2025, this could nearly double prices by mid-2026. The two Korean giants, alongside US-based Micron, dominate global memory production. All three are reallocating advanced manufacturing capacity to high-margin server DRAM and HBM chips for AI infrastructure, squeezing supply for PCs and smartphones. Financial analysts have raised their earnings forecasts for the firms in response, as they look to benefit from the AI infrastructure boom that is driving up prices for everyone else. Taiwan-based market watcher TrendForce reports that conventional DRAM prices already jumped 55-60 percent in a single quarter. Yet despite the focus on server chips, supply of these components continues to be strained too, with supplier inventories falling and shipment growth reliant on wafer output increases, according to TrendForce. As a result, it forecasts that server DRAM prices will jump by more than 60 percent in the first quarter of 2026. Prior to Christmas, analyst IDC noted the "unprecedented" memory chip shortage and warned this would have knock-on effects for both hardware makers and end users that may persist well into 2027. "The memory market is at an inflexion point, with demand materially outpacing supply," IDC stated, claiming that while the memory industry has long been characterized by boom-and-bust cycles, this one is different. This crunch stems from AI's voracious appetite for memory - hyperscalers like Microsoft, Google, and Amazon are driving demand that's permanently reshaping silicon wafer allocation away from consumer products (phones and PCs). This restricts the supply of general-purpose memory modules and pushes up prices across the board. IDC expects DRAM and NAND supply growth to lag at just 16 and 17 percent respectively this year, well below historical norms. According to Reuters, shares in the big memory chip makers are rising in response, as investors rub their hands at the prospect of further price increases. Shares in Micron surged 240 percent last year, while Samsung more than doubled and SK Hynix's market cap nearly quadrupled. Samsung's calendar Q4 operating profit is forecast to be up 160 percent, with SK hynix and Micron also expected to double profits in their next earnings disclosures. Economists this week warned that AI infrastructure investment could fuel broader inflation as these price hikes ripple through the economy.

Another Major DRAM and NAND Price Surge in Q1 2026 Predicted

According to a report, contract prices for general-purpose DRAM are expected to rise by 55 to 60 percent quarter-on-quarter, while NAND flash memory contract prices are projected to increase by 33 to 38 percent. The figures apply to standard memory products and exclude high-bandwidth memory. The report identifies AI server demand as the dominant force behind the current price surge. Large-scale AI deployments continue to consume significant volumes of DRAM and NAND, reducing supply availability for other market segments. This imbalance is being reinforced by ongoing DRAM process upgrades and deliberate capacity control on the NAND side, both of which limit near-term production growth. TrendForce further estimates that server DRAM shipment prices will rise by more than 60 percent quarter-on-quarter in Q1 2026, reflecting intense competition for memory in the data center space. Within the NAND market, client-side SSDs are expected to experience the strongest price increases, with contract prices climbing by at least 40 percent. This makes cSSDs the fastest-growing category among NAND flash products in the current quarter. The firm also highlights a broader structural change in memory demand. For the first time, enterprise SSD usage of NAND flash is expected to surpass smartphone-related consumption in 2026. This shift underlines the growing influence of enterprise and AI-driven infrastructure on the global storage market and suggests that elevated pricing pressure could persist beyond the first quarter. 4Q25 1Q26E Total DRAM Conventional DRAM: up 45-50% HBM Blended: up 50-55% Conventional DRAM: up 55-60% HBM Blended: up 50-55% Total NAND Flash up 33-38% up 33-38% Source: IT Home, TrendForce, January 2026

Memory Prices Expected to Surge Further in 2026

Smartphone prices in 2026 are expected to rise due to memory shortages The insatiable demand for artificial intelligence (AI) and server capacity continues to wreak havoc in the memory market. According to a market research and consulting firm, the ongoing DRAM shortage caused memory prices to surge by up to 50 percent in 2025. It is also anticipated to soar by another 50 percent in the first quarter (Q1) of 2026, significantly impacting not just the hardware manufacturers, but also the end user, as the cost of devices increases along with the Bill of Materials (BoM). Memory Prices to Surge Further According to Counterpoint Research's Memory Price Tracker for January 2026, memory prices increased by 40 to 50 percent in Q4 2025. A stick of 64GB RDIMM RAM surged from $255 (roughly Rs. 23,000) in Q3 2025 to $450 (roughly Rs. 40,500) in the fourth quarter, translating into a price hike of about 75 percent. The market intelligence firm suggests that the price for the RAM may reach $700 (roughly Rs. 63,000) by March 2026. Analysts say it would not come as a surprise if memory prices surpass the $1,000 (roughly Rs. 90,000) mark. It could reach as high as $1.95 (roughly Rs. 175) per GB, which is said to be almost double the 2018 high, when it was recorded at $1 (roughly Rs. 90) per GB. Per Counterpoint, the surge in DRAM and NAND prices is bringing a structural shift in the BOM costs for hardware manufacturers. For example, the memory components are said to have accounted for more than 10 percent of the BOM of the iPhone 17 Pro Max. This number could be even higher for top-of-the-line variants. If the current price hikes continue, smartphones featuring 16-24GB LPDDR5X RAM and 512GB-1TB UFS 4.0 onboard storage may see 20 percent or more, of the total BOM, account for just the memory components. This suggests a substantial increase compared to five years ago, when it accounted for about 8 percent of the BoM for the iPhone 12 Pro Max. This, however, is impacting consumers too. Amid the ongoing Consumer Electronics Show (CES) 2026, Samsung's President and Chief Marketing Officer, Won-Jin Lee, reportedly stated that the ongoing memory chip shortage is worsening, and it may prompt the company to reprice its devices in the coming days. In a recent conversation with Gadgets 360, Francis Wong, Chief Marketing Officer at Realme India, stated that smartphones launching in 2026 will be more expensive than those with similar specifications in 2025. "This trend is unstoppable and will continue till H2 2027," the official added.