Tech industry leaders, including Elon Musk and Tim Cook, are warning of a brewing global crisis: A shortage of memory chips is starting to hit profits, disrupt corporate planning, push up prices for everything from laptops and smartphones to cars and data centers, and supply constraints will only get worse.
Since the beginning of this year, more than a dozen large companies such as Tesla and Apple have hinted that there is a serious shortage of DRAM, a memory chip used in almost all technology products, which will inevitably restrict production. Cook said this will squeeze iPhone profit margins. Micron Technology called the shortage "unprecedented." Musk even said Tesla would have to build its own chip factory.
"If we don't build a chip factory, we will encounter a chip bottleneck," Musk said late last month.
The root cause of the tight supply of memory chips is the wave of construction of artificial intelligence (AI) data centers. Since NVIDIA's AI chips require a large amount of high-bandwidth memory, the available production capacity of the memory chip industry has been squeezed, and even memory chips used in traditional fields such as mobile phones and personal computers are also facing severe shortages.
The ensuing surge in memory prices is reminiscent of the hyperinflation of the Weimar Republic. From December last year to January this year, the price of a certain type of DRAM surged by 75%. More and more retailers and middlemen are adjusting prices every day. Some people use the term "memory apocalypse" to describe the coming situation.
“We are on the cusp of some huge changes we have never seen before,” Tim Archer, chief executive of chip equipment supplier Lam Group, said at a conference in South Korea this month. “The scale of demand before us between now and the end of this decade will be greater than at any time before and, in fact, will overwhelm all other sources of demand.”
What is worrying is that before the AI giant actually launches its huge data center construction plan, the price of memory chips is soaring and the supply is getting tighter. Alphabet and Amazon announced that capital expenditures this year may be as high as US$185 billion and US$200 billion respectively, which would be the highest level of capital expenditures in a single year in corporate history.
Bernstein semiconductor industry analyst Mark Li warned that memory prices are experiencing a "parabolic" rise. While this will bring huge profits to Samsung, Micron and SK Hynix, other areas of the electronics industry will pay a heavy price in the coming months.
Lenovo Group CEO Yang Yuanqing said in an interview after last week's financial report that this supply shortage will last at least until the end of this year. "The structural imbalance between supply and demand is not a short-term fluctuation."