Chip shortage dubbed 'RAMaggedon' drives up consumer prices due to AI demand

The rise in prices for goods such as smartphones and laptops, and possibly even cars, has become an undesirable consequence of the frenzy surrounding artificial intelligence. This component shortage is not yet over.

Samsung Electronics CFO reported this week that the scarcity of digital data storage microchips is likely to intensify in 2027 and remain strained until 2028.

This crisis has been named 'RAMaggedon' in reference to RAM components, or random access memory. It is caused by chip manufacturers, driven by profit motives, reorienting production towards High Bandwidth Memory (HBM)—a more advanced type of computer memory that is in huge demand for training and running AI tools.

Wade Lam, a manager at In-Technology Services, one of many small retailers in Wan Chai Computer Centre in Hong Kong, told AFP that the displayed items are intended to inform customers who 'do not know what is happening.' The center sells a variety of tech equipment, from gaming consoles to computer components.

Ken Tam, manager of Videocom Computer, which specializes in custom PC builds, noted that business has halved since the price increases began in September. He stated that the price of sixteen gigabytes of RAM rose from HK$300–400 (US$40–50) to HK$1,500.

Tam added that when prices suddenly become so high, buyers face a psychological barrier. While they will buy the necessary memory if it is essential, otherwise, they will either wait or lower their requirements and purchase a less powerful chip.

Chinese Competition

Analyst Ellie Wang from the Taiwanese market research firm TrendForce stated that the prices for PC and smartphone memory have risen by approximately five to six times compared to the previous year. The AI boom has brought enormous profits and stock growth to three global memory manufacturing leaders: South Korea's Samsung Electronics, SK hynix, and American giant Micron.

ChangXin Memory Technologies (CXMT) ranks fourth, becoming the most valuable mainland Chinese company on Monday after its debut on the Shanghai Stock Exchange, indicating the intensity of the sector. James Zhao, Senior Lead Analyst at Omdia, noted that CXMT, being a relatively new player, 'retains a follower position regarding advanced technologies.'

HBM is used in data center servers to support other powerful chips, such as those produced by American leader Nvidia, which perform complex calculations for AI systems. However, regarding traditional computer RAM and DRAM types, he suggested that the 'current limited supply market environment' could give CXMT an 'early entrant advantage.'

In a shopping mall in another part of Hong Kong, customer Henry Wong, an investment banker, reported that he decided to upgrade the RAM in his old laptop instead of buying a new device with better specifications. He shared that after the memory upgrade, the laptop ran very smoothly, and he lost the desire to buy a new computer.

Bubble

Automakers are reporting increased costs for onboard computing systems, which could also lead to higher prices for new vehicles. In Tokyo's Akihabara technology center, Charles Bruss, a 30-year-old graphic designer and PC builder from Belgium, stated that the prices for RAM, graphics cards, and motherboards have reached 'absurd levels.'

For his service 'PC & Chill,' Bruss does not purchase components for pre-building machines because it is too expensive, but requires clients to buy them themselves, and he assembles them. Bruss, while in Tokyo on his honeymoon, noted that the chip shortage forces people to buy cheaper laptops instead of desktop computers that can last for ten years. He expressed doubt about whether this is good, as people are acquiring products with shorter lifespans, which fuels the consumption cycle.

Bruss also added that the fact that this shortage is driven by an AI 'speculative bubble' disappoints him, as he himself is a graphic designer, and AI is having a real impact on his profession.