Tech firms warn of memory-chip shortage

Dell Technologies, HP and other tech companies are warning of potential memory-chip supply shortages in the coming year due to soaring demand from the build-out of artificial intelligence (AI) infrastructure.

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Consumer electronics makers including Xiaomi have sounded the alarm about potential price increases, while others including Lenovo Group have begun stockpiling memory chips in anticipation of rising costs. Counterpoint Research in November forecast a 50 per cent price rise for memory modules through the second quarter of 2026.

A shortage would threaten to increase the costs of manufacturing everything from phones to medical equipment and cars. Such chips are used in virtually every modern electronic device that stores data.

The Al boom is indirectly to blame. There are two types of memory chips, ones that help with processing and ones that store information. Manufacturers are allocating more production to meet demand for new, more complex and profitable products used in Al systems, causing a shortage of more common types of memory.

Dell has never seen “costs move at the rate” that they are now, chief operating officer Jeff Clarke said on a call with analysts on Nov 25. The company has seen tighter supplies of dynamic random access memory, DRAM for short which includes high-bandwidth memory for AI to the chips powering personal computers (PCs) as well as of hard drives and so-called NAND flash memory, he said.

"The cost basis is going up across all products."

Dell will work on its configurations and product mix, but Mr Clarke said he sees the impact inevitably reaching customers. The Texas-based computer maker will consider all options, including repricing some devices, he said.