AI frenzy is driving a memory chip supply chain crisis

An acute global shortage of memory chips is forcing artificial intelligence (AI) and consumer-electronics companies to fight for dwindling supplies, as prices soar for the unglamorous but essential components that allow devices to store data.

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Japanese electronics stores have begun limiting how many hard-disk drives shoppers can buy. Chinese smartphone makers are warning of price increases.

Tech giants including Microsoft, Google and ByteDance are scrambling to secure supplies from memory-chip makers such as Micron, Samsung Electronics and SK Hynix, according to three people familiar with the discussions.

The squeeze spans almost every type of memory, from flash chips used in USB drives and smartphones to advanced high-band-width memory (HBM) that feeds Al chips in data centres.

Prices in some segments have more than doubled since February, according to market-research firm TrendForce, drawing traders betting that the rally has further to run.

The fallout could reach beyond tech. Many economists and executives warn the protracted shortage risks slowing Al-based productivity gains and delaying hundreds of billions of dollars in digital infrastructure.

It could add inflationary pressure just as many economies are trying to tame price rises and navigate US tariffs.

“The memory shortage has now graduated from a component-level concern to a macroeconomic risk,” said chief executive Sanchit Vir Gogia of Greyhound Research, a technology advisory firm. The Al build-out “is colliding with a supply chain that cannot meet its physical requirements”.

This Reuters examination of the spiralling supply crisis is based on interviews with almost 40 people, including 17 executives at chipmakers and distributors. It shows industry efforts to meet the voracious appetite for advanced chips — driven by Nvidia and tech giants like Google, Microsoft and Alibaba — created a dual bind.