From Xiaomi to HP, multiple tech companies warn of a "memory shortage," with Dell's conference call stating "we've never seen costs rise this quickly."

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From personal computers to smartphones, the technology industry is facing a memory chip supply crisis triggered by the construction of AI infrastructure. Tech giants such as Dell, HP, Xiaomi, Lenovo, and others have recently issued frequent warnings, stating that memory shortages will drive up manufacturing costs for almost all electronic products—from phones to medical devices to cars.

Dell's Chief Operating Officer Jeff Clarke said during an analyst conference call on Tuesday that the company "has never seen costs rising at the current pace." He pointed out that the cost base for all products, from high-bandwidth memory used for AI to dynamic random-access memory (DRAM) for personal computer chips, as well as hard drives and NAND flash memory, are on the rise. Dell stated it would consider all options, including repricing some of its devices.

HP CEO Enrique Lores said in a media interview that the second half of 2026 is expected to be particularly difficult, and the company will raise prices if necessary. He revealed that HP is taking "active measures," including introducing more memory suppliers and reducing the amount of memory used in its products. According to the company, memory accounts for 15% to 18% of the cost of a typical PC.

Market research firm Counterpoint Research predicted this month that by the second quarter of next year, memory module prices will increase by 50%. Xiaomi has already raised prices for its flagship devices and expects that memory chip shortages will lead to further price increases for mobile devices next year. Xiaomi's management pointed out during a conference call that the current rise in memory prices is a long-cycle phenomenon, mainly driven by surging HBM demand stemming from AI rather than traditional cyclical fluctuations in the smartphone and laptop industries.

The AI boom changes capacity allocation patterns

The root cause of this shortage lies in the AI craze's reallocation of chip production capacity. Memory chips are divided into processing-assisting and data-storing types, and manufacturers are allocating more production capacity to new, more complex, and more profitable products used for AI systems, resulting in shortages of more common types of memory.

The memory shortage is due to manufacturers prioritizing business with the world’s largest AI chip supplier, Nvidia, headquartered in Santa Clara, California. Nvidia has been stressing the assembly of the highest value, most advanced systems for AI data centers. Analysts warn that memory shortages could limit production of cars and electronic products in 2026.

Logic chip suppliers may also be affected since customers, if unable to access sufficient memory, may avoid placing orders. These chips are used to process data and are critical for building AI systems.

Manufacturers respond to shortages by stockpiling and raising prices

In response to the supply crisis, many manufacturers have begun taking defensive measures. Lenovo CFO Winston Cheng said Lenovo’s memory inventory is about 50% higher than usual. Asus has also joined the stockpiling, and both PC makers plan to maintain stable prices during the holiday quarter and reassess the market in the new year.

Xiaomi's management revealed that the company has made advance arrangements, signing full-year 2026 supply agreements with its partners to ensure uninterrupted supply. Lu Weibing admitted that rising product prices may partially offset increased memory costs, but the fundamental solution is to continually optimize product structure and resolutely push toward premiumization. The company’s 2025 mobile phone shipment target remains about 170 million units, but there’s a greater focus on improving product structure rather than pure volume growth.

Lenovo emphasized its economies of scale, saying it sees opportunities to capture greater market share by leveraging supply chain advantages while competitors struggle. However, Cheng echoed Dell’s comments, calling this cost surge “unprecedented.”

Apple gave a relatively optimistic assessment. CFO Kevan Parekh acknowledged during an analyst conference call that there is "slight upward pressure" on memory prices, and the cost structure for some new products is marginally higher, but he emphasized that Apple is managing costs well. Like Lenovo, Apple, as one of the largest customers of many suppliers in the electronics supply chain, benefits from favorable conditions for sustained supply.

Supplier valuations soar amid market tension

Tight supply has pushed up valuations of the world’s leading memory manufacturers. With inventories shrinking and supply challenges becoming more evident, stock prices of Samsung Electronics and SK Hynix in South Korea, as well as Micron Technology, have surged in recent months. SK Hynix said last month that it had sold out all its memory chip product lines for next year, and Micron expects supply to remain tight through 2026.

Japan's Kioxia Holdings, focused on NAND production, saw its stock price multiply, driven by the same supply tension after its IPO in December last year. CLSA Korea’s head of research Sanjeev Rana said after Samsung’s earnings release last month: “All memory-related products—whether advanced or traditional—are seeing extremely strong demand and supply is lagging. We may see continued price increases for DRAM and NAND for several quarters.”

SK Group Chairman Chey Tae-won, parent company of SK Hynix, also warned of supply bottlenecks earlier this month. "We have entered an era where supply faces bottlenecks," Chey said during a keynote speech at the SK AI Summit in Seoul. "We are receiving many requests for memory chip supply from companies, and we are working hard to meet all demand."

The race to build AI infrastructure has already pushed up energy bills in areas near large data centers. Now, the battle for AI-driven memory chips is passing cost pressures throughout the entire consumer electronics supply chain.

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