HBM seizes all chip production capacity? Global memory supply tightens, smartphones may be impacted next year

The explosive growth in demand for artificial intelligence is causing a global shortage in memory chip supply. Chip manufacturers and analysts warn that this shortage could impact the consumer electronics and automotive industries next year. Chipmakers are shifting their production focus toward high-margin AI application chips, leading to limited supply of low-cost memory chips needed for traditional consumer products.

According to a Wallstreetcn article, Zhao Haijun, co-CEO of Semiconductor Manufacturing International Corporation (SMIC), stated on last Friday’s earnings call that current industry memory prices have risen significantly, and the "storage super cycle" will have a negative impact on end-product manufacturers. He said that concerns about memory chip shortages are causing customers to delay orders for other types of chips.

"No one is willing to place too many orders or make too many shipments in the first quarter of next year because they don’t know how many phones, cars, or other products (the memory chip industry) can supply."

Another Wallstreetcn article also mentions that Samsung Electronics has quietly raised prices on some memory chips in October by 30%-60%. Market research firm TrendForce predicts that the memory industry has entered a "strong price increase cycle" and this may force downstream brands to raise retail prices.

Analysts point out that AI demand in 2026 is expected to far exceed this year, and the severe downturn in the memory industry during parts of 2023 and 2024 led to underinvestment, with new capacity construction underway but needing time to come online.

AI server demand squeezes traditional market supply—Is HBM taking all chip capacity?

Chipmakers are shifting their production focus toward advanced memory chips needed for AI computing, reducing production investment for consumer products. AI servers mainly run on processors designed by companies like Nvidia, and these AI processors heavily rely on high-bandwidth memory (HBM).

Dan Nystedt, Vice President of Research at TriOrient, said, "AI construction is absolutely consuming a large amount of available chip supply, and overall demand in 2026 looks like it will far exceed this year." He noted that memory companies like SK Hynix and Micron are chasing AI demand, since AI server companies are willing to pay high prices for premium chips.

Memory suppliers have been chasing as much AI demand as possible, thanks to typically higher profit margins. Nystedt warned, "This could be very bad news for PCs, laptops, consumer electronics, and cars that rely on cheap memory chips."

Supply shortages drive up chip prices

Facing supply constraints, memory companies have reportedly begun increasing chip prices. M.S. Hwang, Research Director at Counterpoint Research, said, "With rising memory prices and shrinking supply, worries about production bottlenecks are growing."

Supply shortages have already hit the low-end smartphone and set-top box markets, but the risks could expand further. Hwang pointed out that, due to high reliance on low-cost devices, some Asian markets "are feeling the pressure even more," but he cautions that supply constraints are a global issue.

TrendForce predicts that the memory industry’s price increase cycle may force downstream brands to raise retail prices, adding pressure to the consumer market. The firm expects that consumer products such as smartphones and laptops will face even greater price and demand pressure.

Insufficient memory capacity intensifies downstream market tension

The memory industry experienced a severe downturn during parts of 2023 and 2024, resulting in underinvestment, which further worsened the current supply strain. Nystedt said, "They are now building new capacity, but it takes time before it comes online."

This capacity shortage sharply contrasts with the surge in AI demand, creating a market environment of severe supply-demand imbalance. Analysts expect that until large amounts of new capacity come online, this supply strain may continue until the end of 2025, or even longer.

Consumers may pay the price for memory shortages, with products ranging from smartphones to cars all facing upward price pressure.

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