The world of memory production is currently navigating a tumultuous period as a ‘supply shock’ ripples through the industry. This has resulted in a frenzy of stockpiling by manufacturers who are entering a phase of panic-buying.
Memory Shortages Anticipated to Extend Through 2027
Demand within the DRAM market has surged, largely due to the expansive development of data centers. Both suppliers and customers are hastily building up their inventories to brace for impending shortages. Reports suggest that companies like ASUS and MSI are actively purchasing consumer memory on the spot market. This reaction is driven by predictions of continued shortages until 2027, potentially keeping RAM prices high for at least a year. In a cautionary move, numerous suppliers have ceased providing price quotes.
Cloud Service Providers (CSPs) are making strategic moves to secure RDIMM modules, while demand for High Bandwidth Memory (HBM) has soared, fueled by the need for AI computing power. This trend is expected to persist for several quarters, signaling challenging times ahead for the consumer PC market. Recent findings indicate that ASUS anticipates rising costs for consumer products if DRAM shortages persist in the coming months, with inventory levels projected to last merely a few weeks due to unforeseen DRAM supply constraints.
Adjustments in Production Capacities
The shortage may extend beyond initial expectations due to the previous ‘downtrend’ in the DRAM industry prior to the AI boom. This led major suppliers like Samsung and SK hynix to reduce DRAM production capacities to protect profitability. With demand spiking unexpectedly, the supply chain is undergoing a realignment to accommodate the increased production demands, a process that has taken several months.
For suppliers, this surge in demand is a welcome opportunity, yet for everyday consumers, the DRAM shortage is proving to be a ‘nightmare’ as it drives up costs for related consumer electronics.