AI-Driven Memory Chip Shortage Predicted to Last Until 2030: What It Means for the Tech Industry
Summary:
- The global memory chip shortage, driven by AI demands, is expected to continue until 2030.
- Major impacts include potential bankruptcies of several tech companies and significant reductions in smartphone, PC, and TV production.
- Prices for memory products have surged, leading to an unstable supply and favoring high-profit customers.
The semiconductor landscape is undergoing seismic shifts, particularly in the memory chip sector. In a candid assessment, Pan Jiancheng, CEO of Phison Electronics, has projected that the ongoing AI-driven memory chip shortage could last until 2030. He warns that this crisis could lead to numerous manufacturers facing bankruptcy or withdrawing entirely from certain product lines by the end of 2026 due to insufficient memory supply.
Current Market Dynamics
The DRAM and NAND Flash markets have transitioned into seller-driven environments, where suppliers now demand unusually large advance payments—some requiring three years’ worth—to guarantee allocation of production capacity. This shift has not only changed the operational logistics for manufacturers but also placed considerable pressure on the consumer market.
On the consumer front, projections are grim. Experts anticipate significant declines in smartphone production, with estimates estimating a drop of 200 million to 250 million units. Similarly, shipments for PCs and TVs are expected to witness drastic cuts. This situation firmly places stress on supply chains, particularly in sectors reliant on these critical components.
Uncontrolled Price Increases
The impact of these market changes is starkly visible in pricing trends. The cost of 8GB eMMC memory chips has skyrocketed from approximately $1.50 in early 2025 to an alarming $20, while automotive-grade products are nearing $30. This drastic price increase has created instability in supply chains, compounding the challenges already faced by manufacturers.
Jiancheng emphasizes that many companies within the consumer sector are at risk. Without steady supply lines and access to essential materials, the sustainability of operations for system manufacturers is jeopardized.
Prioritization and Structural Imbalances
As the supply becomes increasingly tight, suppliers are strategically prioritizing high-profit customers. Data suggests that memory components account for over 20% of material costs in smartphones—an exponential increase compared to just 5% to 6% for servers. This significant disparity creates a bidding advantage for data center clients, further sidelining consumer-facing tech companies.
Consumers may be compelled to extend the life cycles of their devices. With repairs becoming a more viable option than purchasing new products, this scenario could inadvertently lead to an increase in the longevity of electronics, as consumers face the harsh realities of rising costs and limited supplies.
The Growing Demand from AI
To further illustrate the scale of the growing demand, Jiancheng pointed to the NVIDIA Vera Rubin GPU as a compelling case study. It requires an SSD with more than 20TB of storage. Should shipments reach approximately 10 million units, this alone would consume a staggering 20% of global NAND production capacity from the previous year. This figure alone does not even account for the considerable data storage needs generated by various AI systems.
Conclusion
The ramifications of the ongoing memory chip shortage are profound, threatening the very foundation of the tech industry. With the current trajectory, manufacturers and consumers alike need to adapt to a new reality characterized by inflated prices, limited availability, and a shift toward more sustainable consumption practices. As we look toward 2030, understanding these dynamics will be crucial for stakeholders at all levels of the industry.
In a landscape where memory components are becoming scarce, the overarching message is clear: adaptability and strategic planning are vital to navigating this challenging period.
