Soaring demand for AI infrastructure from tech giants like OpenAI, Alphabet, and Microsoft has triggered a severe shortage and dramatic price increases for memory chips, diverting supply from consumer electronics and pressuring the broader market. Memory chip prices have surged approximately 50% over the past year, with some specific products experiencing inflation as high as 1,000% over two quarters, according to industry reports.
The supply crunch is being driven by massive purchases of high-bandwidth memory (HBM) for AI servers, with Nvidia's needs placing particular pressure on its key supplier, SK Hynix. Major memory producers—Samsung Electronics, SK Hynix, and Micron Technology—are prioritizing these high-margin data center sales, which is pulling capacity away from the production of standard memory for consumer devices.
This shift is having a cascading effect on global electronics markets. Research firms IDC and Counterpoint now predict global smartphone sales will fall by at least 2% in 2026, marking the first annual decline since 2023. The PC market is projected to shrink by 4.9% this year, a reversal from 8.1% growth in 2025. Console sales are also expected to drop by 4.4% in 2026.
Analysts forecast memory prices could jump another 40-50% in the first quarter of 2026, forcing device manufacturers into a difficult position. Companies like HP and Raspberry Pi have already announced price increases, with HP's CEO citing memory costs directly. Low and mid-range manufacturers like Xiaomi, TCL, and Lenovo, which operate on thinner margins, face the greatest pressure. TrendForce reports that Dell and Lenovo were planning price increases of up to 20% in early 2026.
Conversely, the chipmakers themselves are benefiting significantly. SK Hynix, a leading HBM producer, is at the center of the AI demand wave and is expanding production capacity with a new plant. Samsung Electronics has seen a sharp rebound, with early data indicating operating profit for a recent quarter tripled year-over-year, largely due to higher memory prices. Both companies are set to report earnings on January 29, offering a clear view of the boom.
While most consumer electronics firms are struggling, Apple appears better insulated due to its strong pricing power and use of long-term supply contracts that protect against spot market volatility.
