Demand for memory chips currently exceeds supply and there’s very little chance of that changing any time soon. More chips for AI means less available for other products such as computers and phones and that could drive up those prices too.
AILSA CHANG, HOST:
The world has a memory shortage, and it’s in large part because of the AI boom. Artificial intelligence is having an impact on all kinds of things, including how much memory there is to power the technology that we all use. NPR’s John Ruwitch has been covering this and joins us now. Hi, John.
JOHN RUWITCH, BYLINE: Hey there.
CHANG: Hey. OK, so what does this mean, that we have a memory shortage? Like, what are we looking at here?
RUWITCH: Yeah, we all have memory shortages from now and then – right? – occasionally.
CHANG: I mean, I do (laughter).
RUWITCH: It’s a Friday. Ha ha. But what we’re talking about here is different. It’s computer memory, right? There’s a RAM shortage in the world right now. RAM as in R-A-M, random access memory. This is kind of a microchip that provides the short-term memory for your computer or smartphone or device. It’s what makes real-time computing possible. And to note, though, that RAM is different than storage, right? So your computer comes with a hard drive that’s maybe a few hundred gigabytes or a terabyte. That’s storage. RAM is – basically makes computing smooth. It allows you to have more tabs open on your browser, for instance, or watch videos without it being choppy.
CHANG: OK, that makes sense. So how big of a deal is it, then, that we don’t have enough memory?
RUWITCH: Yeah, it seems to be pretty seismic. I spoke with Avril Wu about this. She’s a senior vice president at TrendForce, which is a Taiwan-based tech consultancy that tracks markets for computer hardware. She says cloud providers and all these new AI data centers that are coming up around the world are sucking up a lot of these memory chips, and she’s crunched the numbers on it.
AVRIL WU: It means that out of the overall demand out there, there’s 10% that cannot be fulfilled.
RUWITCH: So 10% of demand can’t be fulfilled. That’s pretty big. If you think about it, every laptop, PlayStation, iPad, smart TV, they all have this kind of memory in them. And now there’s this big upswing in demand from the AI boom. One of the companies that makes chips – these chips is Micron, based in Boise, Idaho. They released quarterly earnings last week, and they’re doing pretty well. This shortage has meant there’s a lot of demand for the chips and higher prices. Here’s a clip of CEO Sanjay Mehrotra talking about it on a webcast after earnings.
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SANJAY MEHROTRA: We believe that the aggregate industry supply will remain substantially short of the demand for the foreseeable future.
CHANG: OK, so how does this chip shortage affect you and me specifically?
RUWITCH: Yeah, it comes from the data centers, but it kind of affects everything. And chip companies have been prioritizing this AI boom, so they’ve been shifting production to make more memory for their cloud computing and AI data center customers. That means there’s less of this RAM to go around for other segments of the market, like PCs, mobile phones, video games. Here’s Avril Wu again.
WU: I keep telling everybody that if you want a device, you buy it now. I myself bought an iPhone 17 already.
RUWITCH: That’s because she’s predicting that prices will rise as companies pass on these higher costs. And this quarter alone, she told me that the price of one popular category of memory chip has already gone up as much as three times from last quarter.
CHANG: Wow. Well, how soon can all of this be resolved, do you think?
RUWITCH: There doesn’t seem to be a short-term fix. You know, the analysts I spoke to all said that this is a structural change in the market. Demand for memory for these data centers is only going to grow. And the reality is that there’s limited RAM production capacity on Earth, and it takes years to build new chip fabs. Avril Wu from TrendForce says that the next big one is being built in Idaho. It’s being built by Micron, and the company’s website says that it won’t come online until 2027. So we can probably expect prices of memory and of all the stuff that this memory goes into going up in the coming months and maybe years.
CHANG: That is NPR’s John Ruwitch. Thank you so much, John.
RUWITCH: You’re welcome.
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