AI Keeps Consumer Prices High in 'RAMaggedon' Chip Crunch

Consumers are facing higher prices for electronics like laptops and smartphones due to a severe shortage of memory chips, a situation dubbed "RAMaggedon." This crunch is driven by chip manufacturers shifting production to high-bandwidth memory (HBM), a crucial component for training and running artificial intelligence systems.

The demand for HBM has led to a significant reduction in the supply of conventional random-access memory (RAM). This shift has caused prices for RAM to skyrocket. For instance, 16 gigabytes of RAM, which previously cost around $40-50, now sells for approximately $150 in Hong Kong.

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If they need it, they will buy it, but otherwise they will wait, or lower their standards and buy a less high-performing memory chip.

This price surge is creating a psychological barrier for consumers, with many delaying purchases or opting for less powerful components. Ken Tam, manager of Videocom Computer, noted that business has halved since prices began rising in September. He observed that customers either buy if absolutely necessary, wait for prices to drop, or compromise on performance.

Industry analysts predict the shortage will persist. Samsung Electronics' CFO indicated that microchip shortages could deepen in 2027 and remain tight through 2028. While companies like Samsung, SK hynix, and Micron are benefiting from the AI boom, Chinese newcomer ChangXin Memory Technologies (CXMT) is positioned as a follower in leading-edge technologies but might find advantages in the current supply-constrained market for conventional DRAM. The situation highlights the intense demand and strategic shifts within the global semiconductor industry.

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the current supply-constrained market environment could bring CXMT late-mover advantages