The memory limit: How chip shortages are driving up prices and slowing down the AI boom

At the end of 2025, the global semiconductor market is facing an acute shortage of memory chips. The three largest players - Micron, SK Hynix and Samsung Electronics - control almost the entire memory market for AI gas pedals, with their shares rising 253.6%, 256% and 178% respectively over the year. Memory issues are already a structural problem, without the solution of which it is impossible to further scale AI.

In January 2025, a consortium of technology companies and infrastructure investors announced the launch of the Stargate project, a large-scale initiative to build next-generation AI data centers. This became the catalyst for the crisis. SK Group chairman Chey Tae-won estimates that the project could require up to 900,000 wafers per month by 2029, roughly double the current global production of HBM memory. Even with aggressive investment, this scale means long-term pressure on the memory market.

A few months ago, Morgan Stanley analysts expected that the peak in HBM memory prices was near. Now the bank refuses from this scenario. The growth of orders for Nvidia H200 gas pedals turned out to be much higher than previous estimates. The bank predicts that prices will increase by another 25%-30% in the first quarter of 2026.

Counterpoint Research estimates that prices for both advanced and legacy memory could rise another 20% in early 2026, cementing scarcity as one of the key constraints to global technology growth. New memory plants will not be available until 2027-2028 at the earliest.

Most of the capacity for 2026 is already completely sold out.

Against the backdrop of shortages, pricing dynamics are becoming more extreme. Samsung, according to Reuters, has raised server memory prices by up to 60%, and major cloud and internet companies including Google, Amazon, Microsoft and Meta are sending requests to manufacturers for unlimited volumes without price fixing. Since the start of 2026, shares of Micron, SK Hynix and Samsung Electronics have risen 27.1%, 17.36% and 24.52% respectively, extending last year's rally.

As manufacturers reallocate capacity in favor of server and AI orders, the shortages are beginning to affect consumer electronics as well.

Market participants cited by Reuters say buyers are willing to accept products at almost any price as long as volumes are guaranteed.

Morgan Stanley is pricing DRAM chips up about 60% year-on-year. The reason is simple: all capacities are loaded, transitions to new process technologies are slow, and AI data centers and conventional electronics are competing for the same chips. Counterpoint Research predicts that average selling prices for Apple and Samsung products will increase by 6.9%.

According to DropReference, between October 2025 and January 2026, the most common type of 32GB DDR5 memory, which is most often used in PCs and laptops, went up in price about 3.7 times - from €150 to €569. In other words, for the end consumer, buying a PC or laptop can cost about €429 more than it did six months ago.

HSBC analysts believe that the current situation is similar to the one in the early 1990s, when the PC memory market grew sixfold. The AI cycle forms a similar, but longer cycle - for 4-5 years. In this scenario, memory ceases to be an ancillary component and becomes a key limiter of the entire AI chain, comparable in strategic importance to Nvidia's gas pedals. And this will affect the shares of the major players.

SK Hynix -- HSBC maintained a "buy" recommendation and raised its target price from 850,000 won to 1,050,000 won in a Jan. 13 report, up 37.4% from the close on Jan. 19. The bank expects the company's operating profit to grow about 57% quarter-on-quarter to reach about 18 trillion won in Q4 2025, while revenue will climb to 33 trillion won. HSBC emphasizes that the current cycle may be longer than usual as AI creates structural and sustainable demand with limited capacity growth, and investments by large and new cloud providers continue to accelerate.

Samsung Electronics. On Jan. 12, UBS maintained a "buy" recommendation and raised its target price from 154,000 won to 172,000 won, which implies a 15.2% upside from the closing price on Jan. 19. According to the Swiss bank, limited supply amid strong demand from servers and AI is leading to a sustained memory shortage that could persist until 2026-2027, supporting high profitability. UBS significantly raises its earnings forecasts: operating profit in 2026 is now estimated at 171 trillion won, well above the consensus of 130 trillion won. Analysts emphasize that rising memory prices will offset margin pressure in the smartphone business, and free cash flow could exceed 100 trillion won in 2026.

In a Dec. 23 report, Morgan Stanley wrote that, Samsung's semiconductor business profits could grow about 310% year-over-year.

Micron . In its latest report, HSBC reiterated a "buy" recommendation on Micron and raised its target price on the stock to $350 from $330, down 3.5% from the closing price on Jan. 13. The upside was originally estimated at about 55%.

The reason for revising the forecasts was the results of the first quarter of fiscal 2026, which significantly exceeded market expectations.

I should add that there has already been a similar deficit on chips - in 2010, European regulators uncovered a cartel conspiracy of memory manufacturers involving Micron, SK Hynix and Samsung Electronics and several Japanese companies. The total amount of fines amounted to €331 million, almost half of which - €145.73 million - was paid by Samsung Electronics. Only Micron was not fined - because the company had reported the collusion.

Does not constitute an investment recommendation

This article was AI-translated and verified by a human editor