AI Boom Drives DRAM/HBM Hoarding, Squeezing Margins
The rapid expansion of AI data centers is causing major players to hoard high-bandwidth memory, driving DRAM/HBM prices up by 170%. This supply strain is reportedly forcing margin squeezes for Apple's iPhone and causing product delays for companies like Sony and Nintendo. The intense demand highlights the significant ripple effects of the AI buildout on the global consumer electronics supply chain.
- SK Hynix has become the leader in the DRAM market for the first time, capturing a 36% revenue share in the first quarter of 2025, largely due to its dominance in the HBM market. Samsung fell to second place with a 34% share. - The cost for a 12GB LPDDR5X memory module, a type used in smartphones, more than doubled for Apple in 2025, increasing from about $30 at the start of the year to $70 by the end. To manage this, Apple has shifted from negotiating memory prices every six months to every quarter. - The supply constraint is forcing competitors to alter long-term product roadmaps; Sony is reportedly considering delaying the PlayStation 6 from a rumored 2027 release to 2028 or even 2029. Nintendo is also contemplating a price increase for the Switch 2. - Memory components can account for 10% to 20% of the material costs for high-end smartphones. The impact is more severe for PC makers like HP, which estimated that rising memory costs would reduce its 2026 adjusted earnings per share by 30 cents. - Memory manufacturers are reallocating production capacity away from traditional DRAM to the more complex and lucrative HBM. This shift is a primary cause of the shortage, with HBM expected to consume 23% of the total DRAM wafer output in 2026. - The overall high-bandwidth memory market is projected to grow from around $7 billion in 2025 to over $71 billion by 2035, exhibiting a compound annual growth rate of over 26%. - Relief from the current supply constraints is not expected in the short term, as the lead time for building new DRAM fabrication plants is typically three to five years. Major new facilities are not expected to be operational until 2027-2028. - Memory suppliers are racing to develop next-generation technology, with Samsung, SK Hynix, and Micron all planning for mass production of HBM4 in 2026. Samsung has also detailed a roadmap that includes HBM4E in 2027 and HBM5 in 2029.
