Samsung says tight memory supply will favor long term contracts and prioritize AI data centers, creating price pressure that could ripple through consumer device markets.
According to Samsung, the RAM-chip shortage will not only persist into next year, but will likely intensify in 2027, and strained supply conditions will last at least until 2028. The company manufactures and supplies about a third of the world’s memory chips.
During its second-quarter report, Samsung noted that advanced artificial intelligence laboratories that require access to memory infrastructure are reaching out to the company with their medium- and long-term demand forecasts to secure future supply.
share their medium- and long-term demand forecasts
– Samsung Electronics
Impact of Demand on Contracts and Production Plans
Rising demand allows Samsung to favor customers who are willing to sign multiyear contracts. Such long-term visibility enables placing equipment and ramping up production for the long term, without worrying that demand will suddenly disappear, helping to avoid boom-and-bust cycles in the memory market.
At the same time, rising demand pushes chip prices higher, and increases in component costs affect profitability. While memory division revenue reached a record high in the second quarter, profitability in the mobile and TV segments declined due to higher component costs.
The company has also begun passing a portion of rising component costs on to consumers by raising prices for Galaxy smartphones and tablets. As a result, demand for these devices has declined somewhat.
Memory shortage, unofficially known as RAMageddon, has also prompted Apple to raise prices on its MacBook, Mac, and iPad last month. According to the latest earnings call, Apple warned that revenue growth in the next quarter is expected to be in the range of 9–11% year over year, compared with about 16% growth in the previous period.
While memory manufacturers redirect capacity to AI data-centers and pull resources from consumer devices, consumers face a new reality – higher device costs. Nvidia is expected to raise prices for its consumer graphics cards by 20–30%, which could push up the cost of gaming hardware, desktops, consoles, and laptops.
In the future, the memory market could face a longer deficit, affecting prices and manufacturers’ decisions. Consumers may feel higher gadget costs, while companies will need to rethink supply chains and invest in memory infrastructure.
To sum up, experts expect continued volatility in the memory market over the coming years and potential further price movements in the technology sector and related industries.