Samsung has reportedly increased the prices of DDR5 memory by up to 60% within a two-month period. This sharp rise is attributed to a surge in demand, fueled by the global race to build advanced AI data centers. The escalating shortages are placing pressure on major technology manufacturers, leading to increased costs across various electronic products, including servers, smartphones, and computers. Samsung’s decision to delay formal pricing announcements until October, typically a monthly affair, underscores the volatile market conditions.

The company has also indicated its intention to potentially raise prices for other components, such as memory chips used in smartphones and computers, further signaling the widespread impact of this scarcity.

Global Memory Shortage Drives Costs and Delays

The current global shortage of memory chips is a direct consequence of increased demand from the development of AI data centers. This surge is putting upward pressure on prices for server builders and electronics manufacturers worldwide.

Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide, highlighted the severity of the situation, noting that many large server and data center manufacturers are struggling to secure sufficient product volumes. He also confirmed that the cost premiums being applied are substantial.

Specific price increases reported by Fusion Worldwide show significant jumps for DDR5 modules. For instance, 32GB DDR5 modules saw contract prices climb from $149 in September to $239 in November. Gonnerman also stated that prices for 64GB and 96GB DDR5 modules have risen by over 30%. Smaller capacity modules, such as 16GB and 128GB, experienced approximately 50% price increases, reaching $135 and $1,194, respectively.

⚡ The chip shortage has become so acute that industry analysts observe some consumers resorting to panic buying to secure necessary components.

The widespread impact of this shortage is evident as companies like Semiconductor Manufacturing International Corp (SMIC) report that clients are delaying orders for other semiconductor components due to uncertainty surrounding memory chip availability.

“People don’t dare place too many orders for the first quarter next year. Because no one knows how many memory (chips) will actually be available – how many phones, cars, or other products it can support.”

– Zhao Haijun, co-CEO of SMIC

Zhao Haijun further elaborated that manufacturers of memory-dependent vehicles and smartphones are likely to face pricing pressures and supply uncertainties in the coming year. He described the current memory market as being in a state of significant undersupply, with costs escalating rapidly.

Haijun also suggested that the current super cycle in the memory industry will intensify competition for foundries. Simultaneously, customers are attempting to negotiate reduced contract prices for other types of integrated circuits to offset the growing price increases on memory chips.

SMIC reported a 9.7% year-over-year increase in its third-quarter revenue, reaching $2.38 billion, primarily driven by robust domestic demand. The company’s profit also saw a rise of 28.9% to $191.75 million. Both figures surpassed analyst expectations, according to LSEG data.

The company’s monthly manufacturing capacity expanded by 3.2% compared to the previous quarter, reaching 1.02 million eight-inch equivalent wafers. Utilization rates, a key indicator of a foundry’s production intensity, improved to 95.8% from 92.5% in the second quarter.

Last month, Xiaomi, a prominent Chinese manufacturer of smartphones, gadgets, and automobiles, also issued a warning regarding increased production costs for its phones, directly linking it to the rising expense of memory chips.

Xiaomi President Lu Weibing indicated that memory chip prices have exceeded initial expectations and are projected to continue their upward trend. Reports suggest that Xiaomi plans to reduce the price of its popular K90 model by 300 yuan ($42) during its initial sales month, bringing the cost down to 2,899 yuan ($407), likely as a strategy to manage inventory amidst rising component costs.

Samsung Capitalizes on Scarcity to Boost Sales

Samsung, an industry giant, appears to be benefiting from the current memory chip scarcity. Having previously lagged behind competitors in delivering AI-specific chips and experiencing slower revenue growth, the company is now seeing a positive impact from the market’s tight supply conditions.

Jeff Kim, head of research at KB Securities, noted that Samsung possesses stronger pricing power in the memory market compared to smaller competitors like SK Hynix and Micron. This advantage is partly attributed to Samsung’s comparatively slower transition to AI-centric chip production.

💡 Notably, according to Korean news outlet Maeil Business News, Samsung plans to sell 35 million units of its flagship Galaxy S26 smartphone. Of this total, 24 million units are anticipated to be sold within the first half of the year, a significant increase from the 22 million units projected for the Galaxy S25 in the same timeframe.