In the past few months, budget phone makers and other consumer electronics manufacturers have faced rising prices and shortages due to scarcity, while AI data centres and hyperscalers secure the bulk of advanced memory chips.
Phone memory and chips are currently scarce because the massive global boom in artificial intelligence (AI) has forced manufacturers to switch to high-margin AI data centres.
2020 to 2023 pandemic chaos
The global semiconductor supply chain from 2020 to 2023 was a massive crisis. The main reason was the COVID-19 pandemic that disrupted over 170 industries worldwide. The crisis began when early lockdowns forced temporary closures. However, it brought a massive demand for consumer electronics. A combination of external disasters, such as factory fires in Japan, severe drought in Taiwan and the Russia- Ukraine war choking off gas supply, was compounded later when the government passed the U.S. CHIPS Act. This led to a shortage of many types of semiconductor chips, including memory chips (DRAM and NAND flash memory), affecting industries like smartphones, PCs, cars, and more. The shortage was largely unintentional and due to external disruptions.
What Is Different About the Current Shortage?
The current chip shortage, nicknamed RAMmageddon or RAMpocalypse, isn't like the 2020 to 2023 shortage caused by pandemic supply chain chaos. This one is deliberate; memory chip makers like Samsung, SK Hynix and Micron are reallocating factory capacity away from phone-grade DRAM and NAND toward the far more profitable high-bandwidth memory that AI data centres need. High-bandwidth memory (HBM) is far more profitable for chip makers than commodity memory chips for phones. The current "RAMageddon" memory chip crisis is a deliberate shift, with manufacturers favouring high-margin AI hardware over "commodity memory" (DRAM/NAND) used in phones, causing severe shortages and price hikes for consumer electronics.
Big tech companies like Google, Meta, Microsoft, and Amazon have brought up years of chip supplies through expensive long-term contracts. This leaves smartphone makers facing shortages and fighting for leftovers, while pushing phone prices up by nearly 7% this year. At the same time, phone shipments are expected to drop by 13% to 14%, marking the worst decline in the industry. The current shortage is not caused by supply chain chaos but is deliberate.
Budget-friendly brands like Transsion and Xiaomi are hitting the hardest, while giant brands like Apple and Samsung are acting safe. Estimates on when it ends range from 2027 to past 2030, and it's spilling into cars and PCs too, not just phones. Reportedly, computer prices are estimated to increase by 22.2%. The shortage is spilling over into other sectors such as:
Automotive industry (cars increasingly rely on chips for electronics). This means the scarcity and price increases are not limited to phones but affect a wide range of electronics. The automotive industry will delay launching affordable electric vehicles (EVs) because modern car software suites require massive amounts of cheap memory to run safely.
The current DRAM market closely mirrors the 'OPEC of the memory industry,' highlighting the extreme market dominance held by just three key players: Samsung Electronics (005930.KS), SK Hynix (000660.KS), and Micron.
Samsung Electronics and SK Hynix are making record-breaking profits. Even though chipflation is driving costs for consumers. On the Korea Exchange, Samsung's stock bounced back by 3.34%, a nd SK Hynix grew by 3.69%. This recovery happened just one day after heavy "panic selling" caused both stocks to crash, with Samsung dropping 10.70% and SK Hynix plunging 15.37%. Consumers will hold onto their existing phones and PCs for 5 to 7 years instead of the traditional 2 to 3 years, slowing down software adoption rates worldwide. As affordable smartphones and laptops vanish, low-income consumers and developing markets will face a widening technology gap. When people keep old devices longer, software companies stop making new apps because old phones cannot run them.
The long and massive memory chip shortage means higher prices are coming for everyone. Hyperscalers like Apple, Google, and Samsung will survive the memory chip shortage by raising prices, shifting focus, and making only their most profitable product. However, budget brands face a massive crisis in 2026. High chip costs are forcing them to either lose their profits or raise prices so much that they lose their cheap price advantage. In fact, research firm Gartner predicts that cheap computers under $500 will completely disappear by 2028 because making budget electronics is no longer sustainable. Phone brands will have to spend their entire budget just to secure basic memory chips. This leaves them with zero money to invest in other areas. As a result, non-AI features will stop improving.
As cheap phones and laptops disappear, the gap between the rich and the poor will widen. Low-income families and people living in developing countries will be priced out of the modern digital economy. Without affordable smartphones, millions of people will lose access to online banking, digital education, and remote work opportunities.
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