AI-driven memory shortage disrupts consumer electronics production

Scarcity of high-bandwidth memory caused by prioritisation for AI infrastructure is forcing smartphone, PC, and console manufacturers to revise production plans, risking slower growth in the electronics sector amid rising costs and capacity constraints.

Data centre spending on artificial intelligence is siphoning scarce high-bandwidth memory away from consumer products, forcing a rethink of production plans across the smartphone, PC and console sectors and threatening slower growth for electronics makers this year. According to Forbes, shortages of HBM have become acute as manufacturers prioritise large AI customers, a shift that analysts say will persist as demand from model training and inference clusters expands. (Forbes analysis projects the HBM market to surge from about $35 billion in 2025 to roughly $100 billion by 2028.) ^[2]

The imbalance is already influencing the handset market. Qualcomm’s chief executive Cristiano Amon warned analysts that “Industrywide, memory shortages and price increases are likely to define the overall scale of the handset industry,” a reality echoed by market research and investment banks tracking component flows. Industry commentary and trade reporting shows suppliers are allocating limited HBM to the biggest, most strategic customers first, leaving conventional device makers with constrained supply and higher bills. ^[2]

Some smartphone manufacturers have reacted by trimming shipment targets for 2026 as pricier memory chips squeeze margins. Reports from the consumer electronics supply chain and industry press indicate major vendors in China have adjusted forecasts and procurement plans in response to rising memory costs, while leading memory producers impose stricter order controls to prevent hoarding and to favour longstanding, high-volume clients. ^[2],^[3]

Memory producers are responding with capacity investments but any extra output will arrive slowly. Micron has announced major capital projects and capacity deals aimed at expanding flash and DRAM production, including a multibillion-dollar wafer fab build in Singapore and a separate acquisition of a Taiwanese foundry site to boost long-term output; however the company and industry analysts caution that these moves will not materially ease the shortage until the back half of the decade. ^[4],^[5]

The supply squeeze has translated into markedly stronger pricing and fatter margins for suppliers. Industry commentary and company filings show Micron and its peers are benefitting from a cyclical upswing, with elevated HBM revenues and expanded gross margins as tight supply underpins significant price realisation. Market watchers also point to rapid consumer-price rises for high-capacity modules as a visible sign of stress in the broader memory market. ^[6],^[7]

While the immediate effect is tougher economics for device makers and higher retail prices for some components, analysts see a structural rebalancing underway as AI infrastructure demand reshapes memory priorities. According to Forbes and trade reporting, the proportion of high-end memory steered to data centres is expected to remain large this year, leaving consumer electronics to compete for residual supply until incremental capacity comes online over several years. ^[2],^[3]

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Source: Fuse Wire Services