Datacentre growth triggers global memory chip crunch

Drives up prices for everyday electronics

The world is heading towards its most severe memory chip shortage in decades, with the explosive growth of datacentres set to squeeze supplies for everything from smartphones and cars to household appliances.

More than 70% of all high-end memory chips produced globally in 2026 are expected to be consumed by datacentres, including those powering AI systems, according to industry analysts.

Manufacturers say demand would be even higher if supply allowed.

A recent Wall Street Journal article warns that the consequences of the shortage will ripple far beyond computing and into everyday consumer goods.

Prices for memory chips surged by about 50% in the final quarter of 2025 and are forecast to rise by a further 40% to 50% by the end of the first quarter of this year, according to Counterpoint Research.

The increases are being driven largely by datacentre operators, who are willing to pay

significant premiums to secure supply.

"I have tracked the memory sector for almost 20 years, and this time really is different," said Avril Wu, a senior research vice president at TrendForce in Taiwan.

"It really is the craziest time ever."

Chipmakers scale back production of legacy components Although cars, televisions and many consumer electronics rely on older types of memory, chipmakers have scaled back or even abandoned production of these legacy components.

Capacity has instead been funnelled towards newer, more advanced memory required by AI systems.

The result, analysts warn, could echo the production delays seen in the automotive industry during the Covid pandemic.

Memory is now embedded in almost all modern devices, from Bluetooth speakers and set-top boxes to smart fridges and washing machines.

Manufacturers of such products operate on razor-thin margins. A sharp rise in the cost of a key component like memory leaves them little choice but to pass costs on to consumers, assuming they can secure chips at all.

Market leader SK Hynix said last October that it had already sold out its entire 2026 production, even as it announced major investments in new manufacturing capacity. Those factories, however, will not come online in time to ease near-term pressure.

"Whatever wafer production is in place right now is coming from investment from three or four years ago," Wu said.

New capacity is unlikely to make a meaningful difference before 2028.

Wider fallout

The knock-on effects are already being felt across the technology supply chain. Prices of solid-state drives, graphics cards and even traditional hard drives have climbed sharply in recent weeks as soaring DRAM and NAND prices feed through.

High-capacity consumer SSDs have seen some of the steepest rises, with certain models jumping by more than 50% in a matter of weeks.

Graphics cards, particularly in the mid- to high-end segment, are also selling well above their recommended prices.

Even hard drives, long considered a stable and mature market, are not immune. Premium
high-capacity models have doubled in price in some cases, according to retail data.

Industry researchers warn that memory could soon account for up to 10% of the cost of most electronics, and as much as 30% of a smartphone's bill of materials.

IDC has already cut its 2026 forecast for smartphone shipments by 5% and PC sales by 9%, describing the situation as a "permanent reallocation" of supplier capacity towards AI
datacentres.

Chinese media have reported that several major phone makers are trimming production targets amid expectations of weaker global demand.

For consumers, the message is clear: higher prices and fewer choices may soon become the norm.