Samsung produces about a third of the memory chips used globally, and it expects the ongoing shortage of RAM chips to persist into the next year, intensify in 2027, and last until at least 2028.
For Samsung, the constrained supply outlook cuts both ways. In Q2, Samsung's chip business set a record for quarterly revenue, even as its phone and TV units saw profits drop because pricier chips raised input costs. The company has also begun shifting a portion of those higher component costs onto customers through price increases on Galaxy smartphones and tablets. That has reduced consumer demand for these products.
The AI boom has aggravated memory shortages and helped lift chip prices in recent months. During its Q2 earnings call, Samsung said cutting-edge AI companies, anxious to lock in memory capacity, have sent the Korean tech giant their medium- and long-term demand forecasts directly in order to secure future supply.
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Samsung says the strong demand lets it favor clients who commit to multi-year agreements. This longer-term visibility gives Samsung confidence to invest in new equipment and increase output without fearing a sudden collapse in demand, helping it sidestep the industry's old boom-and-bust cycles.
Apple, Samsung's main competitor, also felt the pinch from the RAM crisis - often called "the RAMaggedon" - and responded last month by hiking prices on its MacBooks, Macs, and iPads. During Apple's most recent earnings call, the company cautioned that it expects revenue growth to decelerate to 9-11% on a yearly basis for the next quarter, a notable slide from its prior 16% quarterly expansion.
Nvidia is likely to raise prices for its consumer graphics cards by 20% to 30%, and that could push gaming equipment, desktops, consoles, laptops, and related devices even higher.
Unlike past cycles, today's shortage stands apart because cutting-edge AI labs have handed Samsung their multi-year demand projections to secure capacity, and that overwhelming demand lets the company give preference to clients who agree to long-term agreements. Samsung says that visibility reduces the risk of overbuilding, but it also means consumer devices must compete with AI data centers for the same chips. Since Samsung controls a large share of the market for RAM and other memory products, its decisions about where to allocate supply ripple through the entire electronics industry.
Memory producers are increasingly directing manufacturing capacity to AI data centers instead of consumer electronics, so shoppers are confronting a new reality: pricier gadgets. Because RAM chips are a shared resource between AI servers and consumer products, the current demand from data centers directly shapes pricing on store shelves. As Samsung and other makers prioritize long-term AI contracts, buyers of phones, PCs, and tablets are left to absorb higher component prices.
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