The AI Memory Crunch: A Game Changer in the Tech Landscape
The AI memory crunch won’t ease until 2028
The AI boom has broken the memory market’s oldest rule. Prices that should be falling are soaring instead, and the AI memory crunch will not subside until 2028. The aftermath could be severe for those who profited from the surge.
July 13, 2026 – 3:54 pm
Image by: Canva / Lari Bat
Memory is typically a stable commodity, following predictable booms and busts. However, the AI build-out has disrupted this cycle, sending demand through the roof.
As The Register explains, the AI boom has consumed every available chip, leading to an AI memory crunch with no quick solutions in sight.
The Broken Cycle
By traditional standards, 2025 and 2026 should have been a downturn year, with prices declining as supply caught up. Yet, the opposite has occurred—prices are at an all-time high. This is primarily due to the excessive demand for GPU servers, which require vast amounts of high-bandwidth memory, DDR5, and NAND flash.
Impact on Consumer Electronics
The consequences extend beyond data centers; consumer electronics are also feeling the pinch. The knock-on effect has led to a surge in prices, effectively killing the market for affordable smartphones.
SK Hynix and Micron have seen their revenues triple in a year, while Samsung has nearly doubled its.
A Long Road to Relief
Expanding capacity is not a quick fix. Building new memory fabs involves complex processes, from obtaining permits to setting up ultra-pure water systems and tuning lithography tools. Even with significant investment, the earliest new facilities will take at least three years to come online and reach full capacity.
IDC forecasts that relief from the AI memory crunch won’t arrive until 2028.
Downstream Costs
In the meantime, everyone below the memory giants feels the pinch. Chipmakers are redesigning their products around the shortage, and AI infrastructure providers are paying more for memory, impacting their already-strained margins.
The Potential Bust
The underlying assumption is that AI demand will continue to grow indefinitely. However, if it falters just as new capacity comes online, it could trigger a historic crash in the memory market.