Chip Industry Warns US Against Memory Market Interference
The chip industry has a stark warning for the Trump administration: stay hands-off in the memory market, or risk deepening an already severe shortage. This comes as the AI-driven memory crunch becomes a political hot potato in Washington.
SEMI, a semiconductor industry group, voiced its concerns in a letter to senior US officials, emphasizing that any attempt to fix the shortage through price controls or production steering would be counterproductive. As reported by Bloomberg, the letter states:
"Interventions that distort pricing or capacity decisions risk prolonging the demand downturn."
The memory shortage, fueled by the AI boom, has led to a surge in demand for memory chips, outpacing supply. SEMI’s members, including Micron, SK Hynix, and Samsung—all major memory makers—have seen their shares rise as a result.
The impact extends beyond the industry. With memory integrated into various products from cars to laptops, rising prices are affecting consumers. Even vintage memory standards have experienced price increases. Companies like Apple and Microsoft have already raised prices on popular devices due to the shortage.
SEMI proposes a two-pronged solution: encourage long-term supply deals between chipmakers and customers, and extend tax breaks to boost US production. Additionally, they suggest consumer tax credits to offset rising phone and laptop prices.
This comes amidst a broader debate. Apple is lobbying the same officials for permission to source memory from two Chinese firms on a Pentagon blacklist. SEMI’s letter reaches out to these very departments, including Treasury, Defense, Commerce, and State, without naming any specific Chinese suppliers.
The challenge lies in the time frame. While chip capacity is expected to grow by approximately 19% annually, AI demand will continue to outpace it. Building new factories takes years, meaning prices are likely to remain high until then. This warning resonates with concerns already expressed in the UK about rising costs for European shoppers.