For anyone who’s been paying attention over the past few months, it’s no surprise that the AI-driven memory chip shortage is pushing up prices on consumer electronics, and that those increases aren’t slowing down anytime soon.
Now, months after most consumers had already come to terms with the situation, Samsung’s co-CEO, TM Roh, acknowledged the crisis. In an interview with Reuters at CES, Roh addressed the shortage and its implications for the South Korean tech giant.
“As this situation is unprecedented, no company is immune to its impact,” Roh told Reuters, acknowledging that the shortage could potentially affect not just smartphones but also TVs and home appliances.
He added that some sort of impact is “inevitable,” and according to Reuters, he did not rule out the prospect of price hikes, though the company is seemingly working with its partners to mitigate some of the impact over the long term.
It’s been clear for months that the AI boom, along with the industry’s race to build massive data centers, has been siphoning manufacturing capacity for memory chips, particularly for DRAM (dynamic random access memory) and NAND flash storage.
Tom’s Hardware reported earlier this year that huge data center projects like OpenAI’s Stargate are calling for hundreds of thousands more DRAM wafers per month, amounting to roughly 40% of global DRAM output. In October, OpenAI entered into agreements with Samsung and SK Hynix to scale production of advanced memory chips, targeting roughly 900,000 new DRAM wafer starts per month.
And that’s just one company. Google, Meta, and Microsoft are all building out their own data centers to train and run the next generation of AI models.
Supplying these tech giants has proven lucrative for semiconductor companies. In fact, Micron recently decided to wind down its consumer business brand, Crucial, to focus on data center demand. That shift has tightened supply for consumer electronics, helping drive prices higher. Even worse, analysts warn that even if supply eventually stabilizes, these higher prices could become the new normal.
While the shortage could be a boon for Samsung’s semiconductor business, it also risks putting pressure on its smartphone and consumer electronics divisions.
Market research firm IDC estimates that the global smartphone market could shrink by 5% next year, while the PC market could contract by an even steeper 9%, largely due to rising prices.
Still, Samsung appears to be pushing full steam ahead with its AI ambitions.
“We will apply AI to all products, all functions, and all services as quickly as possible,” Roh told Reuters.
The company plans to double this year the number of mobile devices, including smartphones and tablets, equipped with “Galaxy AI” features to about 800 million units.