AI is driving the price of RAM to skyrocket. Computers, phones and tablets could be next

From computers to cellphones and even some features of cars, a lot of electronics rely on random-access memory, or RAM. This is the basic hardware that your computer processor needs to run applications, open files, and let you surf the Internet.

But if you’ve been in the market for RAM recently, you’ve probably seen big increases in prices as memory makers are shifting more of their production capacity from consumer products to supplying AI companies, which are rapidly building data centers that require massive amounts of memory to operate.

“The prices have absolutely skyrocketed since the beginning of November,” Mark Chen, store manager at Uniway Computers, which sells custom-built PCs with RAM in Calgary, told CBC News in an email.

In October, Chen said he could get a 32GB DDR5 memory kit for less than $130. By mid-November, the price had more than doubled to around $300.

Now, Chen says, the same memory kit is hard to find for less than $400.

In the latest blow to the consumer market, Micron Technology Inc., considered one of the world’s three leading RAM manufacturers, announced last week It is shutting down its consumer-focused brand Crucial – instead focusing its attention on supplying memory and storage to fast-growing AI data center customers.

Willie Shih, a professor of management practice at Harvard Business School, pointed out that Micron is reallocating its manufacturing resources to AI companies, “where, frankly, they can make a lot more profit.”

“I’ve never seen the price of RAM rise so much before,” Chen said. He said he had seen similar volatility with graphics cards due to the cryptocurrency boom a few years ago, but never for memory.

AI boom fills global memory shortage

As demand for AI grows, companies like Open AI, Meta and Google are scrambling to develop data centers faster – becoming more attractive customers for chipmakers in the process.

AI data centers use large amounts of high-bandwidth memory, a type of high-performance dynamic RAM, or DRAM, which is necessary to process AI’s high workloads. While an average personal laptop can operate with 16 gigabytes of memory, an AI memory component will be closer to 200 gigabytes, Shih explained.

Micron and its two major competitors, Samsung and SK Hynix, are “racing to meet this demand for memory” — which is driving up consumer prices, Shih said.

It’s a logical business move, he added: If a factory has limited capacity to make chips, it will make higher-value, in-demand units designed for AI tasks.

In fact, the demand is so high Lenovo is storing RAM According to Bloomberg, due to the unprecedented supply crisis.

And OpenAI is huge Stargate Data Center InitiativeScheduled to launch in 2029, already done secured commitments Up to 900,000 wafers of DRAM (the base for memory chips) per month from Samsung and SK Hynix. This is equivalent to approximately 40 percent of DRAM output globally, according to Tom’s HardwareA computer technology publication.

DRAM, which is used in various forms in both consumer electronics and data centers, is particularly under pressure. With manufacturers turning their attention to developing those higher-bandwidth memory chips, Shih said less production capacity has been allocated to developing the DRAM found in personal computers.

last month, Reuters reported Samsung has increased the price of some memory chips by up to 60 percent compared to just two months ago. The company’s memory division now brings in almost as much revenue as its mobile phone business, setting an all-time high for quarterly sales In the third quarter of this year.

PC market was the first to deteriorate

While the race to cash in on the AI ​​boom has sent consumer memory prices skyrocketing, it can’t stop there.

“The prices of everything that uses memory are going to go up,” Shih said. This is essentially every electronic product from cellphones to smart fridges to modern cars.

US-based marketing research company International Data Corporation is already predicting that 2026 will see low sales of smartphones Due to lack of memory component.

But its immediate impact is being felt in the personal computer market by parts retailers across Canada and by customers like PC gamers and video editors who buy those individual parts to custom build their PCs.

Chen said suppliers have increased the prices they charge Uniway Computer for RAM components, “so we have no choice but to reflect those higher costs in our final manufacturing prices.”

And rising memory prices are discouraging customers from building their own computers, Chen observed, with more customers shifting toward prebuilt systems from major PC makers.

At Edmonton’s BCOM Computer Centre, corporate sales manager Dustin Plant is feeling a similar strain.

“Because manufacturers are focused on meeting those (AI) demands, they’re not building the stuff that we sell, you know, day-to-day,” he said. “So the supply has dried up across the board.”

Plant said it’s not just the price of RAM that’s rising at a weekly pace: The cost of solid-state drives is also rising.

And video cards could be the next obvious hit to the market, he said, given their RAM usage.

So, how long will prices remain high?

According to Shih, it’s hard to say. Although memory components are experiencing a huge boom cycle driven by AI demand, investors are fearful of ai “bubble” He might just pop.

“There’s a huge amount of investment going on and at some point, there has to be a return earned on that.”

On the PC front, Shih expects computer makers to potentially pass on additional factory costs to consumers in the form of less generous memory configurations in PCs or fewer sales promotions.

Plante said anyone who might delay getting an upgrade should consider doing so, adding it’s difficult to predict how long the price bump will last.

And regarding Micron leaving the consumer memory market and focusing on AI customers, he said, “It’s going to make a bad situation even worse.”

For other products that depend on memory, like cellphones for example, Shih said many companies already secure contracts for RAM components, so consumers won’t see prices for those products rising immediately.

“They’re buying, you know, six months or a year ahead, right. So they may have locked in the price. So when you see that increase will depend on … how much your supplier had,” Shih said.