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The laws of supply and demand are once again hard at work in the global electronic component space, where DRAM memory chips are the latest product to get hit by the scarcity bug. This, in turn, has pushed up prices while making it more difficult for companies to get the chips they need to make cars, smartphones, consumer electronics, medical devices and telecom equipment.
Blame the AI data center boom for creating much of the problem. Goldman Sachs expects U.S. data center capacity additions to climb from 6.4 gigawatts in 2024 to 13.6 gigawatts in 2026 and 36.3 gigawatts in 2027. Those facilities need a lot of memory, including the high-bandwidth memory used in AI accelerators. It says that demand is pushing DRAM wafer capacity toward AI servers and away from the standard memory chips that many manufacturers use.
Companies are feeling the pinch and buyers are talking about it. Reuters recently reported that automakers, retailers, electronics firms and telecom groups all say the shortage is driving up costs and threatening supply chains. TrendForce also expects conventional DRAM contract prices to jump 90% to 95% in the first quarter of 2026 from the prior quarter, citing the AI boom.
Industries are Speaking Up
Short for dynamic random-access memory, DRAM is the semiconductor-based memory used in most computers, servers and consumer electronics. According to IBM (where DRAM was invented in 1966), the global DRAM market is expected to surpass $100 billion by this year. “More significantly,” it adds, “DRAM has become a foundational component of information technology and helped reshape the way we work, entertain ourselves, conduct business and educate our children.”
That foundational component is getting both pricey and scarce right now. Last week, a cross-sector coalition of trade associations representing broadband providers, medical device manufacturers, automobile manufacturers, and national retailers sent a letter to Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick expressing concern about “an urgent imbalance in the market for memory chips that could lead to significant and sustained near-term price increases for American households and disrupt critical U.S. supply chains.”
The associations include NCTA—The Internet & Television Association, ACA Connects, the Medical Device Manufacturers Association and the Alliance for Automotive Innovation, among others. Their letter focuses on data center consumption of available memory chip capacity and says, “The result has been an unprecedented surge in the price of memory chips and reduced supply of these chips for manufacturing and consumer-facing industries. While recent developments in AI offer the promise of generational technological advances and are important for U.S. tech leadership, we must also ensure other key industries are not negatively impacted by this disruption in the marketplace.”
The groups say the real-world impacts of these trends have already begun to show themselves and threaten to deteriorate rapidly if the situation is not remedied. These include (but aren’t limited to) price increases for a broad range of everyday consumer electronics and information technology products; significantly higher costs for building, maintaining and upgrading the nation’s Internet and telecommunications infrastructure; and impacts on the production and availability of automobiles, medical devices and other manufactured goods.
What’s Next?
There may not be a short-term fix for the DRAM problem. In its first-quarter 2026 memory price outlook, TrendForce raised its conventional DRAM contract price forecast to a 90% to 95% increase from the prior quarter, citing persistent AI and data center demand. The firm also said PC DRAM prices were expected to at least double quarter over quarter, with cloud service providers, server OEMs and PC OEMs all facing supply gaps.
This quarter, the firm expects conventional DRAM contract prices to rise another 58% to 63%, with tight supply still supporting higher prices. It also expects NAND Flash contract prices to rise 70% to 75%, driven by AI and data center demand.
