The AI boom has created a shortfall of available memory chips, a critical component that stores data in several items including phones, cars, electronics and medical devices, according to a New York Times report.
Memory chips are being snapped up by AI companies for use in giant data centers. The price of these tiny components has quadrupled over the past year, and now several industry representatives are lobbying the White House for solutions, including federal policy that would push memory chip makers to allocate more chips to their industries.
- Some have suggested selling chips to a broader set of customers should be a condition for receiving money from the 2022 CHIPS and Science Act, a program to fund semiconductor research and manufacturing in the US.
- Others are suggesting that Trump invoke the Defense Production Act to allocate to more industries outside the AI circle.
“We’re in what I would characterize as a 100-year flood on the memory pricing, with exponential increases in memory prices,” Tim Cook, Apple’s chief executive, said last month in an earnings call.
Memory chips are starting to add to inflation, according to economic experts.
“The A.I. boom is so strong that it is bidding up costs elsewhere,” said one expert.
But it is unclear whether the White House or the Commerce Department will do anything that would divert memory chips away from data centers that they say are helping the US keep an AI edge over China.
Shortages in the industry will continue for the next two years, said Dan Kim, a chief strategy officer at the research firm TechInsights who worked on chip strategy in the Biden administration.
There is “almost no ceiling,” he said, to the price that A.I. companies will pay for memory chips. That’s not the case for other businesses.
“Yes, the prices of your iPhone are going up,” Mr. Kim said. “But it’s also possible the prices of your M.R.I. machines may go up, or worse than that, that M.R.I. machine may not get made.”
From JP Morgan:
AI data center demand is creating a shortage in global memory capacity, with prices for dynamic random access memory (DRAM) estimated to rise more than 400% from the start of 2024 to the end of 2026, according to J.P. Morgan Global Research.