Tag Archives: Micron

No Break in Global Chip Shortages

It looks like the chip shortage is going to last longer than expected. At the beginning of this year, it looked like the chip shortage might be over by early to mid-2027. That no longer seems to be the expectation.

As a reminder of the issue, the chip shortage has come about due to chip manufacturers migrating to produce the more profitable chips used by AI data centers. Recent predictions are that 70% of all memory chips manufactured worldwide will go to data centers for the rest of 2026 into 2027. To put that number into perspective, the first public AI model was introduced to the world in November 2022, and the demand for AI chips has grown since then. At that time, about 32% of chips went to the more traditional data centers used for cloud computing.

Electronics of all types rely on chips known as DRAM (Dynamic Random-Access Memory). A DRAM is comprised of a large number of tiny cells that contain one capacitor and one resistor. The simplicity of the structure makes it relatively easy to affordably manufacture chips in volume. The function of DRAM is to temporarily hold data in storage as the computer uses it, and to dynamically cycle in new data as needed during processing.

Broadband devices like Wi-Fi routers, cable modems, and the core electronics used for fiber and wireless networks use a type of DRAM called DDR4. A few other industries, like automotive and consumer electronics, also rely on DDR4 chips. DDR4 chips have less capacity and are cheaper to make than DDR5 chips used for computers and cellphones. By contrast, AI datacenters use HBM (high-bandwidth memory) chips. These are comprised of a three-dimensional stack of DRAM chips. HBM chips are larger and require more wafer space than normal DRAM, and the manufacturing process is more challenging. At least currently, there is a lot more profit in manufacturing the HBM chips.

Three companies have historically manufactured over 90% of all DRAM chips – SK Hynix Inc., Samsung Electronics Co., Ltd., and Micron Technology, Inc. All three companies have shifted a lot of manufacturing capacity to the HBM chips for AI. Micron fully halted the manufacture of DRAM for personal computers. SK Hynix converted its primary DRAM production line to AI chips in late 2024. DRAM wholesalers are alarmed that the average worldwide DRAM inventory in the supply chain has fallen from a normal 17-week supply in 2024 to a 2-4 week supply currently. All three companies have already pre-sold all of their DRAM capacity for the rest of 2026 and well into 2027.

Unfortunately, there is no short-term relief on the way. Micron is building a new mega-factory in Onondaga, New York, to manufacture DRAM that won’t benefit the supply chain until sometime in 2028. The company is expanding a factory in Taiwan that won’t produce new chips until at least the end of 2027. SK Hynix is investing $13 billion in a new factory in Cheongiu, South Korea, that will be completed at the end of 2027. Samsung is building as new factory in Gyeonngi Province in South Korea that won’t be completed until sometime in 2028.

It doesn’t seem realistic that any other companies will step in to fill the market void because of the complexity and intense quality control needed to make DRAM chips. This means a growing shortage of chips for telecom and other industries for the next two years. A few auto factories have already reduced the number of cars being built due to a lack of chips. For telecom, this is going to result in higher prices and longer waits to get electronics. This also means that ISPs at the bottom of the supply chain, those without the buying power of AT&T or Charter, will see the biggest impacts. Also note that ISPs are going to lose broadband customers who can’t afford to replace a dying computer. As always happens with a big price increase, I can’t imagine that chips will ever return to the old prices. The handful of manufacturers are going to expect higher profits from DRAM than in the past, and due to their monopoly, will be able to charge whatever they want.

Impacts of the RAM Shortage

Starting in late 2025, the world began experiencing a big shortage of memory chips used in the manufacture of smartphones, computers, and other consumer electronics. The shortage has been caused by chip makers across the industry deciding to manufacture more lucrative chips for AI data centers. As an example, during the last year, we saw Micron, Samsung, and SK Hynix stop making RAM for consumer devices in favor of AI chips.

Random access memory, or RAM, is a crucial component in devices like smartphones, computers, and game consoles. RAM chips are what allow a computer to perform functions like keeping multiple tabs open in  a browser,

In the fourth quarter of last year, the demand for RAM chips exceeded supply by 10%, and the shortage is quickly growing. By the end of 2025, the price for RAM increased by 50%, and the supply chain delays to get chips suddenly slowed to a crawl. If an electronics factory wants chips sooner, they’re being forced to pay a premium price and pre-pay for a large supply. The shortage is expected to last at least into 2027. A few companies, like ChangXin Memory Technology and Yangtze Memory Technologies Corp. have stepped up to enter the consumer RAM market. There are predictions that RAM prices will increase at least 60% this year, with specialty chips possibly doubling or tripling in price.

This is bad news for the broadband industry since the price of computers and smartphones will climb, likely out of the reach of the budgets of many households. This is going to increase the cost of all of the network electronics used for fiber, cable HFC, and wireless networks.

This is bad news for the nonprofits that have been refurbishing used computers and smartphones. One important part of many upgrades is to increase RAM capacity for old computers to be able handle new web needs. If RAM prices double, these entities will not be able to help nearly as many people. The problem will be made worse since small buyers of RAM will probably be the ones seeing the biggest price increases.

Digitunity recently published an article that estimates that 32.9 million people can’t access broadband from due to the lack of a computer. That’s about 10% of households, a number that compares with other estimates of the homes with broadband.

More expensive computers will hurt broadband adoption, and that hurts the public and the economy. People are increasingly reliant on access to broadband. The federal government, and many state and local governments, are eliminating the ability to communicate with the government by anything other than web portals. Federal services of all sorts, like veterans benefits and Social Security, are moving online.

The IRS and many states expect taxpayers to file tax returns using online software. This software is difficult to navigate with a smartphone, as are many other government portals. The IRS and other federal agencies will also no longer issue paper checks, forcing people to have an electronic way to receive and access payments from the government.

FEMA announced last year that anybody affected by a disaster must make a claim online, which is a particularly ironic requirement for folks who might have just lost a home due to a flood, tornado, or hurricane. For anybody who has ever dealt with a disaster result, there is a mountain of communication needed to push a claim through to the finish line.

People in rural areas increasingly need to use telemedicine as rural hospitals and clinics continue to fail and close.

A computer at home is vital for working from home or taking college and other classes online. These are also tasks that can’t easily be done by smartphone.