Today, it is AI systems that are consuming significant volumes of DRAM, leaving insufficient resources for other sectors, including budget smartphones.
Since the beginning of last year, memory prices have increased by 80-90%, which is linked to the rising costs of server modules.
Electronics manufacturers, fearing shortages, are beginning to reserve components in advance, which only exacerbates the feeling of scarcity.
Manufacturers Can't Keep Up with Demand
The three largest companies controlling over 90% of the global memory market—Samsung Electronics, SK Hynix, and Micron Technology—are currently unable to meet the demands of both AI infrastructure and traditional consumer electronics.For device manufacturers, this presents a double problem: rising component prices and low consumer purchasing power.This could lead to a slowdown in demand for gadgets.
SMIC has already noticed a decline in orders from manufacturers of budget and mid-range smartphones. Even if manufacturers pass the price increase onto end users, it could affect sales volumes.
Temporary Shortage, But Not Anytime Soon
SMIC's management believes that the severity of the shortage may be somewhat exaggerated due to panic buying. However, restoring balance will take time: new volumes of memory may only appear on the market in nine months.Nevertheless, the company advises clients in the consumer electronics sector not to fall into pessimism, as new supplies are likely to be directed specifically to this segment. This is because memory for AI, such as high-speed HBM, requires longer and more complex testing procedures before implementation.
Market Expectations and Reactions
SMIC predicts that revenue in the first quarter of 2026 will remain at the level of the previous quarter, with a gross margin of 18-20%. After the publication of this cautious forecast, the company's shares on the Hong Kong Stock Exchange fell by about 3.6%.At the same time, SMIC continues to expand its production capacities to meet the growing demand for chips, although it warns that increased depreciation expenses may negatively impact profitability.
Conclusions
The rapid development of artificial intelligence is fundamentally changing the situation in the semiconductor market. Memory is becoming an important strategic resource, contested by both data centers and electronics manufacturers. While the industry ramps up production, the market may face rising device prices and temporary supply disruptions—an inevitable cost of the accelerating technological race.The image on the homepage is for illustrative purposes: Umberto / Unsplash.
