Manufacturers of smartphones and PCs are facing supply chain pressure from new AI companies.
Memory chips are essential to the manufacturing of consumer devices (if you've ever bought a laptop, you've probably chosen how much dynamic random access memory (DRAM) it has). But AI companies also need chips to power large language models. This also often uses much more memory than is needed for individual devices.
This is contributing to widespread memory shortages, which analysts predict will cause headwinds and pricing pressure in the smartphone and PC markets.
Research firm IDC predicted in December that supply growth for the two most important memory chips for devices, DRAM and NAND, will fall below historical norms in 2026.
“The memory market is at an unprecedented inflection point, with demand significantly exceeding supply,” IDC analysts wrote. “For an industry that has long been characterized by boom-and-bust cycles, this time is different. The rapid expansion of AI infrastructure and workloads is putting tremendous pressure on the memory ecosystem.
“For both consumers and businesses, this marks the end of an era of cheap and plentiful memory and storage, at least in the medium term,” they added.
Why do I run out of memory?
A memory chip inserted into your PC. Narmon Bowongkitwanchai/Getty Images
Samsung, SK Hynix, and Micron dominate the production of memory chips used in consumer devices. These three companies also make high-bandwidth memory (HBM) chips that are essential for building large-scale language models.
And while the smartphone and PC markets have provided stable business for these chip makers, it is a well-known fact that there are many high spenders in the AI market. OpenAI has committed approximately $1.4 trillion to data center projects over the next eight years. In its third-quarter earnings release, Meta predicted spending on AI infrastructure would reach $70 billion to $72 billion in 2025. Google is expected to incur annual capital expenditures of $91 billion to $93 billion.
The size of AI companies may also give them an advantage. Ensuring LLM computing requires far more chips than a personal device, making companies like Microsoft and Meta “hyperscalers,” according to the IDC report. That means AI companies will be placing bigger orders.
All of this has led to an environment in which the three largest memory companies have sold more of their DRAM and NAND chips to AI manufacturers or pivoted to producing HBM chips. This could mean tighter supplies for device makers, leading to higher prices for consumers.
How will the shortage affect smartphones and PCs?
IDC predicts this shortage will hurt the device market.
Consider the global smartphone market. In its November 2025 forecast, IDC predicted that the market would shrink by 0.9% in 2026. The December update predicted a “moderate scenario” (2.9% contraction) and a “pessimistic scenario” (5.2% contraction) for the new year.
In November, IDC initially predicted that the global PC market would contract by 2.4% in 2026. In December, it predicted a “moderate” contraction of 4.9% and a “pessimistic” contraction of up to 8.9%.
Memory chip prices were already high. According to IDC, for midrange devices, memory can account for 15-20% of the total cost. As prices rise and supply tightens, cell phones and laptops are likely to become more expensive unless companies tolerate higher costs. IDC predicted that in the most pessimistic scenario, prices for smartphones and laptops would each rise by up to 8%.
These price increases are already occurring. Earlier this month, Business Insider reported that Dell was planning to raise prices in response to the shortage. Price increases for top-end memory ranged from $55 to $765.
“Global memory and storage supplies are tightening rapidly,” Dell warned members of its go-to-market team in an email seen by Business Insider.
On Wednesday, Taiwanese device company ASUS announced price hikes citing cost pressures for DRAM. In early December, PC company Framework increased the price of DDR5 memory modules, citing a “period of extreme memory shortages and price volatility.”
IDC predicted that high-end giants such as Apple and Samsung are likely to do better going forward, as they hedge with cash reserves and long-term supply contracts.
Who is benefiting? Of course it's a chip maker. Micron posted record profits earlier this month, suggesting strong demand ahead.
