A surge in demand for advanced computing infrastructure is putting unprecedented pressure on memory chip supply, driving up costs for products such as smartphones, laptops, and other consumer electronics.

According to a recent report by Nikkei Asia, the imbalance between supply and demand in the memory chip market is unlikely to ease anytime soon. Chipmakers are struggling to expand production capacity fast enough, with meaningful relief not expected before 2027. This prolonged shortage is largely attributed to a strategic shift among leading manufacturers toward high-bandwidth memory (HBM), a specialized type of memory essential for powering AI systems and data centres.

Currently, three companies dominate the global DRAM market, accounting for nearly 90 percent of total supply. In response to booming AI demand, these firms have prioritized HBM production over conventional memory used in consumer devices. As a result, supply constraints for general-purpose memory began emerging in late 2025 and have since contributed to steady price increases across electronics.

The report notes that even with planned expansions, these manufacturers are expected to meet only around 60 percent of total DRAM demand in the coming years. Compounding the issue, one major chipmaker has already stepped away from the consumer segment to focus entirely on AI-related business, further tightening availability.

Geopolitical tensions are also adding to the complexity. Ongoing instability in the Middle East has driven up energy and raw material costs, making it harder for chipmakers to maintain predictable production schedules. These external pressures have introduced additional uncertainty into an already strained supply chain.

While new fabrication plants are under development, their impact will take time to materialize. For instance, a major facility scheduled to begin operations in 2026 will not reach full-scale production until 2027 or later. Moreover, these plants are often designed to manufacture multiple types of chips, limiting the extent to which they can boost memory output alone.

Other manufacturers are accelerating their expansion plans, including new facilities expected to come online around 2027 and beyond. However, industry leaders caution that supply constraints-especially for AI-focused memory-could persist even longer, potentially extending toward the end of the decade due to ongoing wafer shortages and production challenges.

Analysts estimate that addressing the current shortage would require annual production growth of approximately 12 percent through 2027. Yet, existing plans suggest a more modest expansion of about 7.5 percent, indicating that supply may continue to lag behind demand.

The ripple effects are already being felt in the consumer market. Rising memory costs are increasing the overall manufacturing expense of devices, particularly budget smartphones, where memory could account for nearly 40 percent of production costs by mid-2026. As a result, manufacturers may scale back output, and consumers could face higher retail prices.

With smartphone shipments projected to decline significantly in 2026, the ongoing chip crunch underscores a broader reality: the AI revolution, while transformative, is also reshaping affordability and access to everyday technology.