Neither technological advances nor a revolution in devices: crises are what is defining the last years of the sector. The veto of Huawei, the semiconductor crisis of 2020, and now, the RAM crisis. This current situation is notably different from the previous one; while the 2020 crisis was caused by a perfect storm, the RAM crisis stems from excessive demand in data centers and AI. This situation is impacting multiple sectors simultaneously.
The absence of RAM for consumers indicates a larger issue: although leading manufacturers are investing millions to ramp up RAM production, the focus is predominantly on GPUs and data center memory. A handful of companies control the market for these chips. If they’re unable to produce enough, it invariably affects the memory chips needed for SSDs, driving prices up.
Current production efforts are primarily directed toward satisfying the soaring demands for AI technologies. Elon Musk, who oversees some of the largest data centers globally, has indicated that there are two ways to tackle this crisis: either confront it head-on or adapt. Consequently, Tesla is contemplating the establishment of its own RAM factory.
Tesla and Intel Eying the RAM Market
Recently, several leading companies in the tech space have pointed out the RAM dilemma during their earnings calls. For instance, PlayStation has emphasized the need to maintain PS5 production without further raising prices. Meanwhile, NVIDIA stresses its reliance on TSMC and Samsung for the latest generation HBM4 memory.
The outlook is grim; NVIDIA predicts an era of unrestricted data center construction lasting seven to eight years. Intel has stated that the crisis will likely persist beyond 2028, and Micron—one of the top three DRAM manufacturers—has categorized the current market bottleneck as “unprecedented.” During Tesla’s earnings presentation in late January, Musk mentioned that the company could “need to build its own memory manufacturing plant.”
While ensuring supply is the goal for all firms, transitioning to RAM production is easier said than done. However, Tesla has an advantage: it is not new to chip manufacturing. Although the company paused its chip project for a few months, Musk has confirmed that they have resumed efforts on custom chips for their data centers. Tesla has the capacity to set up a clean chip manufacturing room alongside its existing facilities.
Intel is also positioning itself as a major voice in the RAM dialogue. In tandem with Japan’s SoftBank, they aim to innovate stacked DRAM memory, dubbed ‘ZAM’, which aspires to disrupt the HBM memory monopoly held by Samsung, Micron, and SK Hynix.
The Domino Effect of the RAM Crisis and China’s Role
This crisis transcends rising RAM prices; it instigates a much broader impact. When companies struggle to meet AI demands, they concentrate their manufacturing capabilities on a singular task, leading to neglect in other areas. This lack of diversity is driving up SSD prices, while even unrelated products like hard drives (HDDs) are experiencing price surges.
This is a devastating domino effect: increased RAM costs translate to companies facing higher expenses, which, in turn, results in more expensive or less capable mobile phones and consoles. As a consequence, devices like the Nintendo Switch 2 confront potential price hikes, while the delay and cost of other systems, like the Steam Machine and future gaming consoles, also rise. Additionally, industries reliant on technology, including automotive, are seeing issues ripple across to sectors like routers.
In this environment, companies such as Intel and Tesla are eyeing a significant stake in the RAM market, while some Chinese manufacturers, previously overlooked, are emerging to fill the demand gap. Reports suggest major PC brands, including Asus, Dell, and HP, are considering sourcing memory from Chinese firms like CXMT.
While the modules produced by these manufacturers may not match the sophistication of South Korean counterparts, they nevertheless contribute to alleviating the supply constraints, as having RAM is preferable to no options at all.
As the competition grows to produce more RAM amidst a crisis that has already dramatically revealed its effects, the focus remains on meeting the needs of data centers rather than individual consumers. In these trying times, all we can hope is that our PCs remain functional and that upgrades when necessary are achievable.
Images | Gage Skidmore, Intel