Huge AI Demand for Memory Fuels a Growing Chip Crisis

A growing procession of tech industry leaders, including Elon Musk and Tim Cook, are warning about a global crisis in the making: A shortage of memory chips is beginning to hammer profits, derail corporate plans, and inflate price tags on everything from laptops and smartphones to automobiles and data centers — and the crunch is only going to get worse, Debby Wu, Takashi Mochizuki, and Yoolim Lee reported for Bloomberg.

“RAMmageddon” is the term some use to describe what’s coming.

Since the start of 2026, Tesla Inc., Apple Inc., and a dozen other major corporations have signaled that the shortage of DRAM — dynamic random access memory, the fundamental building block of almost all modern technology — will constrain production.

Cook warned it will compress iPhone margins. Micron Technology Inc. called the bottleneck “unprecedented.”

Musk underscored the intractable nature of the problem when he declared that Tesla may have to build its own memory fabrication plant.

“We’ve got two choices: hit the chip wall or make a fab,” he said in late January.

The fundamental reason for the squeeze is the rapid buildout of AI data centers. Companies like Alphabet Inc. and OpenAI are gobbling up an increasing share of memory chip production by purchasing millions of Nvidia Corp.

AI accelerators that come with massive allotments of memory to run their chatbots and other applications.

That has left consumer electronics producers fighting over a dwindling supply of chips from companies such as Samsung Electronics Co. and Micron.

The resulting price spikes are beginning to resemble hyperinflation. The cost of one type of DRAM soared 75% from December to January, accelerating price hikes throughout the holiday quarter.

A growing number of retailers and middlemen are changing prices daily. “RAMmageddon” is the term some use to describe what’s coming.