Artificial-intelligence-led memory demands have created a memory-chip crunch never before seen because the growing number of consumers has forced suppliers of consumer electronic goods like smartphones and personal computers to take a back seat as Nvidia seeks to avoid supply challenges.
Micron Executive Vice President of Operations Manish Bhatia said in an interview shortly after the chipmaker held a groundbreaking ceremony for a $100 billion production site outside Syracuse, New York.
The shortage we are seeing is really unprecedented.
Shortage Hits Hard
The use of high-bandwidth memory (HBM) currently used in AI accelerators is occupying around 70% of productive memory of the industry thus crowding out traditional demands.
Big computer makers, such as Dell, and market leaders in smartphone manufacturing, such as Xiaomi, Oppo, and Transsion, have downsized their future projection of 2026, with Oppo operating up to a 20% production reduction in reaction to rising prices.
Counterpoint Research shows that global smartphone shipments increased by 2% year on year in 2025, driven by rising premium demand and improved momentum in key emerging markets. Apple led the global smartphone market with a 20% share and 10% year-over-year growth, the highest among the top five brands.
Samsung increased its market share by 19% year on year, thanks to consistent growth in the Galaxy A series and continued traction in the premium segment with the Galaxy S and Z series. The outlook for 2026 remains conservative due to sharp increases in memory shortages and prices.
Research Director Tarun Pathak said,
The global smartphone market is set to soften in 2026 amid DRAM/NAND shortages and rising component costs, as chipmakers prioritize AI data centers over smartphones. Price hikes in smartphones have already begun to surface. Against this backdrop, we have revised our forecast for 2026 by reducing shipment estimates by 3%. Though the supply crunch will weigh on shipments, Apple and Samsung are likely to remain resilient, supported by stronger supply chain capabilities and premium market positioning, whereas Chinese OEMs concentrated in lower‑price segments will face greater pressure.
Bold Expansion Push
Micron has hastened its growth plan, which has seen it spend $1.8 billion to purchase a fabrication plant in Taiwan which will be used in 2027 to produce DRAM production, as well as the Syracuse plant which it will use to produce wafers by the year 2030.
Micron Technology also plans to invest $200 billion in U.S. manufacturing and R&D capacity and $150 billion in domestic memory manufacturing at its facilities in New York, Idaho, and Virginia, as well as $50 billion in research and development.
What’s Next?
UBS expects blended HBM pricing per bit to increase 18.5% year on year in 2026, driving HBM revenues to $32.7 billion and accounting for more than 70% of SK Hynix’s operating profit. However, chronic deficits present massive threats, such as a smothering of consumer recovery, and an 18.5% per gigabit price increase, which may benefit high-quality equipment.
The fact that Micron invested $20 billion in the capital expenditures implies that the company is optimistic about the industry; however, the need to focus on AI enterprise demand rather than large markets in general will become one of the crucial tests of the industry sustainability in 2027 and beyond.