Global DRAM supply is likely to meet only 60% of demand through 2027; memory to hit ~40% of low-end smartphone manufacturing costs by mid-2026, up from 20% now
TOKYO/SEOUL — A shortage of memory chips appears likely to continue until around 2027, with the top U.S. and South Korean …
Context & Ripple Effects
Related coverage had already established that major memory producers were operating near capacity, with AI demand absorbing production slots and company executives expecting shortages to extend into 2027. This report adds a sharper downstream measure: constrained DRAM is becoming a much larger share of the bill of materials for low-end phones.
The story also reinforces prior forecasts that higher memory costs would pressure 2026 smartphone shipments, particularly among Chinese OEMs. It links the supply imbalance directly to consumer-device economics rather than treating the shortage as a chip-sector issue alone.
First-order effects
- Low-end smartphone makers face an immediate margin and pricing problem as memory’s share of manufacturing cost rises from roughly one-fifth to about two-fifths.
- DRAM buyers remain exposed to allocation constraints through 2027 if supply reaches only about 60% of demand, strengthening memory suppliers’ leverage over available capacity.
Second-order effects
- OEMs with less pricing power, especially those already identified as vulnerable in prior shipment forecasts, may cut specifications, raise retail prices, or reduce volumes to protect margins.
- AI-driven demand for memory capacity spills into handset supply chains: capacity devoted to higher-demand uses leaves consumer-device buyers competing for a scarcer and more expensive input.
Third-order effects
- If the imbalance persists, memory availability—not just processor choice or display cost—could become a primary constraint on entry-level smartphone design and shipment growth.
- The episode points to a longer semiconductor-cycle problem in which capacity additions lag demand shifts, making commodity memory pricing more volatile and transmitting AI infrastructure demand into consumer electronics.
The trend: AI-led memory demand is turning DRAM capacity constraints into broad consumer-device cost inflation, extending the memory supercycle beyond data-center buyers.