Memory Prices Have Erased 20 Years of Progress in a Single Year, Researcher Says
J.P. Morgan said memory prices have risen more than 400% since early 2024 as AI demand and shortages lift costs for consumer devices.
- Global memory prices have surged more than 400% since the start of 2024, driven by artificial intelligence demand and creating what analysts call "chipflation." Prices have returned to 2007 levels, undoing two decades of progress in making PC hardware affordable.
- Artificial intelligence systems require significantly more memory than previous infrastructure; newer AI chips use about 7.2 times more high-bandwidth memory, while complete AI systems consume roughly 65 times more. This unprecedented memory intensity drives the shortage.
- According to the Bureau of Labor Statistics, the Producer Price Index for electronic components rose 27.6% in June from the same time last year. Contract and retail prices for NAND flash have risen between 50% and 100% since the crisis began.
- Major technology companies like Microsoft and Alphabet are securing memory supply years in advance due to what Morgan Stanley analysts call "Fear of Missing Procurement," or FOMP. Apple is testing chips from ChangXin Memory Technologies to manage rising costs.
- Morgan Stanley estimates the memory shortage could add about 0.10 percent to overall U.S. headline inflation, while computer prices could rise 10% year-over-year. The supply-demand imbalance could persist through at least 2027, affecting consumers.
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The AI Boom Is Making Memory Chips Much More Expensive, Impacting Laptop And Smartphone Prices
Surging AI demand is driving up memory chip prices and squeezing supplies available to consumer electronics makers. Morgan Stanley expects the crunch to push PC and smartphone inflation significantly higher.
Why "chipflation" is here to stay
Data: U.S. Bureau of Labor Statistics via FRED; Chart: Emily Peck/AxiosMemory chip prices are skyrocketing, thanks to AI demand, and there's no end in sight.Why it matters: "Chipflation" is pushing up the prices for electronic goods like smartphones and laptops, as well as the costs for cloud storage and hardware — it also helps explain the eye-popping ascents in semiconductor stock prices.While the overall effect on inflation may not be huge — …
Memory prices have erased 20 years of progress in a single year, researcher says
According to computer science researcher and software performance expert Daniel Lemire, skyrocketing memory prices are a "historical anomaly," with the unprecedented increases effectively erasing decades of steady, exponential cost reductions.Read Entire Article
Due to the immense demand for AI data centers, the cost of memory explodes – and the hardware market is falling by decades.
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