Tech firms from Dell to HP warn of memory chip squeeze from AI

NEW YORK – Dell Technologies, HP and other tech companies are warning of potential memory-chip supply shortages in the coming year due to soaring demand from the build-out of artificial intelligence (AI) infrastructure. 

Consumer electronics makers including Xiaomi have sounded the alarm about potential price increases, while others including Lenovo Group have begun stockpiling memory chips in anticipation of rising costs. Counterpoint Research in November forecast a 50 per cent price rise for memory modules through the second quarter of 2026.

A shortage would threaten to increase the costs of manufacturing everything from phones to medical equipment and cars. Such chips are used in virtually every modern electronic device that stores data.

The AI boom is indirectly to blame. There are two types of memory chips, ones that help with processing and ones that store information. Manufacturers are allocating more production to meet demand for new, more complex and profitable products used in AI systems, causing a shortage of more common types of memory.

Dell has never seen “costs move at the rate” that they are now, chief operating officer Jeff Clarke said on a call with analysts on Nov 25. The company has seen tighter supplies of dynamic random access memory, DRAM for short – which includes high-bandwidth memory for AI to the chips powering personal computers (PCs) – as well as of hard drives and so-called NAND flash memory, he said.

“The cost basis is going up across all products.”

Dell will work on its configurations and product mix, but Mr Clarke said he sees the impact inevitably reaching customers. The Texas-based computer maker will consider all options, including repricing some devices, he said.

US sanctions have also worked to exacerbate the supply crunch by limiting the technological capabilities of new Chinese entrants. 

California-based HP sees the latter half of 2026 being particularly challenging and will increase prices where necessary, chief executive Enrique Lores told Bloomberg in an interview. 

“For the second half, we are taking a prudent approach to our guide, while at the same time we’re implementing aggressive actions” like bringing on more memory suppliers and putting less memory in products, he said.

The company estimated that memory accounts for 15 per cent to 18 per cent of the cost of a typical PC.

The race to build AI infrastructure has already raised energy bills in areas near large data centres.

It has also lifted the valuations of the world’s top memory makers. Shares of South Korea’s Samsung Electronics and SK Hynix, along with Micron Technology, have surged in recent months as inventories dwindle and supply challenges crystallise. SK Hynix said in October that it has sold its entire memory chip line-up for 2026, while Micron expects supply will remain tight into 2026.

Japan’s Kioxia Holdings, which specialises in NAND production, saw its stock increase multiple times over following its December public listing, propelled by the same tight supplies.

“Everything that’s related to memory – advanced or conventional – is in very strong demand and supply is lagging,” Mr Sanjeev Rana, head of research at CLSA Securities Korea, said after Samsung issued earnings in October. “We are likely to see this DRAM and NAND price upturn lasting several quarters from here.”

Suppliers of logic chips, the kind that process data and are critical to building AI systems, may also see their business affected as their customers may refrain from placing orders if they cannot secure enough memory. 

China’s top chipmaker Semiconductor Manufacturing International (SMIC) has noted that the memory shortage is coming as manufacturers prioritise business with the world’s largest AI chip provider, Santa Clara, California-based Nvidia.

Nvidia in turn has placed an emphasis on assembling its highest-value, most advanced systems bound for AI data centres. SMIC warned that a shortage of memory may constrain car and electronics production in 2026.

In Beijing, Xiaomi jacked up the price of its marquee device and said it expects a shortfall in memory chips will lead to price increases for mobile devices in 2026 too. 

Lenovo has touted its economies of scale and said it sees an opportunity to grab more market share by leveraging its supply chain while competitors struggle. Still, chief financial officer Winston Cheng echoed Dell’s remarks, calling the cost surge “unprecedented”.

Apple has given one of the most sanguine of assessments. Chief financial officer Kevan Parekh acknowledged on a call with analysts that there was “a slight tailwind” on memory prices and some “new products do have a slightly higher cost structure”.

But he stressed that Apple is managing costs well. Like Lenovo, Apple’s position as one of the top customers – if not the top customer – for many players in the electronics supply chain helps it secure strong terms for ongoing supply.

Lenovo’s memory inventories are meanwhile roughly 50 per cent higher than usual, Mr Cheng told Bloomberg. Taipei-based Asustek Computer has also raced to stockpile, with both PC makers planning to hold prices steady in the holiday quarter and reconsider the market situation in the new year.

Mr Chey Tae-won, chairman of SK Hynix parent SK Group, also warned of a supply bottleneck earlier in November.

“We have entered an era in which supply is facing a bottleneck,” Mr Chey said in a keynote speech at the SK AI Summit in Seoul. “We are receiving memory chip supply requests from many companies, and we are thinking hard about how to address all demands.” BLOOMBERG