AI memory demand squeezes consumer electronics sector
the apples are gone A week of Big Tech earnings with another strong performanceMainly thanks to iPhone 17 sales. Outgoing CEO Tim Cook said demand for the phone “Extraordinary” but he caution for which costs are increasing Memory The progress of the business may be affected.
Memory chips, like RAM, are a vital component in all types of consumer electronics, including phones, PCs, and car information-tainment systems. But their supply has dwindled as memory makers have shifted to a higher-paying customer: AI data centers.
Harvard Business School professor Willie Shih said the memory market has always been volatile.
“This cycle of boom and bust goes back 30, 40 years,” he said.
When a new technological product is released demand increases, manufacturers build more capacity, create abundance, rinse and repeat.
But the AI setback is of a different magnitude.
“An AI server will typically have maybe 10 times more memory than a traditional data center server,” Shih said.
So there are three big memory makers pulled back on the consumer market.
Gamers who built custom PCs were the first to feel the pain, said Ryan Reith at IDC Market Research. Prices for some DIY memory kit It had tripled at the end of last year.
“Think of it as a harbinger of what’s going to happen for the mass market,” he said.
Big brands like Apple had shut down memory supplies before the worst of the surge, but will renegotiate contracts at higher prices this year.
“A large portion of that cost will fall on the consumer,” Reith said. “And as we get into the second half of this year, it will become even more intense.”
IDC estimates that the global device market will shrink significantly until memory supplies resume next year.
But Above Avalon analyst Neil Seibart said Apple could still emerge the winner.
“They are the strongest players, they have the strongest portfolio, they are placing significant orders there,” he said.
Without that bargaining power, Seibart said smaller players would have to pay even higher prices for memory — if they could get anything at all.
