South Korean technology giant Samsung has issued a strong warning about the worsening memory chip this year, noting that the huge and unprecedented demand from the artificial intelligence sector is consuming the available supply, creating serious challenges for its other sectors, most notably smartphones and displays, which may face a “difficult year” full of challenges.
Background to the crisis: From the pandemic to the AI boom
The echoes of the global chip crisis that began during the COVID-19 pandemic continue to reverberate through the industry. While that crisis affected various types of semiconductors and impacted the automotive and home appliance industries, the current wave of shortages is acutely focused on one specific and critical type: high-performance memory chips. The primary driver of this new crisis is the explosive growth in generative artificial intelligence applications, which require enormous computing power and memory to train and run their complex language models, forcing manufacturers to shift their production lines to meet this surging demand.
Official statements paint a bleak picture
In an interview with Reuters, Samsung co-CEO TM Roh described the current memory chip shortage as “unprecedented” and did not rule out the possibility of raising prices to address the supply-demand imbalance. This warning reinforces concerns within the company’s smartphone and display divisions, which are bracing for a “challenging year” due to significant cost pressures stemming from rising prices for a key component like memory.
For his part, Kim Jae-jun, executive director of Samsung's memory chip business, confirmed that "the significant shortage of memory products is expected to continue on a large scale for the time being." He indicated that the industry's ability to expand supply will be limited during 2026 and 2027, given the continued strong demand for chips to power data centers and artificial intelligence applications.
Expected impact on industry and consumers
This crisis presents a paradox for Samsung; while its memory chip division is on track for record profits, its mobile (MX) division is facing increasing pressure. As Son In-jun, an analyst at Hyungkook Securities, explained, “Memory price increases are expected to accelerate this quarter and are likely to lead to a surprise profit for the chip business, while the burden of memory costs will increase for the mobile segment.”.
Globally, the impact extends beyond Samsung to encompass all electronics manufacturers. Consumers are expected to face higher prices for new smartphones, laptops, monitors, and other electronic devices. Other companies may also encounter difficulties in securing necessary components for their products, potentially leading to product launch delays or shortages, reminiscent of the challenges global supply chains have faced in recent years.
