Industry analysts have repeatedly warned for months that AI demand is reshaping the economics of the memory market. While memory shortages have historically been cyclical, the coalition argues that AI infrastructure spending is creating a structural shift large enough to affect industries far removed from data centers. The letter marks the first coordinated, multi-industry push for federal intervention. Whether the administration will respond — and how — remains to be seen.
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Etiido Uko is a news contributor for Tom's Hardware covering the latest updates in big tech and the PC industry. He is a mechanical engineer and senior technical writer with over nine years of experience in documentation and reporting. He is deeply passionate about all things engineering and technology, and is an expert in gadgets, manufacturing, robotics, automotive, and aerospace. ","collapsible":{"enabled":true,"maxHeight":250,"readMoreText":"Read more","readLessText":"Read less"}}), "https://slice.vanilla.futurecdn.net/13-4-24/js/authorBio.js"); } else { console.error('%c FTE ','background: #9306F9; color: #ffffff','no lazy slice hydration function available'); } Etiido Uko Social Links Navigation News Contributor Etiido Uko is a news contributor for Tom's Hardware covering the latest updates in big tech and the PC industry. He is a mechanical engineer and senior technical writer with over nine years of experience in documentation and reporting. He is deeply passionate about all things engineering and technology, and is an expert in gadgets, manufacturing, robotics, automotive, and aerospace.
hotaru251 and nothing will happen. they benefit from the "ai" chugging of memory. Reply
bit_user The easiest thing he could do is let the Federal Reserve do its job and raise interest rates. That would cool investment in the AI buildout, and thereby free up some capacity and lower prices. Except, he hates the idea of higher interest rates, so instead we get higher inflation. Reply
bit_user hotaru251 said: and nothing will happen. The only possible near-term fix is a macroeconomic one. Implementing any fixes at the production level simply take too long to avoid the kind of damage the signatories are concerned about. Reply
jabliese "Implementing any fixes at the production level simply take too long" Except for increasing DDR 4 memory, which we are already seeing. Reply
ejolson In my opinion cars would be more useful and last longer if they relied on less computer technology. Said another way, the real crisis in modern economies is waste. Reply
Pierce2623 bit_user said: The only possible near-term fix is a macroeconomic one. Implementing any fixes at the production level simply take too long to avoid the kind of damage the signatories are concerned about. They could make a near-term fix of flat out limiting the memory companies can buy. They could also hit the memory cartel hard enough to stop the cartel behavior. So far, the only time they really punished the memory cartel, it wasn’t enough to outweigh the money they gain by cartel behavior. They could even go as far as setting maximum prices per gigabit or something if they wanted. Setting a price ceiling is the only way i see to basically force the memory companies to increase capacity as fast as they possibly can or risk a major drop in revenue. Reply
bit_user Pierce2623 said: They could make a near-term fix of flat out limiting the memory companies can buy. It's too late for that stuff. There are already supply agreements in place for the next several years. And, even if that weren't the case, how could you guarantee that some 3rd parties don't just buy up the additional supply and resell it to the companies that are currently buying up all the supply? Not to mention that most of the memory is actually manufactured in other countries, by foreign subsidiaries. Exactly how are you going to legislate them? Pierce2623 said: They could also hit the memory cartel hard enough to stop the cartel behavior. Last time they tried to press a court case against them for price-fixing, they the case fell apart for lack of evidence. Pierce2623 said: They could even go as far as setting maximum prices per gigabit or something if they wanted. Assuming anyone had the jurisdiction to set and enforce such price controls, then what would happen is: all the memory supply still gets bought up market prices are now set by scalpers, who price it even higher memory manufacturers don't get extra profit, so have less incentive to bring additional capacity online and have less financial buffer to see them through the next crash. Pierce2623 said: Setting a price ceiling is the only way i see to basically force the memory companies to increase capacity as fast as they possibly can or risk a major drop in revenue. You have to understand that there's almost nothing they can do, in the short term. It's not a question of will. Reply
rluker5 bit_user said: The easiest thing he could do is let the Federal Reserve do its job and raise interest rates. That would cool investment in the AI buildout, and thereby free up some capacity and lower prices. Except, he hates the idea of higher interest rates, so instead we get higher inflation. The lack of component supply should lead to lack of product supply and drive inflationary pricing. Maybe someone should let the Fed know. Last I heard they tend to raise rates with inflation. There's a small chance you remember I work in chemical manufacturing. Lately there has been a rash of delayed raw material deliveries. All 3 of the reactors I run have had some downtime due to this over the last 2 weeks. Penty of demand but not enough supply. These are possibly linked to the distribution fiasco going on in another part of the world. Not huge delays, a weekend here, a week there, but then other companies also have to wait for their products that come from us. Not nearly as much downtime as covid or the housing crisis (those were due to lack of demand), but a noticeable anomaly nonetheless. I'm only a sample size of 1 and I only brought this up because I see parallels with other industries' component shortage woes. Reply
thestryker jabliese said: Except for increasing DDR 4 memory, which we are already seeing. Except that there isn't increased production of DDR4 memory IC which is the important part. The only companies who would actually want to increase production are the smaller players like Winbond who don't make DDR5, but they're limited by capital. The only positive for DDR4 production is that when the big three announced they were ceasing production there was a spike in demand and prices went up which caused them to delay the wind down. This delay was long enough that it lasted into the current supply crisis so I believe none of them have actually stopped DDR4 production yet. The current pricing benefit simply comes from less demand on DDR4 than DDR5. Reply
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/artificial-intelligence/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/artificial-intelligence/industry-coalition-urges-trump-administration-to-take-urgent-action-as-ai-data-centers-extreme-memory-consumption-threatens-other-industries-ai-driven-memory-chip-shortage-could-raise-prices-in-automotive-medical-telecommunications-sectors#main
- https://www.tomshardware.com/subscription
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- Why Financial Institutions Are Converging on Transaction Foundation Models to Build Their Own Intelligence
- NVIDIA Research Advances Robotics From Simulation to the Real World
- NVIDIA Vera CPU Is ‘Packing a Heavy-Hitting Punch’ Against Competition
- US tech layoffs record single-highest month in two years, and more than any other sector — nearly 40,000 get the axe, AI the most cited reason for layoffs
Informational only. No financial advice. Do your own research.