Memory chip shortage to last through 2027, semiconductor boss says

A leading CEO in the semiconductor sector has revealed that the ongoing shortage of memory chips is likely to extend through 2027. This forecast comes amidst a surge in demand driven by the burgeoning AI infrastructure sector, which has exacerbated the existing supply constraints. Memory chips, crucial for a variety of consumer electronics such as smartphones and laptops, are also essential for the servers and data centers that power artificial intelligence applications. The demand for high-bandwidth memory has surged dramatically, fueled by investments amounting to tens of billions of dollars in data center infrastructure. As a result, prices for these semiconductors have skyrocketed and are expected to keep rising this year. Sassine Ghazi, the CEO of Synopsys—a prominent semiconductor design tool company—shared insights during a recent interview with CNBC, emphasizing that the chip shortage will likely last through 2026 and 2027. He noted that a significant portion of memory production from leading manufacturers is currently allocated to AI infrastructure, leaving other sectors in a state of scarcity due to insufficient capacity. The major players in the memory chip market, including Samsung, SK Hynix, and Micron, are working on expanding their manufacturing capabilities. However, Ghazi pointed out that it typically takes at least two years for new production lines to come online, contributing to the anticipated prolonged shortage. Traditionally, memory prices have fluctuated based on cycles of supply and demand. Yet, some experts are labeling the current situation as a 'super cycle,' with Ghazi stating, 'Now it's a golden time for the memory companies.' Winston Cheng, CFO of Lenovo, the largest PC manufacturer globally, echoed these sentiments in a recent discussion, predicting further increases in memory prices due to the imbalance between high demand and low supply. This trend could lead consumer electronics companies to raise their prices, with Xiaomi, a major smartphone manufacturer, projecting price hikes by 2026. Cheng expressed confidence in Lenovo's ability to manage costs through its diversified global supply chain, which includes 30 manufacturing plants worldwide. Nevertheless, he acknowledged that the consumer electronics segment is facing challenges in terms of price and demand. As users continue to upgrade to Windows 11, the replacement cycle for PCs and laptops remains strong, but he cautioned that the price increases will likely impact the lower end of the market first.