The surging demand for AI-related memory is creating a severe supply crisis that is poised to cause significant disruption across the consumer electronics industry. Industry insiders suggest this imbalance could lead to widespread financial distress and product line eliminations for numerous manufacturers within the next two years. The situation is so critical that memory suppliers are now requiring an unprecedented three years of advance payment for their products, underscoring the extreme scarcity and market power shifts.
According to reports summarizing an interview with Phison CEO Pua Khein-Seng, the memory shortage, largely fueled by the burgeoning AI sector, will force many consumer electronics companies into bankruptcy or to abandon certain product lines by late 2026. This stark forecast includes projections for substantial cuts in the production of mobile phones, personal computers, and televisions, with phone manufacturing alone expected to decrease by 200-250 million units. The CEO emphasized that this memory supply-demand imbalance is anticipated to persist until at least 2030, possibly even longer.
A critical factor exacerbating this crisis is the immense memory requirements of next-generation AI accelerators, such as Nvidia's upcoming Rubin GPUs. If tens of millions of these advanced units are deployed, each demanding over 20 terabytes of solid-state drive (SSD) capacity, they alone would consume approximately 20% of the world's NAND flash production from the previous year, excluding subsequent data storage needs. This illustrates the staggering scale of demand being generated by the AI industry, which is quickly outstripping existing and planned memory manufacturing capabilities.
Despite ongoing investments by major memory producers like Samsung, Micron, SK Hynix, and Kioxia into new fabrication facilities, the lead time from announcement to operational production is typically at least two years. Furthermore, the global demand for manufacturing equipment is extremely high, slowing down capacity expansion. While China is also increasing its memory production, its initial contribution is projected to only cover 3-5% of the global supply, which is insufficient to bridge the existing 10-20% deficit. Moreover, China's vast domestic demand means that any new capacity is unlikely to result in an outflow of low-cost memory to the international market.
The current memory supply chain crisis, largely propelled by the AI boom, is creating an environment of intense competition for crucial components. This situation is compelling memory manufacturers to implement extraordinary payment terms, drastically impacting the financial viability and operational stability of consumer electronics companies. The long-term outlook suggests a sustained period of high memory prices and limited availability, profoundly reshaping the competitive landscape and product offerings within the tech industry.