AI is eating up the world's computing memory
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What does it mean that AI is consuming the world's memory?
AI is sucking up all the world's memory. From American Public Media, this is Marketplace Tech. I'm Megan McCurdy Carino.
No, I don't mean memory in a metaphysical sense, though that could also be argued. I'm talking RAM and other kinds of memory hardware. Much like graphics processing units, high bandwidth memory is essential for training and running AI. It's paired with all those Nvidia chips that have been selling like hotcakes. And only a small handful of companies in the world make it. Now, the surge in demand from data centers has created a global shortage for everything else. The PCs and smartphones and other consumer electronics that also use memory chips. We spoke with Tom Minnelli, vice president of device and consumer research at IDC, International Data Corporation. I asked him how long this shortage could last.
I think one thing that's really important to note is The memory industry historically has been kind of a boom and bust industry. The memory vendors, they build more capacity, they get into an oversupply situation, the industry ramps up to leverage more memory, and then eventually they get into supply constraint and then they start the whole process again. With the AI boom, it's basically a whole new area that is requiring memory. And so our best estimate is that this is going to continue to be a problem throughout 2026 and could easily slide into 2027. The memory vendors are going to eventually build out their capacity. But if you're a memory vendor, this is a very good time to be a memory vendor.
to sell your product for the most money that they can get. And so, you know, the other thing that I think is important to note is, you know, there's a lot of talk about the AI build out. There's a lot of talk about whether we are in an AI bubble. And if it turns out we're in a bubble and some of these hyperscalers and other data center companies pause, then this problem could go away relatively quickly. But there's really no sign of that happening here in January.
So we know that when it comes to high bandwidth memory, it's really just three companies that have the capacity to make that kind of memory. But is the consumer electronics memory market so concentrated? Is there any wiggle room there?
It really is. In fact, one of those companies, Micron, announced, I think, in December that they were going to exit the consumer RAM market. They've got bigger customers in the data center, and they're not going to allocate that to consumer demand on a relatively low margin basis. product. And so there's certainly an opportunity for others to enter this space or for small companies to potentially increase the memory that they're building. But memory is a really capital intensive industry. And so it's not something where we would expect two or three big players to jump in and help alleviate this problem anytime soon.
We'll be right back. You're listening to Marketplace Tech. I'm Megan McCarty Carino. We're back with Tom Minnelli, Vice President of Device and Consumer Research at IDC. What does this mean for consumers in the near term?
I think what you're going to see, there's going to be a few impacts of the rising cost of memory. For one, the larger PC vendors, HP, Dell, Lenovo, Apple. will be in a better position than smaller players. And so there are lots of regional PC vendors. There are still plenty of mom and pop companies that build desktop computers for small businesses. Those smaller companies are going to really be challenged, not only in terms of their ability to pay the higher prices, but even to get allocations. So one thing we think will happen over the course of 26 is there will be some share shifts and likely the larger players will get larger and some smaller players will get smaller or maybe even exit these markets.
We will see price increases. We will see some vendors to account for the RAM. They buy a less powerful CPU or they spend less money on the various other features that go into a device. And so consumers may be faced with making some choices around the capabilities that they buy.
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