Chapter 1: 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.
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Chapter 2: How is the global memory shortage impacting consumer electronics?
Yeah, they are going to be hard hit because the smaller players are not operating at the same scale of a Dell or an HP or Lenovo. And gamers like powerful PCs. They want a powerful CPU and they want plenty of memory. One of the interesting, I guess, perfect storm elements of this memory issue is that there's been a push in the PC industry towards the AI PC.
IDC defines AI PC as a PC that has an NPU, a neural processing unit that's designed to run AI workloads. One of the other things that an AI PC needs is memory. The more memory, the better. As the industry has moved towards pushing the AI PC, sort of a minimum spec, certainly for a Copilot Plus PC from Microsoft, is 16 gigs of RAM. 32 is even better.
And so just as the industry is moving towards you should buy a PC with more RAM, more RAM has suddenly gotten much more expensive.
You are an expert in this domain, but like everyone else, you're also a consumer.
Chapter 3: What insights does Tom Mainelli provide about the memory industry's cycles?
Has this shortage affected any of your personal consumer choices recently?
Yeah, it's a great question. It's something that I think everybody is considering right now. I've got a freshman in college, a sophomore in high school, and I'm happy to say that their phones and PCs are relatively recent vintage. but my wife's phone is getting a little long in the tooth.
You know, one thing that's interesting about the smartphone side of things is in the US and a lot of mature markets, we tend to buy on installment plans. And so a price increase on a smartphone that you are paying off over the course of two years is a little less painful than a dramatic price increase for a PC where you pay for it all upfront.
And then, of course, you've got to factor in all the other devices that consumers buy, whether it's a tablet or a wearable or smart home device. Everything's got memory in it today. And so there will be a juggling act to figure out, OK, what can I afford and when?
That was Tom Minnelli at IDC. Daniel Shin produced this episode. I'm Megan McCurdy Carino, and that's Marketplace Tech. This is APM.
Hey, it's David Brancaccio, host of the Marketplace Morning Report. It has been one year since the costliest set of wildfires in California history, U.S. history, and by at least one calculation, the history of the world. 16,000 structures were destroyed, most of them homes. I can quote your figures about insured versus uninsured losses measured in billions.
But as people in the fire zones face year two, we go from macro to micro. I'm checking in with the neighbors on one street in Altadena, where 15 homes were destroyed on a single block. These are my own neighbors. I lost a home on that street too. Join us for on-the-ground reporting as we hear from people still dealing with insurance, getting permits, finding contractors.
One guy had to go through 30 contractors to find one with the right skills he could afford. Plus, for most, rebuilding is taking years. How do people find the money to live elsewhere? Listen to the Marketplace Morning Report using your favorite podcast app.
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