AI Memory Costs Continue to Explode — And It’s About to Get a Lot Worse
Intel's CEO just warned that memory prices have surged to levels that could reshape the economics of everything from budget smartphones to AI servers, and the worst may still be two years away.
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Intel CEO Lip-Bu Tan set off a fresh scramble in chip stocks this week, warning that memory prices have jumped 5x to 7x and that memory now accounts for roughly 75% of the cost of some lower-end phones and laptops. He cautioned the shortage could deepen in 2027.
What’s Driving the Squeeze
Tan told investors the “industry is facing one of the most severe supply constraints in its history across leading-edge logic, silicon wafers, memory, and subscripts” and that these shortages will persist for the foreseeable future. Intel (NASDAQ:INTC | INTC Price Prediction) is already pivoting production toward data-center CPUs and now guides 2026 CapEx above $20 billion, with 2027 spending set to run significantly higher. Micron Technology (NASDAQ:MU) echoed the outlook, saying “we see tightness continuing beyond 2027”, aligned with SK hynix flagging 2027 as potentially the industry’s worst supply year.
Market Reaction Is Loud
Micron trades at $991.49, up 247.61% year-to-date. SK hynix (NASDAQ:SKHY) ADSs sit at $183.70, up 18.04% in the past month. Intel has ripped 190.6% YTD to $107.23. Micron’s fiscal Q3 gross margin hit 84.9% on DRAM pricing gains in the low 60s percentage range and NAND pricing in the mid-80s percentage range.
Profit Angle to Watch
Memory suppliers hold the leverage. Micron’s $100 billion in take-or-pay RPO and $22 billion in customer deposits and letters of credit lock in floor pricing above prior peak margins. Keep an eye on HBM4E qualification milestones and any 2027 CapEx revisions from Intel, which telegraph how tight next year gets for every buyer of PCs, phones, and AI servers.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
