AI is consuming so much of the world's memory chip supply that there isn't enough left for everyone else.
For the first time ever, orders for memory chips have surpassed orders for logic chips at ASML, the Dutch company that builds the machines chipmakers need to manufacture advanced semiconductors. Logic chips are the processors that run your phone and laptop. Memory chips store and move data. Processors were always the bigger business, until AI changed the equation.
AI data centers require massive amounts of a specialized memory called HBM (High Bandwidth Memory) to function, and chipmakers are scrambling to meet that demand. The tradeoff is zero-sum: every wafer dedicated to HBM is a wafer not making the conventional memory that goes into your phone, laptop, or car.
Micron, one of three companies that dominate global memory production, reported record revenue of $13.6 billion last quarter, up 57% year over year. DRAM prices alone jumped 20% in a single quarter. The company has already sold out its entire 2026 HBM supply and is guiding next quarter for 68% gross margins, almost unheard of for what's always been a commodity business.
Even with all of that, Micron still can't keep up. "Despite significant efforts, we are disappointed to be unable to meet demand from our customers, across all market segments," the company said in its earnings call prepared remarks.
TSMC CEO C.C. Wei confirmed how deep the demand runs on his latest earnings call: "AI is so strong... Our customers, and customers of customers, who are mainly the cloud service providers, continue to provide us with their very strong signal and positive outlook."
The shortage is now cascading into consumer markets:
- IDC's Francisco Jeronimo called it a "tsunami-like shock originating in the memory supply chain."
- Gartner's Ranjit Atwal warned of "the steepest contraction in device shipments in over a decade," with higher prices pushing consumers to hold onto their phones and laptops longer.
It's also reaching industries you wouldn't think of. Ford CFO Sherry House recently acknowledged that while the automaker has enough memory chips for now, the company is already building pricing pressure into forward plans. Modern vehicles rely on memory for everything from infotainment to driver-assist systems, and if those prices keep climbing, that shows up on the window sticker.
Micron forecasts the HBM market alone will grow from roughly $35 billion in 2025 to around $100 billion by 2028. That single product category will be larger than the entire DRAM market was in 2024. And even with Micron increasing capital expenditures to $20 billion this year, most of that increase is going toward HBM, not conventional memory.
Intel CEO Lip-Bu Tan summed up the timeline: "There's no relief until 2028."
Previous chip shortages were caused by supply disruptions like COVID shutdowns and natural disasters, which meant they corrected once production came back online. This one is demand-driven, and the companies buying HBM aren't planning to slow down. Every new model release, every new data center, every new agent framework makes the hunger worse. Your next phone, your next laptop, and possibly your next car are going to cost more because AI needs the same memory they do, and right now AI is first in line. 2028 feels optimistic.
