Chipmakers say not enough chips for PCs, phones amid AI priority

Two of the world’s top chipmakers warned on Thursday that surging demand for artificial intelligence processors is squeezing the supply of traditional DRAM chips, leading to semiconductor shortages for computer and smartphone companies.

The warnings come from South Korean chip giants Samsung Electronics and SK Hynix, which together control two-thirds of the DRAM chip market and count companies such as Apple and Nvidia as customers.

“PC and mobile customers are having difficulty securing memory supplies as they are directly or indirectly affected by supply constraints and strong demand for server-related products,” Park Joon Deok, SK Hynix’s head of DRAM marketing, told analysts on a post-earnings conference call.

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The race to build AI infrastructure has prompted chipmakers to shift manufacturing capabilities toward high-bandwidth memory (HBM) for AI servers. HBM chips are used to build AI chipsets and are more profitable than DRAM processors.

Meanwhile, chip companies have also been conservative in adding more production lines in recent years after being hit hard by aggressive capacity expansion in 2017.

then, Chip demand increases significantly This led to companies like Samsung investing in new production lines, but these quickly turned into a burden as demand cooled from 2018 to 2019.

The resulting reluctance of chipmakers to expand production capacity has also contributed to the current supply shortage. Samsung said any such expansion would be limited in 2026 and 2027.

Prioritize AI needs

Samsung prioritized supplying server customers in the fourth quarter and plans to continue to increase its share of artificial intelligence-related products. This move may lead to further restrictions on the production of traditional memory chips.

Samsung’s aggressive push into artificial intelligence memory chips comes as the technology giant seeks to close the market share gap with SK Hynix in the lucrative field.

SK hynixLeading chip supplier Nvidia led the HBM chip market last year with a 61% share, followed by Samsung (19%) and Micron (20%), according to Macquarie Equity Research.

SK Hynix vowed on Thursday to maintain its “overwhelming” market share in its next-generation HBM4 chip, underscoring intensifying competition with Samsung for market share in the race for artificial intelligence chips.

Smartphone companies brace for impact

As tight conditions persist, some manufacturers have begun to adjust their products to cope Growing pressure on profitschip shortages and soaring prices.

“PC and mobile customers are adjusting purchasing volumes due to the recent surge in memory chip prices,” SK Hynix said in an earnings call.

“Some customers are taking a more conservative approach to shipment plans or considering adjusting (memory chip) specifications in their price-sensitive product lines.”

Research firms IDC and Counterpoint now both expect global smartphone sales to shrink by at least 2% this year, reversing previous growth forecasts. IDC predicts that the PC market is expected to shrink by at least 4.9% in 2026 after growing by 8.1% last year.

Samsung, the world’s second-largest smartphone maker, is also bracing for the impact of the chip shortage, with its mobile business profiting Plunged 10% in the fourth quarter.

Samsung mobile business executive Cho Seong warned that 2026 will be a “challenging year”, with global smartphone shipments expected to be flat this year and the risk of downward revisions due to memory chip prices.

Investors will be watching for comments from larger smartphone rival Apple Inc, which is due to report quarterly results later on Thursday, on how to deal with the global memory chip crisis.

• Reuters, with additional editing and input by Vishakha Saxena

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Visakha Saxena

Vishakha Saxena is Asia Finance’s multimedia and social media editor. She has been a digital journalist since 2013 and is an experienced writer and multimedia producer. As a trader and investor, she is interested in the new economy, emerging markets, and the intersection of finance and society. You can write to her: [email protected]