As devices from toys to cars get smarter, gadget makers are grappling with a shortage of memory needed for them to work.
Dwindling supplies and soaring costs of Dynamic Random Access Memory (DRAM) that provides space for computers, smartphones and game consoles to run applications or multitask was a hot topic behind the scenes at the annual gadget extravaganza in Las Vegas.
Once cheap and plentiful, DRAM — along with memory chips to simply store data — are in short supply because of the demand spikes from AI in everything from data centers to wearable devices.
Photo: AFP
Samsung Electronics last week put out word that it expects sales revenue in the final quarter of last year to surge to 20 trillion won (US$13.81 billion) as prices of memory chips surge along with demand.
US-based Micron Technology, which makes advanced semiconductor memory and storage products, reported record revenue of US$13.6 billion in its last fiscal quarter, compared with US$8.7 billion in the same period a year earlier.
The revenue surge is fueled by an unprecedented memory chip shortage which, according to market tracker IDC, could persist well into next year. The reason for the shortfall cited by experts is that DRAM and memory chip makers have shifted manufacturing capacity to cater to AI data centers.
Meanwhile, AI features being added to all kinds of products have increased the need for DRAM and memory in devices from laptops to smart rings.
“An AI infrastructure boom has now rippled outward,” IDC analysts said in a blog post.
“For consumers and enterprises alike, this signals the end of an era of cheap, abundant memory and storage.”
Costs of computers, drives and memory cards have already risen for consumers, according to Other World Computing founder and chief Larry O’Connor.
SNIFF NOT BARK
Gadget makers are adapting to the shortage by either paying premiums for DRAM and memory, redesigning their products, or foregoing some features, according to Michal Siwinski of Arteris, which specializes in providing connectivity inside chips.
“Maybe the (robotic) dog you’ll get will sniff around and roll over, but it’s not going to bark a serenade because it doesn’t have enough memory,” Siwinski said.
The shortage is already forcing efficiencies such as engineers writing tighter code to use less memory, according to O’Connor.
“These aren’t bad things; they should have already happened,” O’Connor said.
“The entire industry has been built around cheap software that has become very bloated over the last 20 years.”
However, gadget makers must avoid their products underperforming due to memory compromises or pushing prices up too high by paying dearly for components, warned Techsponential analyst Avi Greengart.
“Here at CES we’re still seeing the usual claims that our thing is the best and damn the cost (of memory),” Greengart said on the show floor.
“However, if you spend time in suites talking to (device makers), retailers and component manufacturers” it’s clear features will be sacrificed to keep memory costs lower, according to Greengart.
AI SILICON NEXT?
The shortage is being watched warily by other sectors, particularly companies that rely on semiconductors needed to power AI.
These powerful semiconductors have “nothing to do” with DRAM, but companies are vigilant for any spillover effects, Infineon Technologies chief executive Jochen Hanebeck said.
The German semiconductor titan specializes in powering AI, a market where the computing needs are expected to skyrocket.
“Customers are asking about capacities, and I think they have seen the lessons learned on DRAM, and that’s why they are very mindful,” Hanebeck said.
“There is a good chance for a shortage; it is a real challenge to manage that supply chain.”
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