RAM and SSDs are getting expensive again, and AI may be the culprit

As AI demand grows, memory manufacturers are prioritising the production of high-margin HBM chips over traditional DDR RAM.

A surge in AI computing demand is pushing RAM and SSD prices to new highs. (Image Source: Google Gemini/AI)

Random Access Memory, also known as RAM, is one of the most crucial components of any modern PC or smartphone. But with more people now relying on AI chatbots like ChatGPT, Gemini and Claude, the demand for compute has drastically increased in the last few months.

Earlier this month, two of the world’s largest RAM manufacturers – Samsung and SK Hynix, which together account for almost 70 per cent of global market share – increased the prices of DRAM and NAND flash modules by up to 30 per cent. For context, RAM is used in almost all smart devices, including smartphones, PCs, servers, laptops and tablets, while NAND flash is used as storage in products like smartphones, SSDs and microSD cards.

Unsurprisingly, this has led to a steep price increase in RAM prices. In June, reports suggested Samsung and Micron shifted their focus from the now-dated DDR4 RAM to the new DDR5 and HBM RAM. A report by TrendForce also hinted that suppliers were ‘aggressively” focusing on server-grade memory, which resulted in supplies for DDR4 and DDR5 to be available in limited quantities. “As a result, PC DRAM prices are forecast to continue edging upward through the quarter,” said the research firm.

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As for NAND flash modules, Samsung recently raised server SSD prices by up to 35 per cent, while RDIMM rates were bumped up by as much as 50 per cent, citing increased demand from enterprise and cloud customers. For example, a 16GB DDR4 RAM stick was selling in India for around Rs 3,000 in 2023, but now the same memory stick is priced at around Rs 5,100.

While RAM prices have been quite volatile in the last few years because of various factors like manufacturers cutting down and ramping up production, the AI rush might cause a prolonged global memory shortage, causing prices to increase even further. A few years ago, during the cryptocurrency boom, high demand for graphics cards (GPUs) caused a severe supply shortage, pushing prices to never-before-seen levels.

According to the Korean Economic Daily, the supply shortage could last somewhere between three to four years, mainly because of companies investing trillions of dollars in AI servers.

Currently, the RAM market is in a tight spot as some of the largest buyers in the world are unable to buy enough memory for their computing needs. Reports claim that major players like Samsung and SK Hynix have fulfilment rates of just 70 per cent, while smaller OEMs have been able to deliver around 40 per cent of the total demand.

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A report by the Korean publication Chosun Daily says that some of the biggest overseas electronics and server companies have already “moved to stockpile memory” by signing up long-term contracts with Samsung Electronics and SK Hynix. The RAM industry also seems to be shifting its focus from DRAM used in PCs to making server-grade HBM memory, which has a higher profit margin.