AI-Driven Memory Price Surge Hits Global Electronics Industry, Squeezes Margins and Triggers Price Increases

The rapid expansion of generative AI is reshaping the global semiconductor memory market, as manufacturers prioritize high-margin memory products for AI applications over conventional DRAM and NAND. The resulting supply tightness is driving up memory prices, increasing cost pressures across the electronics industry, and prompting manufacturers to raise prices while reassessing procurement and product strategies.

Japan, May 26, 2026  – Rising semiconductor memory prices, fueled by booming demand for artificial intelligence (AI), are placing mounting pressure on electronics manufacturers worldwide. As memory suppliers shift production toward high-value AI memory products, the availability of conventional memory used in consumer electronics—including smartphones, gaming consoles, cameras, and industrial equipment—has tightened significantly, forcing manufacturers to absorb higher costs or pass them on to customers.

AI Reshapes the Memory Market

The rapid growth of AI servers has dramatically increased demand for High-Bandwidth Memory (HBM), encouraging memory manufacturers to allocate more production capacity to premium AI-oriented products.

As a result, conventional memory products—particularly DDR4 DRAM, which remains widely used in industrial equipment and consumer electronics—have become increasingly scarce, driving prices sharply higher.

According to Toshiya Suzuki, Consulting Director at research firm Omdia, the shift toward HBM production is having a significant impact on manufacturers of smartphones, automotive electronics, and digital cameras. He noted that many customers will eventually need to migrate from DDR4 to DDR5 despite the additional investment required.

Electronics Manufacturers Face Rising Cost Pressure

The impact is becoming increasingly visible across Japan's electronics sector.

Nintendo estimates that higher memory prices, together with tariffs, will reduce its consolidated earnings for the fiscal year ending March 2027 by approximately ¥100 billion. President Shuntaro Furukawa said that rising raw material costs are becoming one of the company's biggest challenges, particularly for hardware profitability.

Canon has lowered its operating profit forecast for fiscal 2026, citing surging memory prices resulting from tight market inventories. The company expects memory prices to gradually stabilize during the second half of 2027.

Meanwhile, Seiko Epson, Brother Industries, Mitsubishi Electric, and KYOCERA have all identified memory costs as a key driver behind rising production expenses across printers, electronic components, factory automation equipment, and air-conditioning systems.

Supply Chain Impact Extends Downstream

The memory shortage is also affecting downstream suppliers throughout the electronics supply chain.

Dai Nippon Printing (DNP) reported slower demand for display metal masks after smartphone and PC manufacturers scaled back production plans because of memory procurement difficulties. As production schedules are revised, related component suppliers are beginning to feel the impact as well.

Industry observers warn that if smartphone and PC makers continue raising prices to offset higher memory costs, weaker consumer demand could further affect component suppliers throughout the supply chain.

Manufacturers Respond with Price Hikes and Product Strategy Adjustments

Electronics manufacturers are implementing various measures to protect profitability.

Mitsubishi Electric is pursuing cost reductions while raising product prices to offset increases in memory, copper, and silver costs.

Seiko Epson has begun passing part of its higher component costs on to customers.

Nintendo recently increased the domestic retail price of the Nintendo Switch 2 by ¥10,000.

Meanwhile, Alps Alpine says its immediate priority is securing sufficient memory supply before implementing broader price adjustments during the second half of fiscal 2026.

China Expands Production, but Global Supply Remains Tight

Chinese manufacturers are accelerating investments in both DRAM and NAND production. However, industry experts believe that most of the additional output is currently being absorbed by domestic demand, limiting its impact on the global supply situation.

Nevertheless, analysts expect the semiconductor memory market to gradually rebalance over the next six months to two years, as new capacity comes online and supply-demand conditions improve.

Source: Nikkan Kogyo Shimbun