Micron warns of 'unprecedented' memory chip shortage due to AI
What's the story
Micron Technology, a major supplier for NVIDIA, has warned that the ongoing memory chip shortage is worsening. The company expects this crisis to extend beyond 2026, driven by an unprecedented demand for high-end semiconductors needed for artificial intelligence (AI) infrastructure. "The shortage we are seeing is really unprecedented," said Manish Bhatia, Executive Vice President of Operations at Micron.
Capacity crunch
AI accelerators consuming industry capacity
Bhatia explained that high-bandwidth memory needed for AI accelerators is consuming a lot of the industry's available capacity. This has created a huge shortage for conventional industries, including smartphones and PCs. He also revealed that PC and smartphone manufacturers are now looking to secure memory chips after 2026, while autonomous vehicles and humanoid robots will further boost demand for these components.
Market impact
Chinese smartphone makers reduce shipment targets
Chinese media outlet Jiemian reported that major Chinese smartphone makers such as Xiaomi, OPPO and Shenzhen Transsion Holdings have reduced their shipment targets for 2026 due to rising memory costs. The global smartphone market could see a 2.1% decline this year as the memory chip shortage drives up costs and production is squeezed, according to industry tracker Counterpoint Research.
Supply constraints
Micron's AI memory semiconductors fully booked
The world's top three memory chipmakers—Micron, SK Hynix Inc., and Samsung Electronics—have all seen their share prices surge in 2025, thanks to the AI boom. SK Hynix has sold out its entire chip slate for 2026 while Micron's AI memory semiconductors are also fully booked this year. To prioritize strategic enterprise customers such as NVIDIA, Micron plans to end its popular Crucial-branded consumer memory business.
Growth strategy
Micron's expansion plans amid chip shortage
The AI industry's insatiable demand for memory chips is also accelerating Micron's manufacturing expansion in the US and Asia. The company recently announced plans to spend $1.8 billion on a site with an existing plant in Taiwan, a key production hub for Micron. This move significantly reduces the time needed to bring a new factory online, with meaningful output of DRAM wafers expected by H2 2027.
US expansion
Micron's ambitious US expansion project
Micron's $100 billion project near Syracuse will have four DRAM fabs—each the size of 10 football fields. The first wafers are expected to come out of production lines by 2030. In Boise, Idaho, Micron is adding two fabs' worth of capacity alongside existing R&D facilities there. The first Idaho fab is set to begin production in 2027 with a second factory also being planned.