How Microsoft and Google are navigating the AI memory crisis
What's the story
The ongoing global race to build artificial intelligence (AI) infrastructure is facing a major hurdle: a shortage of memory. According to industry analysts, the demand for high-bandwidth memory and advanced DRAM used in AI accelerators and data center servers has skyrocketed. This has led tech giants like Google to take extreme measures, including firing procurement executives over their failure to secure additional memory supply, while Microsoft faces similar tensions.
Strategic moves
Procurement executives dispatched to South Korea
A report from Citrini Research reveals that procurement executives from Microsoft and Google have been sent to South Korea. Their mission? To secure more memory capacity from Samsung Electronics and SK Hynix. Failure to do so could result in dismissal for Google executives, highlighting the seriousness of the situation for these tech giants.
Consequences
Google's executives face dismissal over memory supply
The report further states that Google has already fired some of its procurement executives for failing to secure additional memory supply. This happened after the demand for its AI accelerators outstripped internal forecasts. When Google tried to negotiate more high-bandwidth memory from SK Hynix and Micron, it was reportedly told that no extra capacity was available under any terms.
Negotiation challenges
Microsoft's negotiations with SK Hynix also hit roadblocks
Microsoft has faced similar challenges in its negotiations with SK Hynix. The company's executives reportedly walked out of a meeting after being told that their demands couldn't be met. Industry insiders say that the negotiations have become so aggressive that some tech firms are placing open-ended orders, asking suppliers to deliver as much volume as possible regardless of price.
Shift
Memory shortage reshapes procurement strategies
The memory shortage has also changed how Big Tech companies approach procurement. Traditionally, this was handled by the teams based in Silicon Valley or Seattle. But now, firms are hiring procurement managers with engineering backgrounds and placing them in Korea, Taiwan, and Singapore. The idea is to combine technical coordination and commercial negotiation into one role while keeping a constant presence near suppliers.
Long-term impact
Shortage expected to last until 2027
Research company International Data Corporation has warned that the memory shortage could last until 2027. IDC has called this the end of an era of cheap, abundant memory, a structural shift driven by AI workloads that require much higher memory per unit of compute than traditional cloud applications. For Microsoft and Google, these ultimatums highlight a larger reality: in the AI era, access to memory is no longer just a commodity advantage but a strategic necessity.