Memory Chip Prices Surge Sixfold as AI Demand Triggers Structural Supply Crisis

Memory chip prices have surged more than sixfold over the past year, driven by what Morgan Stanley characterizes as a structural supply crisis rather than a cyclical fluctuation. The global memory market is projected to explode from $220 billion in 2025 to $890 billion in 2026, according to TrendForce data released June 16, 2026. The shortage stems from explosive AI-driven demand for high-bandwidth memory (HBM) colliding with supply constraints in extreme ultraviolet (EUV) lithography equipment and wafer capacity. Annual supply growth remains capped at approximately 30%. Three dominant manufacturers control nearly 90% of production capacity and have pivoted resources toward high-margin HBM and server DRAM, starving consumer markets. Morgan Stanley projects a 15% supply deficit for PC DRAM and 12% for smartphone memory by 2027. To maintain profit margins, PC average selling prices may need to increase 67% and smartphones 34%—eight to nine times the inflation seen during the pandemic. The crisis is bifurcating the market: cloud giants secure capacity through advance payments while smaller firms struggle in volatile spot markets.