According to SMIC representatives, it is the AI systems that require significant volumes of dynamic memory (DRAM), leading to a shortage of resources for other segments, such as smartphones, especially budget models.
Analytical data shows that since the end of last year, the cost of memory has increased by 80–90% due to rising prices for modules used in server infrastructure.
The situation is further complicated by the behavior of electronics manufacturers, who, fearing shortages, are preemptively reserving supplies of components, creating an effect of even greater scarcity.
Manufacturers are struggling to keep up with rising demand
The three leading companies that control over 90% of the global memory market — Samsung Electronics, SK Hynix, and Micron Technology — are currently unable to simultaneously meet the needs of both AI infrastructure and traditional consumer electronics.This creates a dual problem for device manufacturers: component prices are rising while purchasing power remains low.As a result, demand for new gadgets may slow down.
SMIC is already noticing a decline in order volumes from manufacturers of mid-range and budget smartphones. Even if manufacturers decide to pass on the increased costs to end consumers, it could still lead to a decrease in sales volume.
Temporary shortage: time for recovery
According to SMIC management, the severity of the shortage may be partially exaggerated due to panic buying. However, the process of restoring balance will take time: additional volumes of memory may enter the market in approximately nine months.Nevertheless, the company urges clients from the consumer electronics sector not to succumb to excessive pessimism — new supplies will likely be directed primarily to them, as memory for AI, such as high-speed HBM, requires longer and more complex testing before use.
The market reacts to cautious forecasts
SMIC expects that revenue in the first quarter of 2026 will remain at the level of the previous quarter, with a gross margin of 18–20%. Following the release of this cautious forecast, the company's shares in Hong Kong fell by about 3.6%.At the same time, SMIC is expanding its production capacity to cope with the growing demand for chips, although it warns that increased depreciation costs may put pressure on profitability.
Key takeaways
The growing interest in artificial intelligence is radically changing the semiconductor market, turning memory into a strategically important resource that data centers and electronics manufacturers are competing for. As the industry ramps up capacity, the market may face rising prices for devices and periodic supply disruptions — inevitable consequences of an accelerated technological race.Photo on the main page is illustrative: Umberto / Unsplash.
