Intel CEO Lip-Bu Tan is warning that the global memory shortage could become even more severe in 2027, adding a new layer of pressure to the semiconductor and consumer electronics industries. The warning highlights how the rapid expansion of AI infrastructure is reshaping memory demand, diverting production capacity toward high-performance applications while pushing up costs for smartphones, laptops and other devices.

Memory Prices Have Increased as Much as Sevenfold

Tan said memory production capacity remains highly constrained and that prices for some memory products have risen fivefold, sixfold or even sevenfold from previous levels. He also warned that businesses are being delayed because they cannot secure sufficient memory, turning availability into a major bottleneck across the technology supply chain.

The pressure is closely linked to the rapid expansion of AI computing. AI systems require large quantities of high-bandwidth memory, or HBM, alongside other forms of DRAM. Manufacturers are directing increasing capacity toward these higher-performance products, leaving less room for conventional memory used in smartphones, laptops, consumer electronics and other applications.

Lower-End Devices Face a Major Cost Shock

The impact is particularly significant in the lower end of the consumer electronics market. Tan said memory can account for roughly 70% to 80% of the cost of some lower-priced smartphones and laptops, putting the current burden at approximately 75% in certain devices. For products designed around aggressive price points, such a shift can fundamentally change their economics.

Manufacturers have several options, but none is cost-free. They can raise retail prices, reduce memory configurations, absorb lower margins or redesign products around different components. Each decision can affect demand, competitiveness and profitability. Smaller device makers face an additional challenge because they generally have less purchasing power and fewer long-term supply arrangements than the largest global technology companies.

AI Demand Is Competing With Consumer Electronics

The underlying problem is not simply stronger demand for smartphones or computers. AI data centers are consuming increasingly large volumes of advanced memory, while semiconductor manufacturers need significant investment and time to add new capacity. As production lines are increasingly optimized for HBM and other AI-related applications, the resulting pressure can spill into the broader memory market.

That competition is already changing product strategies. Device manufacturers are placing orders earlier, reconsidering configurations and looking for ways to reduce their dependence on constrained components. The longer the imbalance persists, the greater the risk that higher memory costs will feed into consumer prices or force manufacturers to accept lower margins.

Looking ahead to 2027, investors will be watching memory prices, HBM demand, new production capacity and the allocation decisions of Samsung Electronics, SK hynix and Micron. The critical question is whether supply expansion can catch up with AI-driven demand quickly enough to ease the squeeze. For Intel and the wider semiconductor industry, the memory market is becoming an important gauge of how the AI investment boom is changing costs and competitive dynamics throughout the technology supply chain.