Memory prices surge impacting the global supply chain, affecting everything from smartphones to computers.

The out-of-control memory prices are no longer just a chip industry issue. Having just shaken off the inventory gloom of two years ago, the global semiconductor industry is now plunged into an unprecedented cost crisis. According to the latest industry analysis, this surge in memory prices has formed a “super cycle” of growth, impacting the entire supply chain at an unprecedented speed, from upstream IC design and wafer foundries to end-user consumer electronics and automakers.

Upstream Supply Chain Hit Hard, IC Design Companies Face Order Crisis

As memory prices soar, consumer electronics demand begins to decline, creating a double whammy for the industry. The first to be affected are globally renowned IC design firms.

Qualcomm, MediaTek, and other key smartphone component suppliers are now facing the risk of downward revisions in their earnings. Especially MediaTek, which derives more than half of its revenue from mobile application processors, where processors and memory are the two most expensive components in smartphones. As memory costs climb sharply, smartphone manufacturers may cut back on processor purchases or push down procurement prices to control overall costs, posing a significant challenge for MediaTek.

The driver IC sector faces similar pressure. Taiwanese companies like Novatek and Korean firms like LX Semicon are being identified as victims of this demand winter. Their order volumes have shrunk significantly, and the entire upstream supply chain is caught in an unprecedented dilemma.

Cost Pressures Propagate, Wafer Foundries Face Difficulties

Wafer foundries are also struggling. When end-market demand weakens, older chips made with mature processes—such as those produced on 8-inch wafers for TV driver ICs and power management ICs—are often the first to see order cuts. Companies like DB Hitek, which focus on 8-inch wafers, are facing shrinking orders and customer price pressures, making them direct casualties of this crisis.

According to Reuters, the rising memory prices have directly increased manufacturing costs for end products, forcing foundries to bear pressures from both ends—higher raw material costs and customer price demands.

Automotive Industry Not Exempt, Component Design Faces Adjustments

The relatively stable automotive electronics industry is also struggling to stay unscathed. According to TrendForce’s latest data, automakers are experiencing memory shortages and high prices, with some even forced to redesign component architectures to cope with cost pressures.

Infineon has initiated cost-cutting measures, NXP has issued warnings of order reductions, and Japanese company Renesas Electronics has announced organizational restructuring including layoffs. These actions clearly indicate that the surge in memory prices has profoundly impacted the global automotive supply chain.

Consumers Ultimately Pay the Price, Computer Costs Likely to Rise Significantly

The most concerning outlook is for the personal computer market. TrendForce estimates that this quarter, the price of general-purpose DRAM will increase by 55% to 60% quarter-over-quarter, and NAND Flash storage will rise by 33% to 38%. These staggering increases will directly impact consumer purchase costs.

Taiwan’s major contract manufacturer, Compal, has issued a warning that this memory price crisis is expected to continue affecting the entire industry. More worryingly, the share of memory costs in the total PC cost is projected to jump from the current 15-18% to 35-40%. This means that in the future, one-third to two-fifths of a consumer’s PC purchase price will directly go toward memory costs.

This ongoing surge in memory prices is no longer an internal industry issue but will directly impact every consumer’s wallet. From high-end products to entry-level devices, no one will be spared in this storm.