As data centers gobble up memory chips, other industries
that need the components, including electronics companies like Apple and medical
device makers, are asking for government help.
·
AI-driven
demand: Massive
AI data centers are absorbing memory chips, creating a
major supply shortage for smartphones, cars, medical equipment and other electronics.
·
Prices
surge: Memory
chip prices have reportedly quadrupled
over the past year, adding to inflationary pressures in the U.S.
·
Industries
Seek Government Help: Companies
including Apple, automobile
manufacturers and medical-device makers are lobbying Washington
for greater access to memory chips.
·
Possible
Government Intervention: Industry
groups are seeking measures such as requiring chipmakers receiving CHIPS and Science Act funding
to supply a broader range of customers.
·
Defense Production Act: Some companies have urged the Trump administration
to invoke the Defense Production Act to prioritize
memory-chip supplies for non-AI industries.
·
US Semiconductor
Expansion: Memory
producers such as Micron Technology, Samsung Electronics and SK hynix are seeking additional government support to expand production.
·
Factory
Constraints: New U.S.
semiconductor facilities are extremely expensive and can take years to construct, limiting
the industry's ability to respond quickly to demand.
·
Production
Incentives: Chipmakers
are lobbying for additional funding, streamlined environmental approvals and other
measures to accelerate U.S. manufacturing.
·
China Supply
Debate: Apple
and other electronics companies are seeking permission to purchase more memory chips
from Chinese manufacturers,
despite U.S. restrictions.
·
National
Security Concerns: U.S. lawmakers
oppose greater reliance on Chinese memory producers such as YMTC and CXMT, citing risks
to national and supply-chain security.
·
Apple Under
Pressure: Bipartisan
U.S. senators have urged Apple not
to use Chinese memory chips, while lawmakers have called for additional
restrictions on Chinese semiconductor companies.
·
Industry
Position: Semiconductor
industry group SEMI has opposed direct government intervention in chip pricing or
allocation, instead advocating trade
agreements, regulatory relief and manufacturing incentives.
·
Outlook: The shortage could persist for at least two more years,
with AI companies able to pay significantly higher prices than traditional chip
customers.
·
Key Impact: The memory-chip crunch could raise prices
or delay production of smartphones,
gaming consoles, automobiles and medical equipment, while intensifying
the U.S.-China semiconductor supply-chain rivalry.
[ABS News Service/10.08.2026]
The artificial intelligence
boom has created a shortage of a critical commodity called memory chips, and a new
front for corporate lobbying in Washington.
Memory chips store
data in items as varied as smartphones and cars, and they are being snapped up by
A.I. companies for use in giant data centers. The price
of these tiny components has quadrupled over the past year, creating a problem for
the White House, which has struggled to convince Americans that it has inflation
under control.
Now, a wide range
of industries, including medical device makers, car manufacturers and consumer electronics
companies like Apple, are asking for the government’s help to get the chips they
need.
The companies and
their lobbyists have suggested a mix of solutions, some conventional and others
highly interventionist, like federal policy that would push memory chip makers to
allocate more chips to their industries, according to interviews with 18 people,
many of whom spoke on the condition of anonymity because they were not authorized
to speak publicly about those discussions.
Some have suggested
that selling chips to a broader set of customers should be a condition for receiving
money from the 2022 CHIPS and Science Act, a program to fund semiconductor research
and manufacturing in the United States, three of those people said. Others have
asked the Trump administration to use a Korean War-era law called the Defense Production Act to require allocation to industries outside
of A.I., five people said.
“We’re in what I
would characterize as a 100-year flood on the memory pricing, with exponential increases
in memory prices,” Tim Cook, Apple’s chief executive, said last month in an earnings
call.
In a letter to Treasury Secretary Scott Bessent and Commerce Secretary Howard
Lutnick in June, a group of trade associations warned of “risks to large parts of
the economy” from an “urgent imbalance” in the memory chip market.
Memory chips are
starting to add to inflation in the United States, said Diane Swonk, the chief economist
for KPMG US, an accounting firm. Shoppers are already cutting back on buying video
game consoles, and more expensive electronics will probably follow, she said.
“The A.I. boom is
so strong that it is bidding up costs elsewhere,” Ms. Swonk
said.
It is unclear if
the White House or the Commerce Department will intervene. Though eager to keep
prices down, they are reluctant to divert memory chips away from data centers that are helping the United States maintain an edge over China in A.I.
Kush Desai, a White
House spokesman, said domestic semiconductor manufacturing was a top priority for
President Trump, and his policies had secured hundreds of billions of dollars of
investments in the sector.
Memory chip makers
like Micron Technology, Samsung and SK Hynix are also seeking help to increase their
production. Some of the companies are lobbying Congress for another infusion of
funding, similar to the CHIPS Act. They have also asked the government to relax
environmental regulations so they can build new U.S. facilities, three people said.
Micron has pledged
more than $250 billion to the U.S. memory sector, the largest investment of its
kind, said Manish Bhatia, an executive vice president at the company. He added that
constructing chip factories in the United States took longer than anywhere else,
and that the country needed to streamline permitting and cultivate its work force.
“This is something
that’s going to take a concerted effort from the manufacturers as well as the suppliers
as well as the government,” Mr. Bhatia said.
Other memory chip
makers like Samsung and SK Hynix, which are based in South Korea, produce a majority
of their chips in South Korea and China. Representatives for these companies and
their customers have floated the idea of increasing production in their Chinese
manufacturing facilities to respond to the shortage, two people said.
Both the Biden and
Trump administrations have tried to encourage chip makers to expand in the United
States. Micron, Samsung and SK Hynix have all committed hundreds of billions of
dollars over the next few years to expand production in the United States and elsewhere.
But the facilities are extremely expensive and take years to construct.
Shortages in the
industry will continue for the next two years, said Dan Kim, a chief strategy officer
at the research firm TechInsights who worked on chip strategy
in the Biden administration. There is “almost no ceiling,” he said, to the price
that A.I. companies will pay for memory chips. That’s not the case for other businesses.
“Yes, the prices
of your iPhone are going up,” Mr. Kim said. “But it’s also possible the prices of
your M.R.I. machines may go up, or worse than that, that M.R.I. machine may not
get made.”
That said, chip makers
don’t want the government to be too assertive. In July, SEMI, an industry trade
association, argued against interventions that would influence how memory chips
are priced or allocated. The group recommended using trade deals to increase production, cutting regulations and
extending a tax credit meant to encourage domestic manufacturing.
SK Hynix said in
a statement that it was “pushing to maximize production to fully meet surging demand,
and would increase its capital expenditure by 50 percent this year.”
Apple declined to
comment, and Samsung did not respond to a request for comment.
Apple, which has
cited the memory chip shortage for recent price increases, is working with other
consumer electronics companies to push for permission to buy memory chips from China,
which faces certain restrictions, seven people said.
Apple was in talks
in 2022 to buy memory chips from Yangtze Memory Technologies
Corporation, or YMTC, but those efforts fizzled under
pressure from U.S. lawmakers.
Many officials appear
unsympathetic to Apple’s desire to buy Chinese chips, because the company has promised
for years to move more of its supply chain to the United States but has made only
small steps toward that goal, four people said. Other critics of the plan said that
China was also experiencing a similar chip crunch, and had proved itself to be a
risky supplier when it restricted its mineral exports last year.
Micron, which manufactures
memory chips in the United States, Japan and Taiwan, has pushed for more restrictions
on Chinese competitors, arguing that buying chips from China would hurt U.S. production,
two people said.
Chris Miller, the
author of “Chip War,” said buying more chips from China came with a big risk: The
companies that did so could permanently lock in more market share and “open the
door for longer-term dependency risks.”
The United States
has cracked down on China’s semiconductor industry in recent years, believing it
is helping to advance the Chinese military. In 2022, the Biden administration added
YMTC to the U.S. “entity list,” which restricts access to American technology. U.S.
officials have also considered adding another Chinese chip maker, ChangXin Memory Technologies, or CXMT, to the entity list. Both
companies appear on a list that bans their chips from products that are sold to
the government.
Apple’s renewed push
to buy memory chips from China has prompted a backlash from lawmakers. In July,
a bipartisan group of senators urged the company to commit to not using Chinese memory.
The same month, Representatives
John Moolenaar, Republican of Michigan and chair of the House Select Committee on
China, and George Whitesides, Democrat of California, sent a letter to Mr. Lutnick,
urging the Commerce Department to add CXMT to the entity list and to prohibit American
companies from buying from companies on the list.
“Dependence on Chinese
memory manufacturers creates an unacceptable risk for U.S. national security, economic
security and supply chain security,” they wrote.