Memory chip crisis threatens small electronics makers as prices set to surge further

The global memory chip crisis driven by insatiable AI demand is entering a new, more dangerous phase — one that large technology companies can weather through price hikes and supply chain leverage, but that threatens to destroy smaller manufacturers outright.

As tech giants including Apple ↗ 0.90% and Microsoft ↘ 1.24% pass rising memory costs on to consumers, small and medium-sized electronics manufacturers face what IDC analyst Nabila Popal called an existential threat. "For small Android smartphone manufacturers and regional manufacturers producing devices priced under $100, this is a crisis that threatens their very existence," Popal told CNBC Comcast Corporation ↗ 0.43% last week. "They will be unable to procure memory because memory suppliers only fulfill orders from large companies."gigazine+1

A Structural Shift, Not a Cyclical Blip

The crisis stems from a fundamental reallocation of global memory production. Hyperscalers including Google Alphabet Inc. ↘ 0.32%, Meta ↘ 3.20%, and Amazon Amazon.com, Inc. ↘ 1.25% are signing multiyear contracts with memory manufacturers to secure high-bandwidth memory for AI data centers, paying premiums that make consumer electronics orders less attractive. According to Jefferies Equity Research, roughly 50% of memory supply is already locked into these agreements, a figure that could rise to 70%.notebookcheck

Memory prices are expected to surge another 40% to 50% in the third quarter of 2026, followed by an additional 30% to 40% rise in the fourth quarter, Jefferies projected. No meaningful relief is expected before 2028, when new manufacturing capacity begins entering the market.qazinform+1

Gartner projects that soaring memory costs will reduce global PC shipments by 10.4% and smartphone shipments by 8.4% in 2026, with PC prices rising 17% and smartphone prices climbing 13% compared to 2025 levels. IDC's latest forecast, revised downward in May, now projects smartphone shipments will fall 13.9% this year to 1.09 billion units — the steepest annual contraction in the industry's history.cnbc+1

Small Firms Face Extinction

The pain is distributed unevenly. Companies like Apple can absorb or pass along costs: the company raised Mac and iPad prices in late June, with the MacBook Pro jumping from $1,699 to $1,999. But smaller firms lack both the bargaining power to secure supply and the brand pricing power to offset costs.fortune

GoPro ↘ 1.69% offers a cautionary example. After reporting a 19% decline in sales for fiscal year 2025, the action camera maker disclosed in a June filing that "there are serious doubts about whether we can continue our business for the next 12 months."gigazine

The sub-$100 smartphone segment — representing roughly 171 million devices — is becoming "permanently uneconomical," according to Popal, who projects market consolidation as players exit. A class-action lawsuit filed in U.S. District Court in Northern California alleging price-fixing by Samsung, SK Hynix, and Micron ↘ 2.64% adds another dimension to the crisis, though the manufacturers attribute pricing to supply-demand dynamics.pcgamer+1

For the firms caught between rising input costs and price-sensitive customers, the question is no longer whether margins will shrink — but whether they will survive long enough for relief to arrive.