The Memory Crunch: Samsung’s Self-Inflicted Supply Squeeze

In the high-stakes world of semiconductor manufacturing, where billions of dollars hinge on supply chains and market demands, an unprecedented drama is unfolding at Samsung Electronics. The South Korean tech behemoth, a dominant force in memory chips, finds itself in a peculiar bind: its own semiconductor division is reportedly refusing to fulfill RAM orders from its mobile phone unit. This internal rift highlights the severity of a global memory shortage driven by the insatiable appetite for artificial intelligence infrastructure. As AI data centers gobble up high-bandwidth memory (HBM) and other advanced chips, everyday consumer products like smartphones and PCs are left scrambling for scraps.

The story broke recently when reports surfaced that Samsung’s Device Solutions (DS) division, responsible for chip production, turned down requests from the Device eXperience (DX) division, which handles consumer electronics like Galaxy smartphones. This isn’t just corporate bureaucracy; it’s a symptom of a broader crisis where memory prices have skyrocketed, forcing even a company as integrated as Samsung to prioritize profits over internal harmony. Sources indicate that the DS division is focusing on lucrative contracts for AI-related chips, leaving mobile production in the lurch.

This internal negotiation—or lack thereof—comes amid a surge in memory chip prices that has stunned the industry. Samsung has hiked prices on certain memory chips by up to 60% since September, according to insiders cited in a Reuters report. The move reflects a shortage exacerbated by the global rush to build AI data centers, which demand specialized memory like HBM that commands premium margins.

Roots of the Shortage: AI’s Voracious Demand

The memory market’s turmoil can be traced back to the explosive growth of AI technologies. Companies like Nvidia and OpenAI are deploying massive server farms that require enormous amounts of high-performance memory. Samsung, along with rivals SK Hynix and Micron, has shifted production lines to prioritize HBM, which is essential for AI accelerators but leaves traditional DRAM in short supply. This pivot has created a ripple effect, inflating prices for standard memory used in everything from laptops to automotive systems.

Analysts at Trendforce have noted that memory vendors are deliberately avoiding ramping up production of commodity DRAM to focus on R&D for next-generation technologies. As a result, DDR5 pricing is expected to climb steadily through 2026, per their forecasts referenced in a The Register article. This strategy minimizes the risk of oversupply, a lesson learned from past boom-bust cycles in the semiconductor industry.

Posts on X (formerly Twitter) reflect widespread frustration among consumers and tech enthusiasts. Users have shared anecdotes of DRAM spot prices soaring to $27 per chip, with warnings that the crisis is just beginning. One post highlighted how South Korean firms like Samsung and SK Hynix, controlling two-thirds of the DRAM market, are strategically limiting output to favor high-margin products, aligning with reports from Counterpoint Research estimating a further 30% price rise through the end of 2025.

Internal Strife at Samsung: A Case Study in Prioritization

Delving deeper into Samsung’s predicament, the company’s semiconductor arm has reportedly shifted to quarterly contracts for supplying DRAM to its own mobile division, a departure from longer-term agreements. This change allows DS to chase higher profits from external clients demanding AI chips. A PCWorld report detailed how Samsung Semiconductor refused a RAM order for new Galaxy phones, citing the “AI bubble” as the culprit behind rising costs.

Samsung publicly denied some aspects of these claims, stating in a response covered by PC Gamer that reports of rejecting customer requests were baseless. However, the denial hasn’t quelled speculation, especially given the company’s history of internal negotiations. In fact, Samsung’s DS division is said to be in “close communication” with global customers, but the emphasis on AI products suggests that internal divisions aren’t getting preferential treatment.

This isn’t the first time Samsung has faced such tensions. Earlier in 2025, the company partnered with OpenAI to secure massive DRAM supplies, committing to up to 900,000 wafers monthly, as noted in a Gigazine article. Such deals underscore how external AI demands are reshaping internal priorities, potentially delaying smartphone launches or increasing costs for consumers.

Broader Market Implications: Price Surges and Supply Constraints

The ramifications extend far beyond Samsung’s walls. RAM prices have surged dramatically, with some modules seeing increases of 163% to 619% in late 2025, according to data compiled in a personal blog post by Rost Glukhov. Contract prices for 32GB DDR5 modules have jumped from $149 to $239, while larger capacities like 128GB chips now cost around $1,194, up about 50%.

Industry executives are sounding alarms. Gerry Chen, general manager at Team Group, warned in a Tom’s Hardware interview that the diversion of capacity to HBM will leave markets short through at least 2027-2028. New fabrication plants won’t come online soon enough to alleviate the crunch, and prices for DRAM and NAND have already doubled in a single month.

On X, traders and analysts have pointed to spot market chaos, with Samsung reportedly halting quotes due to rapid price fluctuations. One user referenced Bloomberg data showing DRAM prices rising so fast that major players like Micron and SK Hynix are sold out for 2026 in key segments. This sentiment echoes broader concerns that the AI boom is strangling supply for consumer goods.

Consumer and Industry Fallout: From PCs to Smartphones

For everyday users, the shortage translates to higher costs for upgrading PCs or buying new devices. Desktop and laptop memory prices have surged through late 2024 and 2025, driven by AI demands combined with unexpected PC replacement cycles and strong smartphone sales, as outlined in a BaCloud analysis. Mobile LPDDR5X prices have doubled to about $70 from $33 earlier in the year, pushing smartphone component costs up by 25% or more.

The automotive sector isn’t immune. With chipmakers prioritizing AI servers, car manufacturers could face delays in infotainment systems and autonomous driving tech. A WebProNews piece warns that prices could triple until 2027, impacting industries from gaming to telecommunications.

Even within Samsung, the mobile division is exploring alternatives, such as sourcing from competitors like Micron. Posts on X highlight how Micron’s DRAM is gaining ground, with Samsung reportedly using it in its flagship S25 phone due to overheating issues with its own chips. This shift could erode Samsung’s market dominance if the shortage persists.

Strategic Shifts and Future Outlook: Navigating the Boom

Samsung and its peers are betting on sustained AI growth to justify their strategies. SK Hynix has announced that its 2026 supply is already committed, per updates shared on X and confirmed in industry reports. This “minimize oversupply” approach, as described in PC Gamer coverage, aims to avoid the busts that followed previous booms, potentially extending high prices past 2028.

However, critics argue this controlled supply risks alienating long-term customers. Digitimes reported in a recent analysis that while Samsung plans to release some RDIMM modules for servers in late 2025, it won’t fully ease the shortages for other segments. Spot prices for DRAM and NAND flashed higher in November, underscoring persistent demand pressures.

Investors are watching closely. Memory stocks have rallied, but volatility looms if AI hype cools. Morgan Stanley’s earlier predictions of an “unprecedented super cycle,” cited in X posts from mid-2024, seem prescient, yet the human cost—inflated gadget prices—remains a sore point.

Global Responses and Potential Resolutions

Governments and regulators are taking note. In China and the U.S., efforts to boost domestic chip production could eventually balance supplies, though timelines stretch into the late 2020s. Samsung’s investments in new fabs, including U.S.-based facilities, aim to expand capacity, but as Tom’s Hardware notes, these won’t address immediate shortfalls.

For now, companies like ADATA and Corsair are halting new orders, as referenced in X discussions, forcing resellers to charge premiums. Consumers might delay purchases, hoping for relief, but experts like those at Counterpoint Research predict ongoing increases.

In this environment, Samsung’s internal discord serves as a microcosm of industry-wide challenges. By prioritizing AI profits, the company risks its integrated model, but it also positions itself for the next tech wave. As the memory market evolves, stakeholders from Seoul to Silicon Valley will be monitoring whether this shortage becomes a catalyst for innovation or a drag on growth. The coming years will test the resilience of supply chains forged in the fires of AI ambition.