Key Takeaways
- Samsung increased memory chip prices by up to 60% amid severe AI-driven shortage
- 32GB DDR5 modules jumped from $149 to $239 between September and November
- Industry-wide price hikes expected to continue through 2024
- Shortage causing panic buying and supply chain disruptions
Samsung Electronics has implemented massive price increases of up to 60% on memory chips as AI data center demand creates severe shortages. The world’s largest memory chipmaker delayed its usual October pricing announcement before implementing the sharp hikes, according to sources familiar with the matter.
Market Impact and Stock Reactions
The price surge triggered significant stock market movements, with Samsung shares rising 3%, SK Hynix surging 6%, and Micron Technology climbing 4%. All three companies are recovering from earlier declines amid concerns about stretched AI valuations.
Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide, told Reuters: “Many of the largest server makers and data center builders are now accepting that they won’t get nearly enough product. The price premiums being paid are extreme.”
Detailed Price Increases
The South Korean company’s contract prices for 32GB DDR5 memory chip modules skyrocketed to $239 in November, up dramatically from $149 in September. Additional increases include:
- 16GB DDR5 and 128GB DDR5 chips: Approximately 50% increase to $135 and $1,194 respectively
- 64GB DDR5 and 96GB DDR5: More than 30% price hikes
Industry-Wide Consequences
The memory chip shortage is creating ripple effects across multiple industries. China’s top contract chipmaker SMIC reported that customers are holding back orders for other chip types due to the memory shortage. Xiaomi warned that surging prices have increased smartphone manufacturing costs.
Jeff Kim, head of research at KB Securities, noted that Samsung’s slower shift to AI chips has actually given the company better pricing power than smaller rivals like SK Hynix and Micron.
Future Outlook and Production Response
Samsung is responding to the crisis by building a new chip production line in South Korea, anticipating sustained AI-driven demand. TrendForce analyst Ellie Wang predicts Samsung will raise quarterly contract pricing by 40-50% in the October-December period, exceeding the industry average of 30%.
“They are really confident that the price is going to increase. And the main reason is that now the demand is really strong, and everyone is working on long-term agreements with the suppliers,” Wang said, noting these agreements extend to 2026 and 2027.
The severe chip crunch has sparked panic buying among some customers, according to industry executives, suggesting the supply challenges may persist through 2024.
