The Semiconductor Squeeze is Quickly Becoming The Biggest AI Crisis

Ejaaz: We're not even a week into 2026 and AI's biggest crisis is already underway. The battle for memory. Ejaaz: What if I told you this ugly piece of plastic, a graphics card, Ejaaz: is now worth $4,000 when it was only worth $500 literally two months ago? Ejaaz: The reason? AI is consuming the entire memory chip supply and it's leaving behind Ejaaz: a $100 billion hole that needs to be filled ASAP. Ejaaz: You see, memory is a really crucial component for AI models.

Ejaaz: It helps them store and access intelligence very much like how our human brains work. Ejaaz: In fact, it's so important that companies like NVIDIA and Google spend tens Ejaaz: of billions of dollars each year just on memory to build their GPUs. Ejaaz: The issue, though, is that manufacturers of memory like Samsung and Micron are Ejaaz: running out of supply, which means that prices for these things are skyrocketing.

Ejaaz: In fact, it's so bad that companies like Google and Microsoft have each fired Ejaaz: their executives that live out in Southeast Asia because they weren't able to Ejaaz: secure capacity for 2026. Ejaaz: Everyone thought that GPUs was the main commodity to win the AI race, Ejaaz: but turns out it's actually memory. Ejaaz: Josh, you're kind of on the front line for this kind of stuff.

Ejaaz: You've had experience like building out custom PCs and stuff, Ejaaz: and you've been tracking like the memory prices for a while. Ejaaz: Now, what's your take on this? Josh: This story for me hits very close to home because I've spent so much time building Josh: custom computers, custom PCs. I love gaming. That was my thing. And... Josh: Seeing this is really disappointing because throughout history, Josh: there's always been these reasons why my GPUs have gotten so expensive.

Josh: First, it was for like crypto mining. Now it's for AI. Josh: And all the supply chain crisis that is downstream of PC gamers is such an annoying thing to deal with. Josh: There's this cool chart that i'm going to show on the screen right here which shows the.

Josh: Ddr5 ram over time and i guess what i could do is kind Josh: of highlight why you need ram in a computer there's a Josh: few parts there's the case that holds it there's the power supply there's the Josh: gpu and the cpu which you think of as the brains and then there's memory and Josh: there's two types of memory there's one that you could think of as short term Josh: which is ram and there's one long term which is your storage what we're looking

Josh: at here is the price of ram ram is the short term fast memory that's required Josh: to do a lot of heavy compute things. Josh: So if you think of your computer as a kitchen, maybe it's like the GPU and the Josh: CPU is the chef, the RAM is the countertop space where the ingredients are laid Josh: out, and then your storage is in the pantry somewhere else.

Josh: The problem is that this countertop space where you quickly work on, Josh: very valuable and a lot of people really want that precious countertop Josh: space and what we're seeing here is the price of Josh: a 232 gigabyte sticks of ram which Josh: is very standard for a computer going from 200 to 800 Josh: over the last couple of months and there's this great example of this post from Josh: this guy levels who we'd love following on twitter he was talking about his

Josh: experience where he actually bought two sticks of ram for 64 gigabytes a few Josh: months ago at 350 and now they are $2,500 for that same exact thing. Josh: The markup is incredible. Josh: So if you are buying a PC, building a PC, or if you're buying any sort of consumer Josh: hardware, the idea is that these costs are going to have to find their way into the market somehow. Josh: And they're probably going to be hitting you in the wallet right where it hurts.

Ejaaz: So I want to pause for a second and kind of rewind five months ago to when the Ejaaz: rumblings of all of this began. Ejaaz: Because to be frank, this kind of took me by surprise. Ejaaz: I didn't realize that memory was such a crucial component, more so that there Ejaaz: was a supply crunch for it. Ejaaz: So around five months ago, we were kind of like winding down the year.

Ejaaz: You know, OpenAI probably announced their thousandth partnership and NVIDIA Ejaaz: launched their next GPU or whatever. Ejaaz: And we were reaching a point where some analysts on Wall Street started to sound Ejaaz: the alarm on prices of memory going up, but it didn't appear in GPUs or in any Ejaaz: part of the AI world, Josh, Ejaaz: it started appearing in consumer electronics or the cost of these graphic cards Ejaaz: that you were just talking about.

Ejaaz: And so they started saying, well, this is going to eventually trickle down into Ejaaz: GPUs because they require a lot of memory. Ejaaz: So therefore, GPU cost is probably going to go sky high. So I started looking Ejaaz: into this and this tweet really summarizes this well. Ejaaz: Did you know that 80% of the average material cost to build a GPU is memory? Ejaaz: That is just an insane amount of like materials that you need to kind of like hike this thing up.

Ejaaz: And so when you're looking at the cost of prices of these consumer electronics Ejaaz: going up, such as we have on the screen here, it starts to really put into place Ejaaz: that it's not just an AI specific thing. Ejaaz: This memory is required for pretty much any consumer electronics device that you have available. Josh: Yeah, Ijez, you mentioned earlier that you were tracking the prices of GPUs. Josh: You had one that you saved for $2,000 and now the price is like upwards of $4,000

Josh: and you have to update your reference now because the price has gone up. so quickly. Josh: And I think I want to make this important clarification that it's not just RAM, Josh: it's a specific kind of memory that AI needs. Josh: So when people say RAM shortage, they mean the sticks you buy for your PC, which are DDR4, DDR5. Josh: But the AI world has its own special type of fuel, which is different than the

Josh: things you plug into your computer, and that's called HBM. It's high bandwidth memory. Josh: And you could kind of think of it, it's like the Formula One pit crew of memory.

Josh: It is the fastest thing that exists because it takes two-dimensional RAM, Josh: which is generally reserved for DDR4, DDR5, things you put in your computer, Josh: stacks them together in three dimensions to add a lot of bandwidth, Josh: a lot of capacity, a lot of additional speed that you wouldn't otherwise find Josh: in these traditional pieces of RAM.

Josh: And the idea is that there's a lot of downstream effects on consumer products Josh: that come from this specialized HBM being absorbed by all these manufacturers. Ejaaz: So basically, each HBM is composed of a stack of DRAM, dynamic random access memory, as you said. Ejaaz: And it requires a lot of this, Josh. In fact, to create one unit of HBM, Ejaaz: it requires three times the capacity that it requires to build regular DRAM. Ejaaz: So why am I talking about these two things?

Ejaaz: Well, DRAM is what you need in pretty much every single electronics device, Ejaaz: including, drumroll, the Apple iPhone. Ejaaz: So if you start to think about it, these companies need to start competing for Ejaaz: the very supply that is limited and that we're talking about right now. Ejaaz: And so when I think about the likes of NVIDIA, Justin Huang, Ejaaz: who needs all this memory and DRAM to build out his GPUs.

Ejaaz: And then Apple, surely there's going to be some kind of price hike that levels up into the consumer. Ejaaz: And that's what we're hearing on the rumor mill here.

Ejaaz: So Apple is releasing their new A20 chip this year, which is the upgrade from the A19 chip. Ejaaz: And the rumors say that it's going to cost 80% more than the A19 chip. Ejaaz: Now, I don't see a world where Apple doesn't pass this cost down onto the consumer. Ejaaz: Because there's now massive competition between basically NVIDIA and Apple as Ejaaz: to who pays more money to secure the capacity. Ejaaz: Now, Apple isn't someone that has a small wallet. They have a very large budget.

Ejaaz: They're able to secure this supply. Ejaaz: In fact, they accounted for 24% of TSMC's revenue in 2024. Ejaaz: And rumors has it that they've secured 50% of TSMC's a memory packaging capacity in 2026. Ejaaz: So I think they're still able to compete, but for how long, I'm not entirely sure. Josh: There's this great example that we're showing on the screen where it shows a Josh: 64 gigabyte memory package compared to a MacBook Air.

Josh: And the funny thing is the prices are pretty much exactly the same. Josh: In fact, the MacBook Air only costs $15 more than the sticks of memory. Josh: So with Apple, you can essentially buy the RAM and get the MacBook for free Josh: because it is all packaged at the same exact price. Josh: And it shows that Apple does have this resistance to price impacts felt throughout the market.

Josh: How long will this last? I don't know. I have to assume that Apple, Josh: like you said, they're very well capitalized. Josh: They have the ability to shrink their margins temporarily in order to gain more Josh: market share across the world. Josh: And if this is the case and the people are either looking to buy a PC or to Josh: buy a MacBook, and the MacBook is the cost of a single component of the PC, Josh: it's a very strong and compelling argument to buy Apple products.

Josh: So how much of this increase is going to be felt throughout the products? I don't know. Josh: I guess the main thing we'll probably see is later this year with new iPhones, Josh: but they also have some series of Macs that are coming out early this year. Josh: And I guess we'll just have to wait and see if they're able to maintain this, Josh: to hold the line, because what a great deal now.

Josh: If you're buying a computer, go buy a MacBook. It's the same price as a single component of a PC. Ejaaz: I want to push back on one thing, Josh. These are the MacBooks that exist today, Ejaaz: right? The models are already out. The supply is already out. Ejaaz: But wouldn't these price changes be seen in the future products that they release? Ejaaz: Like the next MacBook that they drop, the next iPhone that they drop.

Ejaaz: I think that's where we're going to see the price hikes. Am I missing something here? Josh: No, it's possible. We'll see. The M5 MacBooks are coming out probably. Josh: The newer ones are coming out in the next few months. It's rumored to come out in Q1 of 2026. Josh: So we will have to wait and see. Josh: Historically apple has been pretty good at resisting these fluctuations and Josh: smoothing them out over a long period they.

Ejaaz: Might eat the cost Josh: Perhaps it's it's incremental perhaps they eat the cost in exchange for getting Josh: larger market share we'll just have to wait and see but they can certainly afford Josh: it whatever whatever issue may come their way well.

Ejaaz: What's interesting is uh jensen is not eating the cost he's passing that uh Ejaaz: memory price hike of cost straight down to the consumer so i think the average Ejaaz: cost of his gpu was like 35k he's now selling them for 45k per unit.

Josh: With hefty margins. Ejaaz: Hefty, hefty. 80% margin. Don't ever forget that. Ejaaz: Manvidia is a huge monopoly. But speaking of monopolies, actually, Ejaaz: I think now's the perfect time to introduce the key players in the memory manufacturing game. Ejaaz: Now, let's call these the three musketeers. These guys have massive grins on Ejaaz: their face for many different reasons.

Ejaaz: Number one, they are the primary and only providers of high bandwidth memory Ejaaz: and DRAM, which is what both Apple and NVIDIA need to build their respective products. Ejaaz: And Josh, what I'm showing on the screen right now is the timeline of memory Ejaaz: manufacturers, I think roughly over the last 25 years or so.

Ejaaz: And you'll notice that when you pan from left to right, Ejaaz: for those of you who are just listening, you grow you go from Ejaaz: about 11 players in 2000 to three Ejaaz: players in 2013 and these three players samsung sk hynix and micron are the Ejaaz: major players that we're going to be talking about today they've had a fantastic Ejaaz: 2025 josh do you want to do you want to guess what the average price increase Ejaaz: in their share prices has been over the last year

Josh: Looking at this chart we lost 70 of the players over the last 20 years, Josh: which means the remaining 30% are capturing 100% of this unbelievable demand Josh: in the highest priced index. Josh: And industry in the world, which means surely they're up a good amount. Josh: How much? I don't know, but I would guess like perhaps Robin Hood or Palantir levels above. Ejaaz: You might be right. So I'm showing Micron Technology, which is the US ambassador

Ejaaz: of memory supply right here. We're going to go USA over here. Ejaaz: Their stock is up 250% over the last year. Ejaaz: If we peek over at Samsung Electronics, which is the largest market cap already Ejaaz: out of all three of these companies, their stock is up a massive 150% over the last year. Ejaaz: And the same is for SK Honex, which is a Korean or Southeast Asian based company.

Ejaaz: The point I'm making is these guys are in the perfect position because they're Ejaaz: the ones that are able to hike the prices up and say, hey, sorry, Ejaaz: NVIDIA, you got to pay 80% more, either take it or leave it or I'm going to Ejaaz: sell it to Apple. And Jensen's like, Ejaaz: fine, I'll spend that money. I'm fine with that. And Apple's doing the same as well.

Ejaaz: So not only is all their supply booked up, but their supply for the next couple Ejaaz: of years in 2027 to the end of 2027 is also booked up. Ejaaz: So then the question becomes, which one of these three players are going to Ejaaz: fill the $100 billion supply hole that is currently there? Ejaaz: It's going to be a race between the three of them. Whoever can fill it will Ejaaz: be the richest and be king made out of this entire memory manufacturer race.

Ejaaz: My bet, Josh, is it's going to be Samsung. Ejaaz: I have two specific reasons for this. Number one, Samsung has been the biggest Ejaaz: memory provider for over a decade now. Ejaaz: And they've been able to navigate this market through memory cycles up and down for decades now. Ejaaz: They have all the experience and funding to be able to do so. Ejaaz: Which brings me to my second point. Ejaaz: They're known as what is called a chaebel in Korea, which stands for basically monopoly.

Ejaaz: They're able to pull funds from all of their other cash-making sectors of their Ejaaz: business, their electronics business, the mobile phone business, Ejaaz: to keep the memory business alive. Ejaaz: And even if it runs to a zero-cost margin type of race, they'll still be able to win and survive. Ejaaz: And the truth is, whoever survives the memory crunch that they're currently Ejaaz: in will end up being the winner. So I think Samsung's got a lot of legs here.

Josh: So that's the case for Samsung, but we also have a bold case for Micron, Josh: which actually exited the consumer business entirely. Josh: So one of these three major manufacturers left the consumer business, Josh: meaning if you used to buy Crucial RAM, which is actually the memory that's Josh: in my computer, they no longer exist. Josh: They said, see you later. We're going for the big boys. We want the big bucks Josh: with these AI companies.

Josh: And it's devastating for the Josh: consumers because this is where you're really seeing the price increase. Josh: One of these three major players is now gone. They're just catering to the large Josh: people in the market, but it also means that they are focused on bringing rates down.

Josh: So if you are in the industry for a custom PC or any sort of consumer hardware, Josh: The apologies need to be made, but also the hope is that them doubling down Josh: on this will mean that they can produce a lot more and hopefully lower the downstream Josh: cost to these AI providers, which will then lower the cost down to you, the end consumer. Josh: They're locked in. If you ever wanted any indication that they're coming for

Josh: Samsung's neck, this is it. They left the consumer market. They're all in on AI. Josh: And hey, give them a lot of credit. We'll see what happens. Ejaaz: I think what amuses me the most is just the raw power that these companies wield. Ejaaz: There was a news story that broke last week that SK Hynix, the third player Ejaaz: in this memory game, told Microsoft no to their extra requests for capacity in 2026. Ejaaz: To build their own chips and supply open AI in many different ways.

Ejaaz: They also told Google the week before no as well, which led to that Google exec Ejaaz: being firing or reports of him being fired. Ejaaz: So the point of the matter is these three companies are going to control the Ejaaz: spice for all the Dune fans out there of whether you can build GPUs or whether Ejaaz: you can build iPhones at a reasonable cost without passing that on to the consumer. Ejaaz: But it's equally on them to be able to scale supply to be able to meet demand.

Ejaaz: And that is going to be a really important battle to track in 2026, Ejaaz: which is probably a good point to transition on to the kind of future facing Ejaaz: section here, Josh, which is like, how does this play out in 2026? Ejaaz: And what are kind of like the key themes that we're going to see? Ejaaz: I think the main one is going to be, well, there's going to be a lot of fights Ejaaz: between all the AI labs and NVIDIA to get their hands on memory capacity.

Ejaaz: And the companies that are able to do this and navigate this well will end up Ejaaz: being the winning AI companies in 2026, potentially. Ejaaz: Whatever it may be, OpenAI has taken the first punch or rather delivered the Ejaaz: first punch, reportedly locking in 40% of global DRAM wafer capacity supply through 2029. Ejaaz: I don't know how true this is, but I have a feeling this is linked to all the Ejaaz: partnerships that they were signing with Oracle and NVIDIA and stuff like that.

Ejaaz: So, you know, it might be a bit kind of fluffy, but interesting to see.

Josh: Yeah we find ourselves in this interesting situation where we're always on Josh: the lookout for these bottlenecks where are there going to be Josh: problems as we scale these systems and right now the Josh: largest and most important one outside of Josh: energy is ram but now we have two now Josh: we have this memory issue we have this we have this energy issue we Josh: are like kind of accumulating these problems along the way to

Josh: the point where now ram is becoming close to worth its Josh: weight in gold if gold hadn't just gone up like 30 it would have Josh: been and just today it was announced we have this post on screen saying that Josh: the prices for ews for microsoft for google Josh: cloud the ramp prices are 70 percent higher than Josh: in the fourth quarter of last year so Josh: the ramp up is incredibly high and Josh: it's showing i guess how durable the industry is where they're ready to absorb

Josh: this and keep going that's how important this progress is so things are getting Josh: a lot more expensive and there is a new gold rush on the block and that is for Josh: for RAM for random access memory in high bandwidth so they could deliver the tokens to you.

Ejaaz: And finally everyone knows the story about NVIDIA spending 20 billion dollars Ejaaz: to acquire the licensing rights of this company called Grok which also makes Ejaaz: chips for AI models but the story that everyone missed was the fact that these Ejaaz: chips are made with a very specific type of memory called Ejaaz: SRAM, static random access memory, which is a different type of memory to DRAM.

Ejaaz: So you can imagine that in a world where DRAM prices are skyrocketing and everyone's Ejaaz: dependent on DRAM, having a chip that's made of a different type of memory that Ejaaz: costs a fraction of the price of the competing memory type is probably a good thing. Ejaaz: And NVIDIA bought what is pretty much the only $20 billion get-out-of-jail-free, Ejaaz: very expensive get-out-of-jail-free card that was available.

Ejaaz: So NVIDIA, even if DRAM prices continue to increase to an absorbent amount or Ejaaz: a crazy amount, they have this way out to basically still support scanning of Ejaaz: their GPUs without hiking the costs too much. Ejaaz: Just a masterful chess play from the Monopoly. Josh: Yeah. Jensen is, he's on fire, man. Every decision that he makes, he seems so calculated.

Josh: He seems so aware of where the puck is headed to and acquiring Grok and getting Josh: themselves all of this power on the inferencing front is such a huge deal because Josh: now there is no real threat. Josh: They've absorbed the threat and they've made it their own advantage. Josh: So if I had to summarize this, the price of things are going up.

Josh: Why? Because memory is in short supply and not the kind that you plug into your Josh: computer as a hard drive, you put your photos on, but the kind that allows your Josh: computer to think remarkably quickly. Josh: And the fastest version of this, this high bandwidth memory, Josh: has become the new gold rush for AI companies across the world who want to generate Josh: tokens as fast and efficient as everyone else.

Josh: It is a new bottleneck that we need to monitor because there are now an increasing Josh: amount of things that can go wrong. Josh: So we'll be keeping a close eye on this, how resilient these companies are to Josh: that 70% price increase over the quarter, and how the consumer market's going to act. Josh: As me, being like a gamer, someone who uses a PC, this sucks. Josh: Things are a lot more expensive now, $2,000 to $3,000 more expensive per computer.

Josh: But we'll just evaluate the situation and see where we stand. Josh: If you have built a computer in the past, or if you are affected by this, Josh: or if you think the price of an iPhone is going to go up, tell us how much, tell us your stories.

Josh: I'm so curious to hear the firsthand accounts of how people are impacted by Josh: these things outside of the general scope that we talk about here on the show. Josh: So Share this episode with your friends if you enjoyed it. And don't forget Josh: to like and subscribe wherever you are getting your podcasts here. Ejaaz: The cost of this show has officially gone up 500% in the last two months because Ejaaz: of the memory required to run this entire show.

Ejaaz: So guys, if you want us to still be alive and pump out three to four episodes Ejaaz: a week, please like, please subscribe. Ejaaz: We've got an awesome newsletter. We're dropping essays and highlights twice a week now. Ejaaz: Best source of information you can get