Demand for AI chips is driving up prices of memory used in PCs and smartphones

The ongoing demand for high bandwidth memory (HBM) used in producing AI chips is affecting prices used in consumer products. This may result in higher prices for some devices.

In Q2 2024, DRAM prices are expected to increase by 13-18%, according to market research company TrendForce.

Earlier, the firm estimated that in Q2, we will see a seasonal increase in DRAM prices of 3- 8%. In Q1 of 2024, DRAM prices increased by around 20%, the company says.

TrendForce also adjusted the prices of NAND flash memory. However, its increase isn't as significant, with NAND flash memory expected to increase by 15-20% instead of 13-18% projected in Q1.

One of the main reasons for the increase in prices is attributed to the growth of HBM used in AI chips. Companies are allocating their resources toward the production of HBM instead of DRAM.

It’s worth noting that an HBM unit price is several times higher than that of conventional DRAM and about five times that of DDR5.

TrendForce says that manufacturers are wary of potential crowding out effects on HBM capacity. Buyers are strategically increasing their stock in Q2 to prepare for anticipated HBM shortages beginning in the third quarter.

Specifically, Samsung's HBM3e - the fastest type of GBM memory - products are projected to use about 60% of this capacity by the end of 2024, according to TrendForce. This allocation is expected to constrict DDR5 suppliers, particularly as HBM3e production significantly increases in Q3.

Last week, Nvidia supplier SK Hynix reported that HBM chips used in AI chipsets were sold out for this year and almost sold out for 2025.

Micron has also said its HBM chips were sold out for 2024 and that the majority of its 2025 supply was already allocated, Reuters reported.

According to TrendForce's predictions, the annual growth rate of HBM demand will approach 200% in 2024 and is expected to double in 2025.