AI Drives Up DRAM Prices, Global Automakers Face Cost Pressure
0xBroomberg
AI-driven demand has sent DRAM prices up roughly sixfold in a year, forcing GM, BYD and other global automakers to weigh passing the cost on to consumers — a chip tug-of-war that could reshape new-car pricing through 2028.
Why have DRAM prices spiked so suddenly?
DRAM — dynamic random-access memory, the chip that temporarily holds data in electronic devices — has surged roughly sixfold over the past year, according to Morgan Stanley.
This means → the price shock originates not inside the auto industry but in AI training and inference, which is crowding out capacity for everything else.
AlixPartners estimates AI consumed 32% of total DRAM volume last year and will reach 48% by 2028. In plain terms = AI is claiming an ever-larger slice of the DRAM pie, leaving less for autos and other sectors.
How badly is the auto industry being squeezed out?
Autos account for only about 10% of total DRAM consumption — far less bargaining power than AI and data centers.
Chipmakers are shifting more capacity toward high-end AI products, tightening automotive-grade DRAM supply. A procurement manager at a Japanese parts maker put it bluntly: "Global memory output is rising, but none of it is flowing to the auto industry."
This reflects a structural mismatch: total memory production is growing, yet nearly all the growth is absorbed by AI. Automakers face a paradox of "more supply, less availability."
How are automakers responding — stockpiling or raising prices?
GM and Ford both signed long-term supply agreements with U.S. memory maker Micron Technology this month to lock in future volumes. Seven Japanese parts suppliers — including Denso and Hitachi Astemo — signed similar deals with Micron last week.
This means → the industry has shifted from watching prices to racing to secure long-term contracts, signaling that supply tightness is seen as a lasting trend, not a blip.
In South Korea, Hyundai Mobis convened 23 domestic chip-related companies, including Samsung Electronics, to push for local automotive-chip production — a parallel strategy: not just locking in supply but building a domestic supply chain.
Why is the pressure sharpest for Chinese automakers?
Per Huayuan Securities, as of November 2025 the per-vehicle memory cost of Chinese-made cars exceeded $70 — the highest globally and far above the roughly $30 figure for Japanese automakers.
In plain terms = Chinese automakers have invested aggressively in smart cockpits, AI voice assistants and driver-assistance features, packing far more memory chips per vehicle than overseas peers — so the price shock hits them hardest.
Seres Group Chairman Zhang Xinghai called soaring memory prices "the biggest challenge facing automakers." BYD raised the price of its standalone driver-assistance package by 20% in May, explicitly citing global memory-price increases.
How much will new cars cost — should buyers worry?
GM has raised its North American new-vehicle price outlook for this year from "flat to down 0.3%" to up 0.3%, and plans to add more large ICE models from 2028 to pass costs through more smoothly.
U.S. new-car prices are already elevated: the 2025 average is roughly $48,000, up about 30% from 2019. Vehicles priced below $25,000 now account for just one-fifth of their 2019 share.
This means → if DRAM costs keep climbing, automakers have very little room to raise prices further — consumers are already stretched at current levels, and another increase risks suppressing demand outright. Whether the industry can pass costs through without killing volume is the central test from 2026 to 2028.
Content is for reference only, not financial advice.